Senate Standing Committee on Budget and Fiscal Review

The Committee and Budget on fiscal review will come to order. Let's see. I don't think we have quorum yet, so we will start as a Subcommitee. The Senate is continuing to welcome the public in person and via the teleconference service for individuals wishing to provide public comment. Today's participant number is 8772-266-8216 the access code is 621-7161 and that will be periodically up on our screen also or on the website.

I will maintain decorum during the hearing as is customary, and any individual who is disruptive may be removed from the remote meeting service or have their connections muted. Those providing testimony before the Committee today are also part. No, those of you who are providing testimony are here in person. That's great. So that is wonderful. And what we are going to do, well, first to allow public access. There are Members of the public in the hearing room and the teleconference service.

As I mentioned, I gave that access number. We will have our public comment after all the items are presented, and we will not vote on those bills until all of them have been presented and we have your public comment. What we're going to do is have our Department of Finance present a Bill, each Bill, but not at once, in other words, individually, so the Committee Members can raise questions or concerns that they may have.

But after all that presentation and your questions, we'll have the public comment and then we will vote. Now, let me describe what it is we have before us today. We have a limited package of bills today that are early action items that require resolution prior to our adoption of the June budget, and these include technical fixes to the 2022 budget expenditures on childcare.

We are utilizing funds, ARPA funds, from the Federal Government to waive family fees for preschool and childcare through September 2023 and providing federal funds that we would otherwise lose for stipends for childcare to ensure the funds are used for the original purpose that we gave it during the pandemic recovery. Another Bill is to ensure pandemic relief and loan forgiveness for college students and to make sure that it is not considered income for purpose of state income taxes. And the final Bill? Rather not. Final Bill.

The third Bill is to provide hardship relief to struggling hospitals. And then the final Bill is to finalize crucial details that were negotiated with our farm worker unions. And I look forward to discussing these important measures and continuing to collaborate with the Administration as we prepare and finalize the 2324 budget. Vice Chair Niello, you have some comments you would like to make?

Well, this is the first actual meeting of the Budget Committee. We've had a lot of informational hearings before, and I'm looking forward to getting into the details.

Great. All right. Let me just pull up my. Do you have a paper agenda I can borrow real quick? Thanks. I didn't have it up on my computer fast enough. All right, so let us first we have quorum. Let's establish quorum first. Go ahead.

Senators Skinner, here. Niello, here. Becker. Caballero. Dahle. Durazo, here. Eggman, here. Grove. Laird, here. McGuire. Menjivar, here. Min. Newman. Ochoa-Bogh. Padilla, here. Roth. Seyarto, here. Smallwood-Cuevas, here.

Excellent. We've established a quorum, so now we can begin our formal process. We will now hear from Erica Lee from the Department of Finance on AB 100, which is the cleanup for the Budget acts of 2021 and 2022.

Ms. Lee, thank you. Good morning. Chair Skinner, Vice Chair Niello and Members of the Budget Committee. I am Erica Lee with the Department of Finance, and I'm here to present on a suite of bills for your consideration for early budget action beginning with AB 100, which, as the chair stated, this is a budget Bill junior that amends portions of the 2021 and the 2022 Budget act. Budget acts.

Specifically, this Bill includes a $15.4 million for Cal recycle for cleanup and debris removal activities associated with the Mckinney wildfire. It specifies an additional 4.4 million nonprop 98 General Fund and 5.3 million Prop . 98 General Fund that it may be used to support the extension of family fee waivers from July 12023 through the end of September of this year. 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.

Got it. Members, any questions on this cleanup part for 2021 and 2022 budget acts? Yes, Senator Durazo. zero, no. Okay. All right, great. So seeing no questions, we will move on then to AB 110, which is the early childcare and education action. Go ahead, Ms. Lee.

Thank you. AB 110 is a Bill on early childcare and early education this Bill authorizes the California Department of Education as well as 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 112,000,000 federal funds balance is available for the Department of Education to distribute temporary stipends to preschool providers, and an estimated 159.1 million in federal funds balance is available for the Department of Social Services to distribute temporary stipends to childcare providers. Without the statutory change, these federal funds would otherwise go unspent and be returned to the Federal Government.

And lastly, this Bill extends the waiver of family fees for state subsidized childcare programs and the California State Preschool program from July 12023 through the end of September of this year. Happy to take any questions from the Committee.

I'm sure there's going to be some questions, but let me just make some comments. But also, before I make the comments, let me just ask. I know that our childcare union is in negotiations now, and this action includes stipends.

And I guess I want to know from you, do any of the actions that we are taking today to use these ARPA monies, are they going to affect, in other words, does the Administration see these as replacing anything that we may be negotiating for our June budget?

This is a separate and independent action, and it is for a bucket of funds that would otherwise, if unspent, be reverted back to the Federal Government. So we don't want to leave any money on the table. And that I would say this is a separate act to what is happening at the bargaining table.

Okay. Appreciate it. I know that at least the democratic Senate plan has strong advocacy for rate increases. And I asked the question because I wanted to make sure that our approval of this money that I understand now what otherwise we would lose to provide the stipends, which is something that we, as a Budget Committee, prioritized during the pandemic to provide our childcare operator stipends because so many of them, in effect, they had to stop operating. They didn't have families paying because we shut down.

So these stipends were to help to bridge that. And it was both the Federal Government's purpose for approving the money and our intent for accepting it. But I just wanted to clarify that our action now, while it stems from the pandemic and is utilizing these federal funds, does not affect either our negotiations with the Administration on our budget position around rates or the care union's negotiations.

And chair Skinner, I would just add that these funds have been obligated specifically for stipends and slots versus more ongoing rate discussion.

And that was also under federal rules, correct? Not just the states.

It is what we as a state obligated those funds for to the Federal Government last year upon receipt.

Okay, great. Let me see if there's a yes. Senator Menjivar, thank you so much.

Good morning. Question to either DOF or LAO. How much federal funding do we have left over from our ARPA funds that can go into childcare?

The funds that are under this Bill are. It's about 112,000,000 federal funds.

On top of that, that's the one that is a potential of being clawed back. Do we have another leftover pot?

I will have to call for assistance on that.

Jackie Barossa with the Legislative Analyst Office. We would note that there is a bucket of funding that is set to expire September 2024 that is being primarily used, if I'm correct, for slot increases. Those funds aren't impacted by this early action item. The funds that are impacted by this early action item are those that expire September 2023.

So the Legislature would still possibly need to make decisions on how to expend any freed up funding from that September 2024 bucket, and there's time to do that through the normal budget process.

Do you know how much we have left in that 2024 bucket after this is utilized?

That's dependent on slot takeup rate, which our understanding is it is slower than expected. We are not familiar with current estimate of those funds. Our office is working on a broader estimate of that, and hopefully we will be able to report back soon. But I would defer to the Administration on any estimates that they have for that particular bucket.

Gabby Santoro, Department of Finance just want to add that the Administration is working continuously to make sure that we are maximizing use of all the federal relief funds that were awarded to the state. And as part of our forthcoming proposal for the May revision to the Governor's Budget, we'll be proposing any funds or any balances that we have uncovered to make sure that we're spending every dollar that we were awarded.

Thank you so much.

I have a follow up question to that. So when in Department of Finance can answer or Lao, when you reference that this money, this bucket that we have available until 2024 is for slots, is that a decision that we made in our Budget act or a requirement of the feds? I guess the implication of my question is thus do we have flexibility on it for repurposing it, for example, for other childcare needs the Administration.

Correct me if I'm wrong, but the obligation date for that, I believe, is September 2023. The decision to use that particular bucket of money for slots, that was a state decision. To the extent that obligation could change, our understanding is we have until September 2023 to lock in those obligations.

Okay, to elaborate on the Lao's comments, just affirming that the obligation deadline is this September. So our proposal is essentially the way that we can make sure that we're not letting those funds revert.

But this proposal that we're dealing with right now is not that bucket. It is different.

The bucket that is proposed as part of early action, that is what is expiring September 2023.

Right, but the 2024 is what we were asking the questions about.

Zero, apologies my misunderstanding. The Administration had worked with the Legislature to have initial allocations of all the federal funds that were awarded based on whatever the federal requirements are. These different pods have different ways that we can use the funds. What we plan to present is any balances that we've uncovered based on the ways that the Administration and Legislature had agreed to allocate these funds. If there are any balances, we would reallocate those so that we are meeting the September 302024 liquidation deadline.

So do we expect that we would take that action given that it has to be allocated or appropriated by 2023? That we would. September 2023? That we would take that action on this second bucket that is available to us till September 2024? That we would take that action in our June budget adoption?

That is correct.

Okay. So at that end, these negotiations between now and then, we have some ability to discuss what is the appropriate direction or use to those funds.

That's right. You should be receiving that in our may revision soon.

Okay. All right. Other questions from any other Members on this childcare bucket item? Okay, I know our questions just now were all about money that is not before us. What we are dealing with now is just the money that would waive family fees and provide the stipends, and is money that we will no longer have access to from the feds unless we act now. Okay, so now we'll go to our next item, which is AB 111 and it is on the excluding our student loan debt relief from personal income tax.

Yes. Thank you. AB 111 is a Bill that provides tax relief to Californians who had student loans or fees discharged as part of financial relief to individuals impacted by economic hardship from the Covid-19 pandemic, specifically under the American Rescue Plan act, or ARPA, federal law exempts laws exempts loans discharged in 2021 through 2025 from taxation. And this Bill would allow the state to provide the same tax relief at the state level.

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. This Bill also exempts from state income tax community college fees discharged under the Covid-19 emergency in taxable years 2022 through 2026.

And finally, the Bill clarifies that the 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. I'm happy to take any questions from the Committee.

Great. Let me see if there are any questions from my colleagues. No questions. Go ahead, Senator Niello.

I'll be supporting this, but I think it's important to point out that we really don't know what the fiscal impact is because it will change significantly depending upon a Supreme Court decision. Correct?

That is true for the Biden Harris debt cancellation. But under the ARPA federal law exemptions, we don't expect this to have a large or significant revenue impact on the state.

The forgiveness of the student loans as proposed by the Biden Administration currently before the Supreme Court, you do not believe that will have a significant.

No, I'm sorry. Under the ARPA Rescue Plan act, the federal law exempts loans that were discharged. So it's a separate set of loans. But the Biden Harris program, as you mentioned, is on hold. And so at this point, the expectation is that it could provide relief of up to 1.3 billion in tax relief for Californians because we have about 3.5 million Californians that would be eligible. But again, as you stated, this is on hold indefinitely.

