Assembly Budget Subcommittee No. 4 on State Administration

Good afternoon and welcome to our Assembly Budget Subcommittee five hearing today. In addition to various state departments, this hearing will cover state employee compensation, pensions, and retirement. The hearing agenda is available on our Committee website and physical copies are available outside of the hearing room. Few housekeeping notes, this is an in-person hearing with all panelists testifying in person. We will take questions from members of the Subcommittee after each panel, then move to public comment.

All public comments will be taken in person at the end of this hearing. If you are unable to attend this hearing in person, you may submit your comments via email to [email protected]. With that, we are going to begin as a Subcommittee and we will take role after we get other participants. And just so you know, we have not only myself, but our other Members have hearings at the same time.

I'm on higher Ed, I know Assemblymember Ward has privacy and Mr. Patterson has another committee at this time. So we are going back and forth. All right, our issue, our first issue is Secretary of State budget change proposals. We'd like to welcome you up. First, a personal note. I would like to send my regards to Secretary of State Doctor Shirley Weber. I had the privilege of not only serving with her, but her being my seatmate, and it was a immense honor.

With that, let's start with our first budget issues related to the office of Secretary of State. We will review four proposals, two related to information technology and two related to federal funding. And you may go ahead and present.

Thank you. Good afternoon, Committee Chair and Members. My name is Kristen Dagsher, Budget Officer for the Secretary of State. On behalf of Secretary Weber, thank you for the opportunity to present the proposals before you today. In addition to other workload baseline adjustments, the Secretary of State's 2024-25 budget includes funding for the following priorities. One-time funding of $16.774 million General Fund to support the continuation of the Cal Access Replacement Systems Project, also referred to as CARS Project.

One-time funding of $4.018 million for the continuation of the notary automation program replacement project, also known as NAP 2.0.

If you want to move your microphone just a little closer to you, you could pull it up there. There you go.

This project is supported by the Secretary of State's business fees fund. And lastly, we have the annual Help America Vote Act or HAVA proposals. One-time expenditure authority in the amount of $15.009 million to continue implementation of the statewide mandates of HAVA and one-time expenditure authority of 11.3 million to support California statewide voter registration database, Vote Cal. With me today are program and project experts to answer any questions you may have.

If you want to introduce yourselves, it'd be great.

Charles Lasalle, Department of Finance. No additional comment at this time.

Nick Schroeder with the LAO. We have no comments.

Jessie Romine with Department of Finance. Nothing further to add.

I have a few questions. What is the timeline to get the new Cal Access system online and operational? I know it's been ongoing, and you're not the only Department. We have a lot of technology programs kind of midway.

Thank you. To answer your questions about the CARS project, I have with me John Heinlein, the assistant project Director for the cars program and Tristian Cormier from IT.

Hello, my name is John Heinlein, the Assistant Project Director for the CARS project. And in answer to your question, currently we're evaluating the vendor bids. We anticipate having the vendor prime vendor on board by summer 2024. And at this time, we don't know when the system will be implemented because we'll know that when the bid is selected and we announce the vendor bid. But our estimate is that it'd be 27 months of development implementation. That's our estimate at this point.

Can you give a little, just background on what your hope that Cal Access system will do compared to in the past once it's fully operational?

Well, it's designed to replace the legacy Cal Access system, which collects information from campaign filers and disclosure, lobbying disclosure. It will completely replace that system with a more data-driven, user-friendly interface system that allows for scalability and future-proofs it so that we don't have outmoded technology.

So right now, an interested public member can go on and see some information as far as contributions, things like that. But this would update that and make it give even more information?

Yeah, that's our plan. I mean, there's different groups of stakeholders. There's the filers, and then there's the ones who, the data consumers. So in terms of data consumers, it will allow for better search capability and a lot more sort of functionality than we have now.

Thank you. And again, you can stay up because I'm not sure who will answer the question, does the Secretary of State have the resources it needs for the upcoming November election?

With the BCP that we have received in the past, we are onboarding some staff to have the resources. Yes.

And when we talk about resources, can you give us an example of some of the things that you do, do with the resources you have or are planning for November?

We do. We go and look at the vote centers and make sure that they are in alignment with what they're supposed to be doing as vote centers. We have folks that staff the help desk call lines to help voters figure out where they're supposed to go to vote or how to vote, whether they're going to do it online or, I mean, through the mail or in-person processing the ballots once they, I mean, the counts once they come in.

And then last question on the vote centers, have you, are you tracking data that shows the usage of those compared? Because, of course, now we have mail-in ballots, but of course people can choose to go to vote centers. What is your feedback on how those are operating and people, how they're engaging with vote centers?

If I may, I'd like to defer. Nikesha, do you have any information on the vote centers? No, I don't have that with me. I'm sorry.