We are approving it, but we don't know what the fiscal impact is.

We have an estimate that it would be less than 1.3 billion. Billion.

Do some follow up on that. And obviously, as our Vice Chair pointed out, the full relief that has been proposed by the Biden Administration is now being held up in the courts. However, there was relief that was provided during the pandemic. So this at least makes California, which we otherwise, without acting, are not consistent with federal law for those people that did access that relief on student loans during the pandemic, that they would not have that state tax obligation. So it does make it relevant to acting. Now, is that a correct statement?

That is correct.

Okay. All right. Department of yeah, I just want to add to. Mr. Senator Neil, please identify yourself. Sorry. Colby White, Department of Finance. Senator Neelo's comments. So the budget, we don't currently have any, because the Biden Harris plan is not current law. There's currently no recognition that we would receive any revenues as a result of forgiving that student debt. So that's the baseline where we are right now.

And just to point out that, as Miss Lee mentioned, we do expect this to provide up to 1.3 billion in relief to taxpayers, but the actual revenue impact, if we were to score it, would be significantly less. There's many borrowers that would qualify for an exclusion based on cancellation of debt income when their assets do not exceed their liabilities or their liabilities exceed their assets.

And secondarily, we expect this conformity is very important because taxpayers, the Federal Government has indicated that they will not be issuing 1099s. There will be a lot of confusion and therefore it's not clear how taxpayers would respond to not getting in a 1099 and what they would actually report on the tax return.

All right. Any other comments or questions? All right, we will then move to our fourth item, which is AB one. One 2112 on the distressed hospital loan program.

Yes, AB 112. 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 allow and maintain access to care, particularly in rural and disadvantaged communities. It establishes the distressed hospital loan Fund and authorizes the Department of Finance to transfer up to 150,000,000 General Fund to that Fund to be available for this particular program.

The Bill requires the Department of Healthcare Access and Information, or HKI, and the California Health Facilities Financing Authority, CHFFA, to develop a methodology to determine eligibility for this program. This 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 Committee, as well as relevant fiscal and policy committees of the Legislature and regarding other accountability and transparency measures. This 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, similar to other programs regulating sensitive information, and it also authorizes the state to require any hospital with outstanding loans for a year to provide an independent audit of its operations. Lastly, this program will sunset on December 31 of 2031. We're happy to respond to any Committee questions on this Bill.

Great. I think there will be some questions. Senator Menjivar, Senator Padilla, Senator Laird, and Senator Durazo.

Thank you, ma'am. Chair. I understand CHFFA is going to put out the eligibility. Quick question, if we've thought of it already, how many hospitals this will help? And second, do we anticipate with the sunset debt of 2031 that it's going to take us that long to distribute the one hundred fifty million.

I will respond to your first question and then turn it over to my colleague. In regards to the number of hospitals helped, I think it's a short term fix to a longer-term problem, and at this point, the one hundred fifty million. And the reason for going through early action is to address immediate concerns, immediate needs of certain hospitals. And there will be a determination of eligibility from both HKI and Chafa in regards to the needs of the hospitals and the priorities of those hospitals.

So can't give an answer to the question of the number of hospitals, but the idea is to address immediate, urgent needs now versus waiting for July 1 to come.

But at least we may have an understanding which hospitals those are.

I think based on the eligibility requirements and the different factors that HKI and CHFFA are looking at, we may have a sense. I can't speak to the specifics on that. And in regard to your second question, I'll turn that over to my colleague, Adam Dorsey.

Adam Dorsey, Department of Finance. So the language allows up to 72 months to repay the loans. But this is a bit of a fluid situation, and every hospital situation may be a little bit unique. And so, it's unclear whether hospitals will need the 72 months, but that's sort of the framework that the language sets up.

Thank you.

So the 2031 is just the date they have until they can pay it back, not for us to disburse the funds.

They have 72 months from the time that the loan is issued to repay it. The sunset date is just sort of in recognition that this is, as Ms. Lee mentioned, a temporary program to get us through this period, to kind of make a determination as to how the state should proceed on an ongoing basis.

Senator Padilla.

Thank you very much, Madam Chair. The Administration requests the Bill to authorize total transfer authority up to 150,000,000 through 24. They provide any analysis as to whether, as to the sufficiency of that number in the near term, given the substantial acute distress that some of these delivery systems find themselves in, particularly in rural and underinvested communities. Is there a methodology that they utilize to arrive at that authority request that it would be sufficient to cover demand? Can somebody address that?

Thank you.

Sure. Senator Padilla, Erika Li with the Department of Finance. And going back to my comment, we are, and adding a little color, obviously, we're facing fiscal constraints at this moment, but we also understand that there are needs at various hospitals to address some of their financial issues. And so, one hundred fifty million is something that we believe we can absorb at this time. Further discussions on additional funds I think will be necessary beyond this time.

But that is, trying to address an issue during fiscal constraints is always difficult because you're always balancing lots of priorities. But this is obviously a priority of the Administration, to the Legislature, to communities. And so we are trying to address that urgently.

Understand and appreciate the work. I think you're speaking to the capacity and the relative sort of priority setting that on the budgeting side we have to address as the Legislature. That's distinct from sort of a thorough analysis on the demand side of what the extent and nature of the capital assistance required and how we prioritize what system is in the most dire need visa vis other systems. Seems to me we want to be strategic about that as well.

And so that analysis is ultimately really important as well. And I would look forward to understanding more as we kind of evolve the process. Thank you, Madam Chair.

Senator Laird, thank you very much.

Let me just ask a threshold question, and that is, as you're talking about a short term, is this really stressed hospitals right now? And do you think that in the budget process in June we will talk about either a larger amount or a longer-term fix? This just gets us to the budget. Is that the intent of this item?

Well, as noted, the sunset is through December 31, 2031. We believe that is short term because it is a problem that will take.

No, I get that completely, but this isn't your idea that this is the total response to the distress that this is getting us through the short term, and we're going to have a talk about this in June about whether there's a lot more to do.

Yes. And as mentioned, this is to get us through this act.

No, I know I asked if it was short term, and I got an answer about 2031 or whatever that was. I'm just trying to figure out if this is short term and we can.

Have a look and definitely more discussions.

Need to occur for I have a more ethereal question, and basically it's about the guardrails on this and it says there's plans, but it's about how you judge the plans and how you act on the plans. And just to use three examples, it's last year I worked really hard on saving a hospital, and they had a very clear plan of what it took both an operating deficit, getting to a thing, moving to public an amount of money that would help them there.

And then it was purchased, they renegotiated their provider agreements. They're on the path to sustainability. And it was a little state support and a big community effort. Then there's another one in my about to be district that is going under, and they're not being really transparent. They sort of want money for a two month period. And basically it's so that we can ask for more money in two months. And it's ostensibly about the same level of service. And then they close clinics during those two months.

And to me they've not been transparent, and they don't have a plan for getting there. And then there's a third hospital that people are familiar with on the dais that just closed without sort of doing some of the things they could do to remain open. And now it'd be a much bigger hill to get them to reopen. So all three might be qualified even under this, even though one of them is pretty much on the path to sustainability without this. So how do you decide?

It says they have to submit a plan, you have to determine viability, but you got all these factors about that it's just temporary or it's not really sustainable or they're cutting the level of service. How do you decide in a priority about where to put money and where's the guardrails on this to make sure they truly have a plan to sustainability.

And we are supporting that because it seems to me that if you look at page six of the Bill, it's make a determination about what plan is viable and it's have a strategy. Here are the factors. Somebody's going to have to decide, and it's unclear how it's going to be decided. And so that's very important to us in deciding whether or not to invest anything in this. So how would you respond to that?

So, yeah, there's sort of a tradeoff between sort of urgent need and wanting to act quickly because we know that there are a handful of hospitals that may need relief quickly and having everything lined out exactly the way that we all would like and that the Legislature would like at the outset. And so the trade off here is that we've tried to outline a framework as much as possible. That gives some flexibility for Oshped to develop rules and create some of the details around that.

So I think that's sort of the trade off here, is that it's difficult to say, and also because we don't have insight into every hospital's books necessarily at the outset, that there'll be some sort of process developed for the Department that they can make that determination on a case by case basis.

Well, when you say you don't have insight into their books, it sounds to me like you're almost setting up a situation. This is urgent. We're putting too much money in two months money in, and then we're finding due to their books that that was money down a rat hole because there's no path to sustainability. Does that sound like that's a possibility in this?

I'm sorry, Senator, I should have mentioned that as well, is that there does need to be a path to sustainability as part of the application process. And I believe there is mention of that in the language as well.

And don't get me wrong, most of these hospitals that are distressed are rural. Most of them are in disadvantaged community. A lot are in disadvantaged communities, and a lot of them are due to their mix of payees. And if it's overwhelmingly public payees, it's overwhelmingly disadvantaged. And I know in the budget, we're not talking about it here, but if that tax is restored on a Medi-Cal that allows for an increase in medical rates, that'll be something that helps hospitals.

There are some other things that might make it work. But the hardest thing I've discovered, because I spent six months working on saving a hospital last year, they wanted to help themselves. And in wanting to help themselves, they had a plan. They had the community behind them. We knew what we had to do. And there's some that you don't get a feeling, totally have accepted the fact that they want to help themselves. They're not being transparent.

Nurses are standing at podiums, at hospital meetings and saying, we don't understand what the financing is here. And it's how we exact that from this process is, I think, my concern to make sure that what's missing in people wanting to help themselves. So I know some of this is very ethereal, but it's just how does the system get at it?

And I really appreciate this, and I think in some ways, I'm not sure that there's anything to do different about this Bill, but it's to recognize that that's a concern and it has to be acted upon. In this, because I think the previous question about how much is going to what hospital will obviously be determined by these plans. But if we find out 75 million has gone to one hospital, they really weren't on a path to sustainability.

And a lot of small rural hospitals require a lesser amount, and they're not getting it. Those are some of the balances in this that don't totally work. So I just felt like I needed to make those concerns.

And I think when we have this discussion in June, because we are looking more long term, I'm hoping we have a little bit of a track record on this money to start to tell us what was necessary, how it went out the door, what we were missing in plans, what you needed in authority to really take a good fiscal look at this so that if we are looking at a longer term one, we can build those things into the next steps. Thank you, Madam Chair.

All right, let me just let you know who I have on the list so you can feel comfortable. I've caught you. I have Senator Durazo, followed by Senator Caballero, Senator Dahle, then Senator Roth and Senator Seyarto.

Senator Durazo.

Thank you, Madam Chair. First of all, I do think this is an important proposal to help address the access to care. I want to make sure that the Legislature is made aware of where the money is going and if the limited public dollars that we have right now are going to actually preserve access to care. And I just want to say, from the onset, I appreciate a number of meetings that Senator Caballero made to have the conversation.

Because while we want quick relief, the trade off should not be that we're just doling out money. Who knows how much, to whom, for what reason, and where do we end up. So I have a number of questions around those concerns. Could you describe what the transparency of this program is? What are the steps being taken to make sure that there's full transparency here?

So there's a couple of things here that I think really kind of encourage transparency, and one is JLBC notification. Anytime that there's a modification or forgiveness made to any of the loans, I think that there's an audit requirement, the Department may request audit. So I think that there are certainly attempts here to try and be as transparent as possible and sort of signal that we're partnering with the Legislature in trying to administer the program transparently.

Yeah, that's not a requirement. I mean, just to give notice means we find out about it after the decision is made, not beforehand and not to influence. To me, that's not transparency. It seems to me that, since the hospitals are required to submit this financial viability plans to HCAI, that those plans should be available to the public. And it's the public's dollars we're giving out up to $150 million. Who knows how much more after that between now and 2030, 2031. And so, I'd like to hear about that.

That this would be something made available to the public, so that we know how and what is being considered to make the decision as to how much is going to which hospital. And I'm concerned because, while we have a very urgent need right now, question is, are we just, again, just giving out money without really providing a strong case for who gets that money? So that's just one issue. And I think also the information that extends to, you'll be getting hospital financial and utilization data.

That's part of what comes here. But again, I think that should be made public. I don't see why the public shouldn't have access to that kind of information. And then why only notice to the Legislature? Why not approval?

Yeah, so I think this is kind of similar to some of the earlier discussion around kind of balancing a desire to help quickly where we have a crisis situation and have kind of full transparency. And I think that what we've tried to do is structure the language in a way that's sort of consistent how we handle other sort of information that the state wouldn't necessarily always have access to, confidential financial information of a private entity, and trying to sort of be consistent in this process as much as possible with other processes. But certainly this is something that we want to engage the Legislature in. And if there's changes needed in the future, I mean, that's exactly the sort of way that we would want to engage the Legislature in figuring out how to improve the program over time.

Okay, well, I don't hear, the case wasn't made to us with real information, with real evidence of how big or how small or what the size is of the urgency. I don't hear that being presented to us. You start with the point of there's an emergency, there is urgency, but we don't get the information to back that up. We don't know how many hospitals, because certainly there's a lot of hospitals that are doing well. We don't know how many hospitals. We don't know which hospitals.

We don't know which areas those hospitals are that would be considered. We don't know anything. And now we're asked to approve $150 million to be doled out without access to plans, without access to the finances that would back up, that would give us the evidence to that, to feel comfortable with this. And we're saying this should go all the way till 2031. Is that $150 million every year, or potentially every year? What does that mean between now and 2031? But really, we're being asked to approve of something where the case has not been made.

That one's gross.

Other than we hear. We read an article, a newspaper article about a hospital closed, and then the sky is falling. Where's the evidence to back this up?

This is a very challenging question to answer. I think that we are in a similar position that you are, in that some of this is sort of self reported, with the exception of when the hospital actually does close. And what we know is that we have network requirements that are there to protect patients and make sure that we have an adequate network for a Medi-Cal program, in particular. But commercial plans have similar requirements.

And there are certain hospitals that are really important to having that network in place. And if one of those hospitals were in danger of closing, we feel like this proposal is designed to step in and assist in a case like that. It's not meant for sort of broad based sort of handout to private businesses. And so I think that's sort of the balance that we're trying to strike, is stepping in where that network really needs to be protected.

And the hospital that's coming in and applying can demonstrate that there's sort of an imminent need. And until we're in that position, it's very hard to kind of do some sort of a survey and make estimates around kind of what we think the total need may be over time.

And the 150 million, how much more could that grow between now and 2031?

Right now, the proposal is for a one time $150 million investment, and I think that we will have to work with the Legislature to figure out how to proceed going forward after this investment is made.

I'm sorry, just one more. Could you explain when it says continuously appropriated?

So just mechanically, the way that the proposal would work is that we would transfer $150 million into this fund, and then the fund is continuously appropriated so that as repayments are made to the fund, you could conceivably loan out from there without having to come back for an additional appropriation. And so that's sort of the kind of technical budget structure of sort of.

Just to clarify, Senator Durazo, it does not mean that there would be 150 new GF again and again and again. It's the point that he made. Since it is a fund that we're establishing for that specific number of years, the continuous appropriation allows you to have it established for that number of years, plus to reappropriate if you receive money back from a loan. Do you have any additional questions?

Not yet. Go ahead.

Okay. No worries. Yeah, go ahead, go ahead.

And with regards to the information and the transparency, I also think besides the public, also, the employees of those hospitals should have access to the information, since they're employees, and they should have a say as to what's going on. They should have a say as to what their opinion is. They're the ones who work the hospital. They know what's going on. Nobody could cover things up to them. They know exactly what's going on, and I think they need to be a part of the process as well. Thank you, Madam Chair.

Certainly. Senator Caballero. And that will be followed by Senator Dahle.

Thank you very much, Madam Chair. So, sheesh. Where do I start? I have the unfortunate privilege of having a hospital close in my district in Madera, in the County of Madera. And basically, we've eliminated a whole opportunity for people to be able to access health care within their community, and they have to drive at least 30 miles away in order to get care. People have died in route. They have died in route. It's not an easy trek to go to Fresno or Merced.

So let me just say, I've been living this day and night since that hospital closed. I was told by the Hospital Association there were eight or nine hospitals that are at risk of closing this year. If you don't believe them, fine. That's okay with me. The bottom line is, I have a hospital that's closed. And Senator from Santa Cruz discussed a hospital that is part of the district he represents, but he doesn't represent that hospital yet.

Well, that was in my old district, and I've been asked to continue representing that district. And that hospital is teetering as well. So two hospitals in two counties that are very high, Medi-Cal and Medicare operated. And that means that there will be no hospitals in those counties if they go down. So I believe the eight or nine hospitals. And next year, there's another seven or eight or nine hospitals that will closed if we don't do something. So inaction is not a solution, number one.

Number two is that, I got a group of us together that were at risk of losing a hospital this year. And I should have started off by saying thank you to the Administration for this proposal, because it's exactly what we need right now. It is not everything, and it's just the beginning. It's antiseptic ointment on the cut. We haven't even started with the band aid.

Because if you think about what a hospital does, and the exodus of doctors and trained professionals that can provide healthcare when a hospital closes, it's an incredible drain on the community, and you'll never get it back again. It will be impossible. So here's what this group has been, this has been a Senate exercise in terms of trying to figure out what are the pieces that we need to put together. We have added millions of people to our Medi-Cal system, all for really good reasons.

But the bottom line is, we haven't changed healthcare at all in order to accommodate those extra people. And there are people that are used to utilizing the emergency room as their primary care provider. So it's an incredible stress on the hospital system, and then you add Covid and everything else with it. So here's what we've been talking about.

Number one is we need a permanent source of revenue to help us to ameliorate the impact of Medi-Cal on our hospital system, so that they can set up clinics and do as much triaging back to the clinics as possible. So you keep the hospital as an emergency care provider. So that's the discussion around the MCO tax that we have not had, we will have it during the budget. That tax will bring in additional federal resources that we desperately need to match our resources.

So that's going to be really important. And that MCO tax has the ability to do a number of things that will help our healthcare system, like take people out of the hospital settings that are 5150, that are brought in 5150, because people have seen what happens when you mix populations in the emergency rooms that are very small, and they're not capable or set up for all the 5150s we're bringing in. People coming in in significant mental distress.

There's a possibility of doing scholarships for doctors and nurses so that they can pay down their expenses, and we can bring some much needed services to communities that don't have doctors and don't have a number of nursing opportunities. And we can make them part of a teaching experience at these hospitals. And potentially we can use some of the funds for earthquake safety, which I know all of us are really concerned about as well, and that the hospitals just don't have the capacity to fund right now.

So there's a number of things we can do with the MCO tax. But back to this $150 million. One of the solutions that was talked about by this Senate group, for lack of a better word, and we met with everyone that was interested in meeting with us about this issue, is to set up a process very similar to what we do when our schools are in distress.

If you have a school district in your district that has financial problems, administrative problems, or board problems, then there's a distress call that goes out to the County Office of Education, and FCMAT comes in, and they do a thorough analysis of all of the working relationships in that school district to determine whether they should get a state loan and whether there should be a takeover of the school, quite frankly, which is the most significant and severe action that could happen.

We're talking about doing that in this setting as well, where there's a FCMAT kind of process. They come in, they take a look at the books, they take a look at the board minutes to find out if the board is assuming responsibility for the fiscal oversight or are they just a rubber stamp.

And they look at the administration to determine whether the administration is capable of a recovery of the hospital, so that we're not throwing good money after bad, and we're doing everything we can to try to save hospitals. And, as a footnote, our UC system is very interested in talking about partnerships because we desperately need hospitals that can do training, and we don't have enough. And particularly in communities of color, we don't have enough. And so there's a really good possibility that down the road.

But here we are trying to fix an engine of a plane that's up in the air. Does it look pretty? No. Are you going to get every single assurance that you need that every I would be dotted? No, but we got to move. Because we have other hospitals, and I'm sure you're going to hear from some of the Senators that have been with me on this Committee. We have other hospitals that are at risk.

The minute you send out the notice that's required by law, that you're going to close within a certain number of days, boom, your hospital, you see people leave. They don't want to be the last person on the ship going down. They want to make sure they have a job, and I don't blame them. But that's one of the reasons you don't have a list in front of you, because the minute that list becomes public, we're in a world of hurt.

So I just want to say thank you to the Governor's office. This is a really important first itty bitty bitty step. We're going to be back in this budget looking over all this stuff all over again because 150 million is a drop in the bucket. These costs are very expensive. It's very expensive to rent a hospital. And the minute you have a hospital close, it's going to take, there's all kinds of problems. I was just looking at the bankruptcy notice that was filed.

Well, there's a bankruptcy hearing on May 9, so it was just filed. It doesn't have the stamp of the court. You don't want to look at that, friends. You don't want to have to be looking at bankruptcy papers for a hospital in your district that closed. And that is risking the lives of people in your community. So thank you to the Administration for that. And the reason they don't have answers is because we're still working on some of this.

It's a three party agreement with the Assembly, the Senate, and the Administration. And I really appreciate the Administration's swift movement on this because we've got to show some leadership in this. Thank you, Madam Chair. I don't have any questions.

Certainly, Senator Caballero. Senator Dahle, followed by Senator Roth, followed by Senator Seyarto, followed by Senator Grove.

Thank you, Madam Chair. Thank you to the Administration and those that are here. I'm happy that I'm sitting right next to my friend who I've been meeting with for now since we came back to session on this issue. And I just want to start out by saying, the Chair opened up our meeting with this is a Democrat plan. And I hate partisanship because these are real problems that have to happen.

And typically, we don't get to the table very often as our side of the aisle to actually talk about these issues, because I've been working on this for some 10 years now with rural hospitals in my district that have been facing these same issues about Medi-Cal reimbursement rates. And I've been trying to keep them together. And I represent all kinds, district hospitals, where we actually pay a property tax to have a hospital. I have nonprofits. I have for profit. I have them all.

And I want to just give you a flavor of the difficulties of what we are dealing with here. First of all, thank you to the Administration for coming to the table and giving us, actually ointment. It isn't a band aid. It's a thumb in the dike, because we have huge problems in this area. And I want to take this opportunity, Madam Chair, to just let out the problems that we're going to be faced with in two months, because I won't be at the table with the Governor and the Democrats talking about this. So this is my opportunity to say what I think needs to have to happen.

First, we should know that in 2010, we gave about 18 and a half billion dollars out of the General Fund, and we're giving out $35 billion today out of the General Fund to help Medi-Cal and Medicaid reimbursement rates. 8.4 million Californians in 2010, or 23% of them, were enrolled in Medi-Cal. We are on a pace that's extending that by much. 15.5 million Californians are now getting Medi-Cal, using Medi-Cal. That's some 40%. We've added undocumented.

We've added all kinds of people, which this Legislature did without increasing the rate which hospitals get reimbursed, 74 cents on every dollar they spend. You cannot run a business if your reimbursement is 74 cents and you're spending a dollar. That is the fundamental problem with our healthcare system. And there are a lot of legislators who are focused on one portion of it. Maybe it's labor, maybe it's some hospitals don't do a very good job and some do better jobs.

But at the end of the day, you can't run a business losing 26 cents on every dollar you spend. You want to talk about difficulties? I have hospitals now in my district that don't deliver babies. In some cases it's 150 miles you have to drive to have a child. And those are poor people who don't have public transportation and don't have cars. So you want to talk about disadvantaged communities? I have them, and we've been dealing with this for some time.

Now I'm going to talk about some of the fixes that I think need to happen when you have those discussions. Number one, Governor Brown, we did the MCO tax. I voted for it as a Republican. Got slammed by Howard Jarvis and all the people that don't want taxes. But we actually got money from the federal government, and the plans did not want this to happen because they have to pay. Now, I voted for it. We got AB 97 clawbacks which helped my little hospitals.

That money they already spent, had to pay back. But the money went to the General Fund. The money that we gained went to the General Fund. And Governor Brown and all of us spend it on whatever we want to spend on. We need to do the MCO tax again.

We need to have the plans at the table, and we need to give the money to healthcare, where it should go. And help drive up the reimbursement rate so you don't lose 26 cents on every dollar you spend. Number one. And I'm going to talk about something else that most people don't like to talk about. Kaiser.

You don't hear Kaiser in here because the Governor did a no bid contract or basically he negotiated the deal during COVID, and Kaiser got a sweetheart deal. And then, a year later, the Legislature came back and ratified his deal. So now it's law. But Kaiser is pirating off of our rural hospitals and our other hospitals and taking all the ones that make money on and leaving those other hospitals to pay the bill. So that is exactly what is happening here.

I want to thank the Administration for coming to the table to help put a band aid on an issue that is huge. The Hospital Association came in with saying we need a billion and a half dollars this year to cover the cost to keep these hospitals open. So we have a lot of work to do. This needs to be bipartisan, which it is in our working group, and we're talking about some of the issues. But this is not going to go away.

This is going to be here for some time. Until we figure out a funding source to reimburse a reimbursable rate that actually keeps them in business. So that is the bottom line. We can't give some hospitals, Kaiser and those, better deals and pirate against our other ones doesn't work. And so I'm here available at the table and I've been working on this for many years. And it is difficult. And until we get that changed, we're going to be in the same place.

And you can't continue to add people to the rolls and not figure out a way to balance the checkbook at the end of the day. So those are my comments, Madam Chair. Thank you to the Administration for getting us, at least, to have this conversation. Because it's not going away. It's literally more than, it's billions and billions of dollars a year that we have to figure out how we're going to fund or we're going to see all of our hospitals.

And the last thing I want to say is that we have hospitals that are trying to do seismic retrofits. I got on a zoom with every single hospital in my district, and some of them are worried about they're keeping the doors open while they have a seismic problem at the same time. I said don't worry about your seismic because if you don't have a hospital, you don't have to worry about seismic. That's the end of my story. I'm here to help. This is complicated.

It's not easy. But we need to talk about the real things that are happening with our hospitals. And it isn't just one problem, it's several problems that are stacked on top of each other. Thank you, Madam Chair, for allowing me to expand my thought process.

You're welcome, Senator Dahle. Senator Roth.

Thank you, Madam Chair. First, let me say, obviously, this is a critical issue, particularly critical for some of my colleagues in the Central Valley and in the northern part of the state. But there are also issues in the southern part as well. So Roth will be eye on this, and we'll probably have to do this again, I suspect, and Roth will be eye on that one, too. But having spent a couple of decades on one hospital board or the other before I got up here for this gig, I guess I have some questions.

I'm usually used to more specific plans and analysis in terms of the fix because putting money into a problem, while it may keep the ship afloat, unless there's a plan at the end, whether it's version A or the next version that follows, all we're doing is postponing something that we don't want to see. People in Senator Caballero's district will continue to be harmed. So have you taken a look? We've been talking about 12 or 13 hospitals. Maybe it's 15, depending on who's talking and what they're talking about.

Because I will, Dr. Lawson.

Have you taken a look at, to see what the common cause, if there is a common cause, for the hospital distress in this particular situation? And if so, what did you find? And I'm asking because obviously California Hospital Association is in the mix, and of course, with California Hospital Association in the mix asking for a fix, it shouldn't be quite so much of a problem to get a look at the books. And if someone rolls into bankruptcy, everybody's going to get a look at the books.

Senator, that's a good question. We know what the perspective of the industry is, and we have been talking to them, of course. I think that every hospital is a little bit different. I think it does make an analysis somewhat challenging. But, certainly, I would say that we look forward to learning more as this program rolls out and we have access to more information. And I think that in the future we'll have a better answer to that question. And if helpful, I think that we can circle back with some of the program experts that evaluate some of the data that we do have access to and maybe provide a little bit better answer.

But, I mean, we can multitask up here, I think. They say not to do it too much, but shouldn't we be taking a sample of these hospitals and doing an analysis to figure out what would we need to do? What would the Administration need to do in order to try to right the ship? Is it a Medi-Cal reimbursement rate increase, and if so, how much of a reimbursement rate increase for these rural challenged hospitals? North, central, or maybe south, for, certainly south, as well?

If so, how much of a Medi-Cal reimbursement rate increase or would an overall rate increase do the trick? I suspect not. Are these because of our rules on licensing hospitals that require emergency departments and full service lines across the board in areas that probably can't support full service lines in a full scope hospital?

Should the licensing rules be changed for these hospitals to provide standalone emergency department ambulatory care facilities with 23 hours beds and a whole variety of other things where you could triage, treat, and transfer as appropriate, or triage, treat, and send home or keep for 23 hours? I would think that as part and parcel of this, we would do some larger scale analysis. Because we're going to be talking about an MCO tax. Okay, but that's the tax, and that gets the money in the pipeline.

What do you do with the money once it's in the pipeline? Are we going to just figure it out later? Those are a series of rhetorical questions, but perhaps you could find a real question in there and give me some comfort.

I think that my sort of response is, I want to risk not having, like a steel man or a straw man, depending on your perspective sort of response, and try to represent sort of what the industry might say if they were here kind of testifying in my behalf. I think that my only response that I think that is appropriate is that the healthcare system is a series of different payer mixes, and the industry may or may not have problems with Medi-Cal reimbursement.

And so you mentioned Medi-Cal rates, sort of across the board rate increases. One potential. Absolutely. That could be one thing. They may or may not be happy with their negotiations with private plans in their particular area. They may or may not be happy with Medicare rates. And so the question that we have to answer then is, what's the appropriate state role, then in this? And I think that there's a tremendous amount of analysis that still needs to be done before we figure out sort of what that long term solution is.

Well, I guess you have $150 million, starting with dollar one and finishing with 150 million to figure it out. But at some point, we're going to have to devote some brainwaves to this, because I think it's going to require a much larger restructure of the way we deliver health care in some of these rural, underserved areas where it's difficult to recruit physicians. They can't survive in their practice environments, it's difficult to recruit allied health professionals, and yet we require hospitals to maintain full service lines, fully staffed in accordance with our staffing ratios, with Medi-Cal rates, because it's largely a Medi-Cal population that are barely sufficient to keep anything open, let alone a full service, full scope hospital. Thank you, Madam Chair.

Thank you, Senator Roth. Senator Seyarto.

Thank you very much. So this really isn't a question of. I mean, the answer is obvious. We need to spend $150 million, or appropriate that, to save some hospitals. The figures we got and some research we did, it's over half of them are in the red in California, and 20% of them are ready to close. And if you've ever been part of watching hospital systems collapse, it's brutal.

Once one collapses, the impacts that made that hospital collapse get passed to the next hospitals on the ring. And then those hospitals start collapsing, and pretty soon you are void of the care and the service that people need in those communities. So for this particular item, yeah, it's a definite yes because it has to be. Trying to spend a lot of time, and I know what you're saying.

By the time you make people go through the process to decide whether they're, or have the investigators decide whether they're being completely transparent or not, you'll find out because they'll be closed, and nobody will be getting anything, and no employees will have any jobs. What we've done to the hospital system, and I say that, what we have done. Because that's what has happened, these are self inflicted wounds. Partially because of some of the things the good Senator from Riverside was talking about.

You know, when we make a policy, when we create a policy that feels really good, part of that policy has to be an accurate analysis of how much money we have to invest to make it happen. If we're going to say, hey, you know what, we're expanding Medi-Cal and Medicare to everybody, well, guess what? There's a cost to that. And if we're underestimating that cost, during the analysis we can't say there's not much of a cost to the state because the hospitals will just absorb it.

They're not going to absorb it. This is what's happening. They can't absorb that cost, and so they're closing, and with it goes the talent that is helping us survive, basically. So that's one of the issues that, when we're looking at bills, we need to know how we're going to fund this. It's not just a matter of this makes me feel good and then put it in and then watch it collapse a system. That will make us all feel bad. Labor costs are part of this.

Not only have we added labor costs, we've added other regulatory requirements that are costing. That we've just said, hey, here's the costs. Absorb them. Well, hospitals can't absorb all of those costs. We're shipping in nurses from, I just talked to two nurses, two traveling nurses. I run into them all the time. But these two traveling nurses came from Alabama. They fly out here, they get per diem, they get premium dollars, they get flown out here, they get a place to stay.

And then after, I think it's six or seven months, it's actually five months and 29 days, they got to fly home, and they don't have to work when they get home because they've made a bunch of money here in California. But they have to fly home so they don't have to be resident requirements and meet resident requirements to avoid residency requirements for California. That's not a way that is sustainable for California's medical system. And yet that's what we have done. We have created that. And Madera Hospital.

They had a buyer. Now, the buyer probably wasn't going to include certain medical procedures, but certainly they were going to be there for people having heart attacks and having babies and having strokes and having all those other things. And it got blocked because they didn't have the one procedure that could be done down the street. It got blocked, and so now they're closed.

So these are the things that are really sticking in the crawl of a lot of people, including myself, as you can probably see. Because I've seen it happen before, I see it happening again, and we're forced to throw bandaids at it. Otherwise, it's just going to accelerate, and we won't have a chance to recover before a lot more hospitals close. But we can't just keep heaping these costs on the hospitals and expecting them to survive.

They can't go from 30% taking care of Medi-Cal patients to 70% in some regions because that's how the demographics work. If we're going to do that, we're going to collapse those hospitals, and those hospitals will help other hospitals collapse. Thank you, guys, for recognizing the urgency, and do everything you can to ensure that the hospitals that need it most are getting it so that they can survive.

We might be throwing good after bad right now, but right now, even that is helping patients that need to be seen and need medical care in the interim until we figure this out. And it shouldn't be that tough for us to figure this out. Thank you.

Thank you. Senator Grove, you're next.

Thank you.

Thank you, Madam Chair. First, I'd like to thank my colleague, Senator Cabiero. I know we're not supposed to name people, but I don't think either one of us, we're going to work on hospital legislation this year. I had my legislative package all filled out, and I think she did as well. And then, of course, Madera and the closing. And then with Madera Closing, and Madera had 150,000 residents that it served. They had 687 permanent layoffs. The main hospital has 70 or more three shuttered satellite facilities.

And the providers have no place to practice medicine, so they're not staying. I mean, it's not like you can fix a broken arm or do surgery in the backyard. So those providers aren't staying. So when we say that it's almost impossible to bring back these providers after a hospital closes, it's impossible to bring back providers when a hospital closes. And the devastating impact that has on a predominantly low income Medi-Cal community.

That's a farming community where farm workers go to get healthcare, that had a huge impact on the Fresno facility that I represent. And then, of course, we talk about Kuya, which was the next hospital in the loop. It was public. They came out. They think they came out at 52 days cash operating dollars left. They have 613 licensed bed, 5200 employees, 700 providers, 73 beds in the emergency room. They're the largest employer in Tulare County that I represent. They're the number one medical enrollment per population.

Over 70% of the people that they treat have medical. 4500 babies are delivered, 112,000 urgent care visits, and 10,000 plus surgeries are done every year. Which brings me to the real elephant in the room. It's been mentioned several times, but nobody's asked that I know of. I know I was a few minutes late, asked the direct question, when was the last time that Medi-Cal rates were increased in the State of California?

So that's a complicated question. I mean, there's increases every year because we have actuarial based rate setting with our managed care plans, and so the actuaries determine the rate increases needed based on the costs that are observed in the program. And so there are rate increases sort of baked into the base program every year associated with that process. And then the other sort of side of that would be sort of, when are there explicit fee for service rate increases proposed?

And that's a matter between the Legislature and the Administration to negotiate every year. And certainly there are packages that we do from time to time, and I defer to others who might be familiar with some of the more recent investments, but certainly those are things that do get proposed often. For example, our Prop. 56 package includes rate increases that are associated with the tobacco tax revenue.

And we recently discussed a managed care tax that would have some ongoing rate increases as part of that, but no specifics yet provided.

Going back to the question for the Medi-Cal reimbursement rates for fee for service, when was the last time the State of California increased direct medical payments? I say it's 2013. Am I correct or not?

I'd have to take that back. I don't recall off the top of my head.

Okay, it's 2013. The last time that this legislative body and the Governor, not this Governor, the previous Governor, agreed on rate increases for direct fee for service for medical recipients. I realize there's all these formulas, and if you treat a higher percentage of commercial plans, you get higher rate reimbursements for that. But the bottom line is that.

It doesn't matter how you shuffle the dollars. Anyone who's in business and roughly pays out a dollar for every fee for service and gets $0.70 back on that dollar, roughly, it's a pathway to bankruptcy. And that's what we have with our hospitals, a pathway to bankruptcy. Kaweah, I think, has less than 20 days operating cash. It is the largest employer in Tulare County with the highest medical. I say fee for service, but medical access to healthcare.

So I now understand that this body passed Medi-Cal for all, and that makes a great statement in the media and that everybody's going to get healthcare coverage. But when you don't have hospitals or providers providing that coverage because the reimbursement rate is so Low, they can't stay in business, then the Legislature and the governor's office need to work together and solve that problem.

I want to say, I am so greatly appreciative of the governor's, of the Governor and working on this and giving us immediately one hundred fifty million, I don't think it's enough. I don't like the idea of the MCO tax being 40% put into the General Fund and not directly to healthcare, specifically to those hospitals that provide medical services. There are a lot of hospitals that are doing very well. Some got a sweetheart deal; some have very wealthy benefactors that set up foundations that make up the difference.

Some treat 60% of commercial plans, a very few percentages of medical. But in the Central Valley that my colleague from the north of the valley represents and the south that I represent and our colleague in the middle here, our reimbursement rate for Medi-Cal is the huge issue that's impacting our providers and our hospitals. We hear that every day. My colleague from Bieber was frantically yelling about that four years ago. Was it three or four years ago? And we did nothing when his hospital closed.

But now that it's affecting the Central Valley, I'm grateful that we're stepping in now. I wish we'd have learned our lesson when his hospitals were closing. I want you to take really into consideration the direct increase for Medi-Cal. And it doesn't have to be, I don't know. I'm willing to talk and work on this issue. It doesn't have to be everything. I realize that's a huge, hefty lift for the State of California, but what about certain codes?

What about the top 25 codes that you go in for? Respiratory issues or whatever, get with the hospitals and the providers? And what's the top 25 things you guys treat for every single day? I'm not a Doctor. I don't think you're a Doctor. I didn't read your resume. We don't know what they treat for every day. So let's find out why. You look at the seismic issues. You look at cost of payroll going up. There's another Bill.

My colleague from Los Angeles has to make the minimum wage, $25. That increases every salaried employee has to go up because you have to pay them double the minimum wage. So if you're paying $40 an hour, basically now at salary, you'll pay $50 an hour. At one of my small hospitals, a very small hospital, 20 beds out in the middle of Ridgecrest, 90 miles from nowhere, that'll add $10 million to their cost.

And they are a financially distressed hospital that are thrilled to death about this loan program that's going through. So, I applaud you guys. I really do. But this is a short term to me, and I want to ask you, this is the short-term solution, right? We have a medium and a long-term solution in the works, correct? Nobody's asked.

I don't think we can speak to future proposals.

You can't. Okay. Well, then I understand. I couldn't understand where my colleague from Los Angeles was going, but if there's no issues moving forward, it is kind of just throwing good money after bad if they're just going to go bankrupt in two months instead of 30 days. So I have to believe in my heart and I trust with what I've heard that there is some type of solution moving forward. That's going to address this issue in a long term way. And then going back to.

I know my colleagues brought up seismic. We had the worst earthquake probably in this decade in Ridgecrest, California, July 5, at, I think, 04:00 in the afternoon, we had a 5.4, and then at 08:00 we had a 7.1. Do you know that the seismic part of the hospital that was retrofitted where they invested billions of dollars and cash strapped? Their hospital was the only part of the hospital that had to be vacated because it wasn't safe to be there.

So this whole seismic thing, I mean, if we can withstand an earthquake of 7.1 and still have an emergency room that operates and gets people stable so they can go 90 miles, we need to really look at the way seismic is affecting our hospitals because it's got a multibillion dollar price tag, and it's almost unaffordable to be able to maintain the seismic requirements that are coming up with a hard deadline.

And then also the reimbursement rates and going through the whole balance of managed care versus the commercial plans versus Medi-Cal reimbursement. But again, I want to finish with the Administration letting me be a part of this process. My colleague from Madera who worked on this, my colleague from Bieber, who came to every single meeting, we met with every stakeholder. And the number one thing, other than one stakeholder was the reimbursement rates are too low.

And now they've increased millions of patients to come into the system with not adequate reimbursement rates. So, I'd like to see that in the future. But again, on where we are in this particular moment right now, I applaud the Administration. I applaud the Governor. He looked me right in the eye when he was on the floor for something, said he wasn't going to let these hospitals fail.

He's keeping his word, and I thank him for that, because this would be devastating to not only my district, but other hospitals around the state that are finding themselves in this really bad financial situation. So, thank you.

All right, I have Senator Padilla and Senator Smallwood-Cuevas very much.

Madam Chair, just to briefly, sort of clarify and return to my earlier area of inquiry and to sort of return to the early action request that's before us. And I appreciate the great conversation, but what's before us on the specific question of the transfer authority that's being requested to support the lending program?

Reason it's important for this member to inquire about the basis for reaching the initial investment in the lending program is because it's obviously directly relevant to both the sufficiency and potentially the efficacy of the lending program as one of many tools that this legislature is going to have to examine in terms of our ability to support what is fast becoming a crisis in the healthcare delivery system. And so, I want to return to that.

I want to clarify that because I heard a lot of dialogue about kind of, we'll figure it out later, and there's an analysis, and it's an ongoing budget process. I understand all that. But the early action request that's before this body is specifically as to the transfer authority being requested for this particular tool. And it's important to understand the basis for that investment, even as an early action, because it's relevant again to the sufficiency of the lending program and how much effect it could possibly have.

And I wanted to clarify that. And I thank you, Madam Chair.

Thank you, Senator Padilla. Senator Smallwood-Cuevas no, I just want.

To thank my colleagues for this conversation and want to recognize Senator Caballero's work on this. And I'm in support of know early action request, as Senator PadilLA so eloquently put it. I think what I heard on the dais today is we have a revenue problem, and I'm glad to hear the commitment to how do we really think about ways to Fund health care so that it really is a right that everyone has access to.

In the State of California, we have so many more folks that need this help and support. We have more and more workers who don't earn enough, whose jobs don't provide adequate health care, who cannot pay for health care on their own for, and are dying, quite frankly. In my district, black residents die 17 years sooner than anyone else in the county from preventable diseases like diabetes and hypertension because there is not adequate access to health care and it's urban and it's rural.

So, I just want to say I've appreciated the agreement and Senator Dahle, across partisan lines, that we've got to figure out ways to pay for the health care that our folks deserve. And I think it's beyond this early action. I think it's a deeper conversation, and I hope that we continue to have these conversations.

I was looking, and I'm also appreciative of the Administration helping to answer these questions and to work through this, because clearly, it's so important to all of us that folks have the right to the health care that they need. But on the methodology, one of the things I was curious about, how we're grading access to these dollars is we have a lot of healthcare workers and more and more, as we're seeing in other industries, this sort of threat of layoffs, of cuts.

Is that an actual sort of methodological sort of focus and prioritization? I don't see it called out specifically in this list, but it's something that I'm curious, can we look at hospitals that are planning to do major cuts to their workforce or who have already laid off members of their staff? I think that is also something that we need to prioritize. For me, recession proofing our state is making sure folks stay in their jobs and keep working and we don't explicitly call that out.

I think that has to be factored in. Also, having worked a lot with unemployed workers and looking at industries that we want to connect workers with, I spent some time looking at the work of previous administrations around how to stabilize an industry to keep workers employed.

Thinking about the auto industry, and I know we're talking about health care, but one of the things that took place in sort of unpacking the saving of the auto industry was a real stakeholder table that was built that brought the employers, the manufacturers, the unions, the key stakeholders around the table to sort of look at how do we actually secure the industry, how do we make it strong.

I know Senator Laird and I have heard from on the education budget sub one a lot about the ways in which we have established sort of these safety net teams that come in and really help to make sure that those school districts and schools that are in trouble, that we are really analyzing what are the things that they need to make sure that they can meet the standards and continue to thrive and grow.

I think too often on the private sector side, we don't do enough to ensure that it's not just the reimbursement rates, but it's also how we operate, right. To make sure that the operations have sufficient input and support to make the changes that need to be made to ensure that the industries thrive. We can't have strong workers or strong unions without strong industry and so we need to make sure that the operations are in place.

So I say that to say is in part of this early action. How is the Administration thinking about the oversight and the stakeholder tables, whether it be representing rural and urban hospital administrators along with those unions or worker representatives to really sit to talk about what are the ways we can work public and private support to ensure the stabilization of this important sector?

Has the Administration required that as part of this early loan program is that kind of stakeholder infrastructure and oversight being put in place for this first step?

Senator, the language does not spell out that sort of framework specifically. However, I think that as some of the more details of the framework are released, we could certainly take that back as sort of feedback and look forward to continue working with the Legislature if there's specific things that the Legislature would like to see as part of those details in the future.

So the answer is no on that at this point, that's a no and no meaning it cannot happen before this early action or no meaning that I'm trying to clarify.

You know, it's, it's, it's, it's a good question. I don't know the answer. And so I think let's just take that back and, and it's something that we'll just have to discuss.

And then to my point about having another underage, another methodology. Thank you. It is a tough word, but adding to the methodology, this whole question of have there been layoffs, are there planned future layoffs? So that, that is also something that gets weighted in terms of who could qualify and be most eligible for these resources. It's something I would like to see in this.

Position. Payments. Senator Danilo.

Thank you, Madam Chair, when I asked you, I said that I would be brief. Usually when one says I'll be brief, that's followed by an endless string of words. I promise I won't do that. In the Sacramento region, we have fairly, relatively healthy and stable hospitals, so we're looking at rural areas. So I sympathize with the challenges that they have.

But if we keep adding populations beneficiaries, and if we keep adding benefits under the current system, I will be empathizing with them in the future because we'll have the same problem here. Unless we are willing to raise rates to cover costs or cut back on benefits, this is going to be a continual problem, and it will gradually get worse. One quick point about the seismic standards. This is another example of the state providing a one size fits all approach to a challenge.

In Sacramento, we have hospitals that will be retrofitting for seismic standards, meeting the same standards as a hospital that sits on top of an earthquake zone. Sacramento is frankly known as an earthquake free zone. It's frankly one of the selling points for economic development, and yet we have to satisfy the same standards as those that are on a fault. So those are my comments. Madam Chair. I hope I was brief enough. Thank you very much.

Thank you, Vice Chair. All right, before we move to the next item, I have a few comments to make. I appreciate the comments and questions by my colleagues. California has had a hospital shortage for years. We're in the bottom five of states in terms of hospital beds per capita. Last I checked, only Washington and Oregon had fewer. We have about 1.8, and that may be even lower now given that some hospitals closed. South Dakota, for example, has close to five beds per 100,000 people.

So who would have ever thought that South Dakota would have more hospital access than California? So this is a long term problem. But of course, there were a number of things that exacerbated our hospital's revenue circumstance or financial circumstance. The pandemic. During the pandemic, most of us, I think nobody here, many hospitals didn't want to give any elective surgeries, but also most of us wouldn't want to go get one. So much of the kind of revenue that hospitals do depend on shut down during that pandemic.

So, there's some estimates that our hospitals lost up to $20 billion during the pandemic. In terms of revenue, whether that's an accurate estimate or not, we know it hit them hard. We also know that inflation has hit our hospitals hard. And, of course, many of my colleagues have mentioned Medi-Cal rates. And we know that is a factor because of the percent of Californians who are on Medi-Cal.

Now, what's interesting is that when you look at where in the state has higher beds per capita and where new hospitals are being proposed, it is all in very wealthy areas. So, it is in areas where the payer mix is much higher, a private payer. So, while certainly Department of Finance comments know private payer, there are some problems there. Yes, there are, but certainly not as large, because why would you see new hospitals being proposed in wealthy areas that are much higher percent? Private payer?

So these are all factors that have to be considered as we deal with trying to. I mean, we need to keep hospitals open. We need it. We already are too Low in terms of number of beds. Now, I did have concern and pause, and I appreciate, look, I know that we have a shortfall, however, to hear that we chose the dollar amount on the basis of what we felt we could absorb versus the analysis of what we feel our hospitals need was a little disconcerting.

There's estimates that 50% of our hospitals, half of our hospitals right now are in the red. Now, being in the red doesn't necessarily mean you're at risk of closure. So getting that real data of exactly the circumstance and also where the need is highest. And again, look, I don't want to ever choose what hospital to save, but do we focus on saving those that are in the areas where there is the lowest per capita hospital access? That seems like a very important criteria.

Now, I would be much more comfortable if we already had the kind of fiscal evaluation that Senator Caballero referenced that we do. For example, when we look at school districts, if that was part of this item, there are a lot of things I would be much more comfortable with to be part of this item, because I feel like we're being asked now to do an early action. It's May 2nd.

We're going to adopt the budget in our constitutional obligation by June 15, which means funds will be available July 1. Now, if we act on this, and assuming that both houses pass it, yes, funds will be available a month sooner, maybe a little more than a month sooner. And clearly, if that keeps a very important hospital, one that is an area where is in an area with less access open, then obviously. Smart move. However, again, I have some uncomfortability.

This isn't a huge amount of General Fund, but in a shortfall, as pointed out, any amount of General funds got to be considered carefully and just without that kind of criteria and without the intense fiscal analysis. And I partly speak from, and again, any of us in a district I fought for and succeeded in getting money in 2014 for a hospital in my district in a very underserved area that was in financial trouble, and the Legislature approved it, the Governor signed it.

The rescue money that we provided, it was always iffy whether it would be able to stay open. It had a kind of shaky plan for security, and that plan, of course, fell through. So our funds only kept it open maybe four to five months longer than it would have been. And I think while I don't regret that because it was a very, very important, it's still in an area that's a hospital desert, which, of course, it doesn't exist anymore.

Given that we are in a shortfall, I want to be smarter about how we use our money. So I'm acknowledging that the need is real, and I will support the item, but I don't love how it was constructed. And I look forward to our June 15 budget having a much more fleshed out proposal. Robust, I'll use whatever word we want to use, one that gives the kinds of assurances, or at least the criteria that many of my colleagues have raised from the dais.

So we'll leave that. And for those of you who came a little late, we're not voting yet. We're going to hear our last item, then we're going to hear from public comment, and then we will vote. Okay, so I will close this one and we will open our next item. Our last item. And that is AB 113 on the agricultural labor relations.

Thank you. And I almost forgot we had one more Bill left. AB 113 is cleanup language for 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 state and the United Farm Workers.

Amendments in this Bill include a cap on the number of car check petitions over the next five years and creates 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, in order to adequately protect worker confidentiality and safety. This Bill also appropriates $10,000 of General Fund to allow the Agricultural Labor Relations Board to begin implementing the provisions of this Bill in the current year. Happy to respond to any questions.

Great. Thank you. Let me see if there are any questions from the dais. Yes, Senator Niello.

Thank you, Madam Chair. The only thing that makes this a budget item is the appropriation of $10,000 to the Agricultural Labor Relations Board, which really isn't necessary for the policy perspective of this Bill. This really is policy being passed in a budget trailer bill. I've made comments about this in the past. The environment here is much different than it was when I was here 12 years ago, 13 years ago. But why is it necessary for this to be a budget trailer bill?

Why could it not be a policy bill without the $10,000?

Sure. And to your point, I would just state that these are agreed upon amendments pursuant to discussions when the Bill was signed at the end of last year, and that ALRB is in need of funding for implementation.

That the $10,000 is necessary to execute?

To support their work.

Yeah, to execute, it's necessary. This policy could not be executed without the $10,000?

I think, again, it's to financially support their work.

I understand. Why is it necessary for it to be a budget bill?

Again, I would just go back to that this was an agreement between the state and the farm workers, the unit farm workers, that we would amend the Bill that was agreed upon as soon as was possible. This is the first opportunity to do so.

Thank you, Chair and members. Mark Farouk with the California Hospital Association. Thank you for the robust discussion regarding AB 112. The loan program that we've talked about will address the immediate needs of a small group of hospitals that are on the edge of the financial cliff and facing the difficult choice of service reductions, bankruptcy, or even closure. We've already seen hospital closures referencing Madera Hospital. And then just last week, Beverly Hospital in Montebello also filed for bankruptcy.

A recent study by Kaufman Hall has found that roughly one in five California hospitals are at risk of closure. The 150 million proposed in this fund is an important first step to ensure that Californians have access to healthcare services they need and depend on. Additional financial assistance will be needed by dozens more hospitals. They're at risk of closure, as well as those that have had to reduce services just to remain in operation.

That's why CHA continues to support an immediate lifeline and sustainable, ongoing solution to protect care for MediCal patients throughout the state. CHA looks forward to further discussions with the Governor and the legislature on longer-term stabilization package through the ongoing budget process. We would also, as that process continues, encourage a look at ensuring that all hospitals in distress would receive some type of relief as this current proposal is limited in definition of certain types of hospitals in relation to the data reporting requirements.

Would just note that in this proposal, it's requiring data reports also be submitted by hospitals that would not qualify by definition for the loans under this program. We also would encourage further discussions related to the data reporting. We think there may be a better way to get the data that the department is looking for. Hospitals currently report their balance sheets on a yearly basis. This changes that to quarterly. But this may not give you the look that you're looking for in order to identify stressed hospitals.

But looking forward to further discussions. Thank you all for your time.

Thank you. Excuse me. Nicette Short: representing PEACH, the association that represents the 100 hospitals that makeup California's hospital safety net. An alarming 75% of these hospitals are operating at a loss and are struggling. And one of these hospitals we've heard a little bit about is Beverly Hospital. They are a 200-bed acute care hospital in Montebello that has served the community for 70 years. 90% of their patients are Medicaid and Medicare, are covered by Medicaid and Medicare.

They have seen 40,000 people in their emergency department last year at an increase of 20% from the year before. And they are fighting to stay open, to serve their community, and serve the populations they care about. They have filed Chapter 11 bankruptcy, which allows them to stay open. They are working with their community, they're working with their staff. They are working with other partners to try and figure out how to carve their way out of this.

And this bill and these resources will allow them to continue that fight and to continue to stay open for their community that they care about. So we thank this committee, we thank Senator Caballero, we thank the pro tem and the Governor's office for all their work on this. And we look forward to continuing to work with you on those structural changes that we need in the Medicaid program to make sure that the rest of our hospital safety net don't end up in this position. So thank you.

Thank you.

Good morning, Madam Chair and members. Connie Delgado, on behalf of the District Hospital Leadership Forum, representing the 33 district and municipal hospitals in the state, here in support of AB 112 that creates the Distressed Hospital Loan Program. Members, these hospitals are unique. They're governmental entities. They are standalone facilities, so they have to make it or break it on their own. Many of them are located in rural and underserved communities.

We've heard mention of several of those hospitals today. In 19 counties, district hospitals are the only public hospitals within the county, and our figures show that from the third quarter of 2022, 25 of the 33 hospitals had a negative net income. Significant MediCal shortfalls have caused hospitals to close or reduce services. We've had much discussion about that today. We saw devastating effects from the hospital that closed in Madera and what that did to those patients in those communities.

We really want to thank Senator Caballero for her leadership on this issue, as well as the members here in this committee. Programs like the distressed hospital program are a step in the right direction to stave off additional closures and reductions. We want to thank the Governor, the members of this committee, as I said, and all those in the step in the right direction to providing some resources for hospitals that don't fall off the cliff.

We want to continue to keep the doors open and serve the patients of the state. Thank you.

Thank you.

Good morning, senators. Matthew Allen with Western Growers Association. I'll keep my comments brief this morning, but I would just say that the frustration is real when it comes to the Ag Labor Relations Act and what transpired last year with the car check bill: AB 2183.AB 2183 and AB 113 both eliminate fundamentally the effective ability for farm workers to have a secret ballot election process.

Up until last year, under the Ag Labor Relations Act that was held sanchroscinct as the best ability to protect and safeguard, and eliminate coercion in any of the election process for farm workers. So there's a lot of frustration around where we are today on car check. We were told last year that in the debate in the 2183 that it was all about mail-in voting. Well, mail-in voting is not in these provisions at all. They have been eliminated.

Other item I'd like to bring forward, interestingly enough, is that the appeal bond process was left in the language. So there is a huge hurdle in front of ag employers if they want the right to appeal a decision of the ALRB, and that bond has to be filed with the board, not a neutral third party. In every other area of the law, the applet bond is filed with a neutral third party; I. E. The Superior Court. We believe that's fundamentally unfair.

And then lastly, this was an agreement made in the final hour right prior to the Governor's signature of AB 2183, and the ag industry was left entirely out of that conversation. So we remain opposed to this. Thank you.

Thank you.

Good morning. Linda Nguy with Western Center on Law and Poverty. Firstly, we want to appreciate the Senate's plan to include revenues and investments for more equitable California, ensuring wealthy corporations pay their fair taxes. We also appreciate the robust discussion regarding AB 112, which we support, although noting the need for greater transparency.

Thank you.

The bill ensures healthcare access for low-income Californians, particularly for Madeira residents who have been without a hospital in the whole county since December, when it abruptly closed without meeting its 180-day notice requirements. We look forward to future conversations around long-term solutions. Thank you.

Good morning, Madam Chair and members. Malik Bynum with Childcare Providers United, a partnership between SCIU and UDW representing over 40,000 family childcare providers in our state, wanted to appreciate the time for the hearing today and also acknowledge AB 100 and AB 110 and the provisions relating to extending family fees to September 30 of this year.

Additionally, we appreciate the proposed temporary rate supplements for childcare programs, but we acknowledge that there's much more to do at the bargaining table as we look towards a new methodology that accounts for the true cost of providing childcare in California. Thank you.

Thank you.

Amy Hines-Shaikh with the California Community Land Trust Network. I'd like to thank the honorable Chair and members for remaining intact in the 2021 investment for the Foreclosure Intervention Housing Preservation program, and I look forward to long-term housing solutions as the budget conversation progresses. Thank you.

Good morning, Madam Chair and members of the committee. Brian Little, California Farm Bureau Federation. I'd like to associate myself with the remarks made by Matthew Allen a few minutes ago. I can't really improve on that very much, but I would like to point out that Senator Niello hit the nail squarely on the head. AB 113, which we're opposed to, in addition to western growers, is policy being made in the budget process. We were excluded from the process by which AB 2183 largely -

I'm sorry - the process by which AB 113 came about. Half of the stakeholders in the AB 113 debate were heard; the other half were not. That included us. So what you are doing here is you're going to pass significant changes in policy that will never go before a policy committee of either of these two bodies of the legislature. Yet that takes away any opportunity that we will have to be able to comment on whether it makes any kind of sense or not.

And I'd like to wrap up by noting that the fundamental problem with AB 2183 and AB 113 put together is that they effectively remove from any meaningful oversight the process of collecting authorization cards and petitions that will occur entirely outside the oversight of the Ag Labor Relations Board, who will no longer have any capacity to be able to protect agricultural employees from intimidation and coercion in making a very important decision about their ongoing economic future. So thank you for your time.

Thank you.

Madam Chair and members. Peter Kellison, on behalf of St. Paul's Senior Homes and Services located in San Diego. They are in support of AB 101; one section in particular, which extends the encumbrance for funds to provide to the infrastructure for wellness and housing for frail and vulnerable seniors. Appreciate staff and the Administration working with us on this. Thank you.

Thank you.

Good morning. chairmembers. Janice O'Malley, with the American Federation of State County Municipal employees, wanted to align our comments with Malik Bynum from our AFSCME affiliate, the United Domestic Workers on childcare. So thank you for the administration on that, but also wanted to make some comments about AB 112 and truly appreciate Senators Laird and Durazon and Smallwood-Cuevas on comments about transparency through this process. Yes. When a hospital closes, it absolutely affects the community. It affects the workers who likely live in the area.

We need to ensure that transparency is a top priority and that these funds are being used to support hospitals that have a plan moving forward to stay open in those communities and to serve those communities moving forward. So thank you. And AFSCME would appreciate ongoing conversations with the legislature and the administration on this proposal. Thank you.

Thank you.

Good morning, Madam Chair and members. Jolie Onodera with the California State Association of Counties. On behalf of 58 counties here in support of AB 112 as a first step on this issue. Thank you.

Thank you.

Good morning. Chairmembers of the committee. I'm Julia Terry with the Childcare Resource Center or CCRC. We're a proud member of the ECE coalition, and we would like to thank the Senate for making childcare a top priority in your Senate budget package. We also would like to thank you for addressing the critical issues of childcare rates and family fees in this early action package. Thousands of families will be able to sustain access to care because of this family fee waiver extension. We're in full support of AB 110, and we would ask the Committee to commit your aye vote. Thank you.

Thank you.

Good morning, senators. My name is Justina Erpelding, and I'm with Every Child California. And on behalf of our members who are subsidized care providers across the State of California, we want to thank you for the early action package priorities of childcare, with increases to rate reimbursement and delaying family fees to give time to develop a more equitable family fee schedule. These changes are a step towards stabilizing the subsidized early childcare field, and you have our sincere gratitude. Thank you.

Thank you.

Kimberly Rosenberger with SEIU we are really appreciative of the efforts to do these early actions, especially in bridging the gap on the family fees. We're a little disappointed that there's such lack of clarity around the ARPA dollars, but we are appreciative of prioritizing getting that money out. It is much needed to stabilize our workforce, and we hope we can continue those conversations with DSS on the best way to disseminate those funds in a timely manner.

Now, I'm going to speak slightly out of my issue area with comments from my colleagues at SEIU on AB 112. We are appreciative of the proposal to protect community's access to care.

We agree with the Committee on the need for additional transparency and accountability in the program, but we specifically want to ensure that the plans, finances, and staff assessments are made available to ensure the public can review and hold the hospitals accountable to ensuring access to care, especially when it comes to hospitals needing to address workforce retention and the turnover it has been a struggle for staff. So, we would hope to see that there are more requirements around investment in the healthcare workforce.

Thank you.

And we sincerely appreciate the acknowledgment of the benefits to the IHSS Career Pathways program. And thank you for the inclusion in the blueprint to extend the program through December 2024. Thank you.

Madam Chair and Members. Courtney Jensen, on behalf of the Low Income Investment Fund, we're in support of AB 110 and a proud Member of the ECE Coalition. LIIF works with providers to advocate for quality childcare facilities, the infrastructure, and physical buildings that the children are taken care of in.

We really thank you and think about this issue in two ways, which are the infrastructure, the people, and the buildings. This goes really far in making first steps to make sure the people that are working in these facilities are taken care of, are paid correctly and adequately. And we also continue to urge support for additional investments for the infrastructure for the physical buildings that these children are taken care of in through the Childcare and Development Infrastructure Grant Program, which is housed at DSS.

This legislature has done an incredible amount of work over the past couple of years to invest dollars into the physical infrastructure, and we need to continue that momentum to make sure that providers have access to the funds that they need for updates for building new facilities, to making sure that the slots are available. Thank you.

Thank you.

Good morning, Madam Chair and Senators. Rosanna Carvacho Elliott here on behalf of the Early Care and Education Consortium, which is an association of Multistate, multisite, high-quality childcare providers; the Members of ECEC have about 470 centers here in California with the capacity to serve 66,000 students or children. Excuse me. So I want to start by thanking the Senate Democrats for their package prioritizing childcare. Really appreciate that. That is incredibly important, and I appreciate the Senate's commitment to that.

Additionally, I want to express support for AB 110 and the extended family fee waivers, as well as the additional funding for subsidy providers. One thing to note, however, is not just subsidy providers are struggling from COVID to transitional kindergarten expansion to workforce issues; the childcare field is struggling across the board, and it is not just limited to subsidy providers. So I want to just put a plug out there that all providers need help.

But again, thank you for the continued support for childcare and support AB 110 today. Thank you.

Thank you.

Good morning. My name is Mary Ignatius. I'm the executive director of Parent Voices California. We really want to thank you for this early action extending the childcare family fees and the rates for providers. We've had parents come and testify in the full committee in sub-three. Our youth have come. They've waited hours on the phone to testify about the impact of these fees.

And so we're just so grateful that you heard them. I also just want to appreciate that the Senate priority bills include child care and an overhaul of the fee schedule that this early action gets us to September, but the rest of the budget gets us to really overhaul that system and find long-term solutions to the true cost of childcare. And we appreciate all of the conversation that happened around revenues today and that the priorities include corporate taxes to pay for some of these items.

Hi there. Josefina Ramirez Notsinneh. On behalf of Children Now, I want to thank senate leadership for commending you for this budget plan to provide $1.0 billion to address childcare rate increases and for waiving family fees until September.

These corporations have benefited from the pandemic, and they benefited on our working families, who were the essential workers, and the childcare workers who kept their programs open so our economy could recover. And these actions will help them recover as well. So thank you.

Thank you.

We joined previous speakers, colleagues from the EC coalition: strong support of AB 110. The $1 billion plan included in the Senate plan is a great start. However, we know that to get to the actual cost of care, it will take billions more to implement a cost-based rate system. And we encourage you and legislative leadership to continue to address the childcare crisis. Our childcare workers are an essential workforce.

We need to transform childcare and early learning in California to ensure that families and children can thrive. Thank you.

Thank you.

All right, I'll try to be brief. Greetings, Members, Madam Chair, and Senators. My name is Teja Stephens. I'm a legislative advocate for Catalyst California, and on behalf of my organization and some of my other ECE coalition members, we want to thank you for this early action plan prioritizing child care and the budget.

We are strong in support of AB 110, and we look forward to seeing a more equitable and community-based scope when we look at the model for the true cost of childcare. Thank you so much.

Thank you.

Madam Chair, members of the Committee, Louis Brown, today in support of AB 112 on behalf of United Ag and California Fresh Fruit Association, agree with conversation that this is only the beginning and a small step in the right direction to addressing our rural health care issues. And then I will associate my comments on our opposition to AB 113 with those made by Western Growers and the Farm Bureau, both on the policy and the lack of process. Thank you.

Thank you. So, seeing no other public in the room who want to speak directly to us, I want to go to the phone lines now. I'm going to hold the phone line comment to 10 minutes so that we have time to vote before all of us need to go to caucus. So, as a reminder, the participant number is 877-226-8216, the access code is 621-7161, and we will take just me, too, on this phone line, and we will go no longer than 10 minutes. Moderator, go ahead.

Thank you. Please press 10 at this time. Again, it's 10. Let me go first to line number 12. Please go ahead.

Yes, thank you. Madam Chair, members of the committee, my name is Deanna Coronado Robles. I'm a family childcare provider from the city of Baldwin Park. A Member of Childcare Providers United, a project of SEIU Local 99. I would like to thank you for hearing us and addressing our immediate needs. We urge you your continued support as we address higher ongoing rates.

Thank you. This is me-too only. You're in support, obviously.

Yes.

Okay. Thank you.

Next, we have line 11.

Hi, this is Justine Flores, family childcare provider, member of CCPU. I am in support of-

Line 19.

Hello, my name is Orlando Cabalo. I'm with the Free the Degree Coalition and the campaign for California Bar's Rights, and I'm in support of SC 111. Thank you.

Line 29.

Good afternoon, chairmembers. My name is Sada Boabsa with Young Invincibles of the Campaign for California Bar's Rights, also in support of AB 111, SB 111. Thank you.

Line 37.

Samantha Seng with NextGen California and also a part of the Campaign for California Boroughs Rights Coalition. Calling in strong support is AB 111.

Thank you.

Line 18.

Yeah, hi, this is Giovanna, and I am in support of extending the family fee waivers with Childcare Providers United.

Thank you.

Next is line - sorry, line 39.

My name is Sonya Carolina, and I am agreeing with the immediate budget for supporting family childcare providers. Thank you.

Thank you.

Line 27.

Good morning, Chair and members. This is Raquel Yoffie, on behalf of the California Alternative Payment Program Association, calling in support of AB 110 and supporting all the ECE Coalition's ask. Thank you.

Thank you.

Line 40.

Good morning, chairmembers. Samantha Silva, current leader of Farm Voices California, in support of AB 111. I just want to thank you for supporting children, parents and providers with your actions. Thank you.

Thank you.

Line 45.

Good afternoon. This is Blake Hofstad with Parent Voices. In support of AB 111. Thanks.

And line 46.

Good morning. Ashley Hoffman, on behalf of the California Chamber of Commerce in opposition to AB 113. For the reasons stated by the Western Growers. Thank you.

Thank you.

Line 48.

Hello, Kelly Reynolds. On behalf of Early Edge California in support of AB 110. We also want to thank the Senate for prioritizing childcare and its budget package, and we look forward to working with the Legislature and Administration to increase access to high-quality early learning and care. Thank you.

Line 51.

[Forgein Language]

[Translated] Thank you very much.

And line 52.

Good morning, Madam Chair and members. Amy Blumberg, on behalf of the California Children's Hospital Association in support of AB 112 and would like to line my comments with those of the California Hospital Association. Thank you.

Next we have line 53.

Senator Newman is on his way.

Thank you. Madam Chair and members of the committee, this is Laurie Furstenfeld from the Childcare Law Center, director of legal advocacy and member of the ECE coalition. We are in strong support of AB 110 and on a personal level, I'm also in support of AB 111. Thank you.

Thank you.

Line 41.

Good morning, Madam Chair and committee members. My name is Maéva Marc. On behalf of Kidango, we are a childcare and preschool provider in the Bay Area and we are in strong support of AB 110. Thank you so much.

Thank you.

Line 49.

Keisha Nzewi with the California Childcare Resource and Referral Network in strong support of AB 110.

Line 55.

Good morning. Heidi Keiser. On behalf of Child Action, in strong support of AB 110.

Line 58.

Hi, yes, my name is Yvonne Cottage. I'm a childcare provider from Lancaster and also a member of Childcare Providers United. I am in strong support of extending the family fee waiver, addressing the higher ongoing rates, basic benefits, and we need to address some important areas at the collective bargaining table, please. Thank you.

Thank you.

Line 60.6-0.

Hello, my name is Mary Washington. On behalf of the Cal State Student Association, I am calling in support of trailer bill AB 11 - 111. Sorry, thank you.

Line 36.

Hello, my name is Juan with Caring Across Generations. I just want to express strong support for AB 110 and thank folks for continuing to suspend the family fees through September 30.

Thank you.

Line 23.

Hi, this is Ana Fung with the Institute for College Access and Success, and we're calling in strong support of AB 111. Thank you.

Line 57.

Raquel Morales on behalf of the Education Trust-West and strong support of AB 110. And we want to thank the committee for their action and leadership on this budget item.

Line 43.

Hello, my name is [unintelligible], member of CCPU United. I'm calling on behalf of providers from CSM Valley for full support. Thank you.

Thank you.

Line 50.

The YMCA of San Diego County calling in strong support of AB 111. Thank you.

And line 68.

Hi, this is Maria Lowell from Parent Voices San Francisco. We want to thank you for your action of continuing to suspend the family fee through September 30, 2023, and for the temporary increase in reimbursement for all childcare programs. Thank you.

And none further in queue for comments.

Great. Thank you.

So, members, now that we are concluded with public comment, we will now move to votes, and we will start with the first item, AB 100. May I get a motion? Alright. The bill is moved, and we will call the roll.

AB 100. Motion is due-pass. [Roll Call]

That bill is unanimous, so the bill is out. We will now go to AB 110 on early care and education. Do I have a motion, Senator Menjivar moved. Let's have a roll call.

[Roll Call]

All right. That bill has 17 votes, which is again unanimous. So it passed. We will now go to AB 111 on the student loan debt income tax exclusion. Do I have a motion? Senator Ocho moved. Go ahead with roll call.

[Roll Call]

All right, that bill had 18 votes. I'll correct my last. I said 17 on AB 110; it was actually 18. AB 111, which we just voted on. 18 votes. Again, unanimous. Bill is out. We'll now go to AB 112, the Distressed Hospital Loan Program. I have a motion by Senator Grove.

[Roll Call]

That was the AB 112. That bill is out. Unanimous. We'll now go to AB 113. Do we have a motion, Senators? Moved by Senator Smallwood Quavas? Roll call, please.

[Roll Call]

All right, that bill passes. The vote is 13-5, and the bill is out. And with that, I want to thank the budget staff. I want to thank the Department of Finance. Thank my colleagues, and I look forward to many more discussions between now and when we adopt the budget in June. And with that, the Senate Committee on Budget and Fiscal Review adjourns.