That's all right. If you can just report back to us. Do we have any other questions from LAO or Department of Finance? All right, well, thank you for your presentation.

Thank you.

Thank you. Next, we have Fair Political Practice Commission budget change proposal. If you would like to join us. Welcome. Fair Political Practice Commission, all elected's favorite agency. All right, we have one budget change proposal related to the FPPC. Let's go ahead and begin and please introduce yourself.

Good afternoon, everyone. My name is Jue Wang, acting chief of admin at FPPC. So on behalf of PPC, we would like to present the local ethic training BCP to you this afternoon. Existing law requires each local agency official to receive ethic training every two years, which includes training on their ethic duty under the Political Reform Act of 1974 and on other ethic principles and laws. Since 2006, FPPC has maintained an online local ethic training course, thus is available to all local officials free of charge.

The Commission created has maintained the ethnic training course using only existing resource, and over time this has become unfortunately unsustainable. The current ethic training system is over 18 years old. Among other issues, the system was not built to accommodate the growing number of users and also cannot be updated to meet current security standards due to its age. The training course is highly beneficial resource for local agency.

It's heavily relied on and used by local officials with 88,900 users completing the course since 2010 and over 16,000 users in 2023 alone. With the passage of AB 2158 in 2022, about 2000 additional agencies and several thousand additional agency officials will become subject to this training requirement starting in 2025, which the FPPC expect will result in increased usage of the training course.

So this budget proposal will add one it information specialist position and will provide funds for learning management systems, which will enable PPC to continue to offer this valuable and widely-used program for local agency officials. And that's all. And we're happy to answer all the questions you have.

All right. Before we do that, we'll go ahead and take roll.

[Roll Call]

All right. We have a quorum. Ann, you just mentioned that there will be now thousands of individuals that will need to take this training, FPCC training. Is that provided online or how are those trainings going to take place?

So the training, the ethnic training system, right now it's posted on the website, FPPC website. So we expected there are 2000 new agency and thousands agency officials will subject to the training. So they will all utilize the online training system.

Okay. All right.

With these new funds, then are you confident that you will be able to meet the deadlines that are noted and accommodate the new influx of individuals that will need to take these trainings?

Yes, we are comfortable that BCP will provide sufficient fund to support, continue support local ethics training system.

All right, any questions? Any comments or questions? All right, thank you very much.

Thank you.

All right, next, we have Department of Veterans Affairs budget change proposals, and we'd like to welcome you up.

Hi. Good afternoon. Thank you very much. My name is Beth Muszynski and I'm assistant deputy secretary of veterans homes at the California Department of Veterans Affairs. I have others with me both here and in the seats behind me to answer questions and provide details as you'd like. I can provide a brief overview of the four BCPs that CalVet has before you, if that's what you'd like me to do. Okay, thank you.

There are four that we have here in front of you today, and thank you so much for your time. One of them is for our CSAAVE program, which is within our vet services division, and it is requesting the department requesting $265,000 in Federal Trust Fund beginning in the 24-25 fiscal year. It's to address increased workload within the program, and it's a Title 38 program, and it is essentially to upgrade to positions within the program.

Second, the department is requesting $902,000 general fund money and $284,000 for the 24-25 fiscal year. And it's broken out between some different functions with regard to implementation, the final implementation of our new electronic health record in the veterans homes, and then also a portion of the funding for maintenance and operations, and then an additional $415,000 in the next fiscal year for maintenance and operations of the new electronic health records system at the veterans homes and at CalVet headquarters.

Third and fourth are two BCPs for the veterans homes division, which is the division that my colleague and I are here on behalf of. And the first one is for our Barstow Veterans Home. It's actually a reduction. It aligns with our master planning efforts to, over time, reduce the domiciliary program, which is the independent living program at that home. And so this is a reduction of $265,000 general funding in the next fiscal year and a reduction of 30 budgeted domiciliary beds and two positions.

Finally, the department is requesting for the new skilled nursing, skilled nursing facility building in the Yountville Veterans Home an additional 5.389 million and 40.2 positions in the next fiscal year, and then 12.129 million and 108 positions annually thereafter to support the staffing needs of that new building. Thank you so much for your time and consideration of these requests, and I and my colleagues are happy to answer any questions that you have.

I'll let you go ahead and start.

I just wanted to highlight and thank you for your commitment to increasing skilled nursing facility capacity. That's something we desperately need, especially for those that qualify in these facilities across the state, but generally across our state. It's something I'm hearing a lot more as people are watching their parents become to a position of need for these across our community. So even despite a very difficult budget year, it's something I very strongly support, and I appreciate your commitment.

Thank you. I appreciate that.

I do have a question on the skilled nursing. How many beds will you have once this is completely built out?

I'm in Brett Lapp with homes division CalVet. The new skilled nursing facility will have 240 beds split between regular skilled nursing and memory care.

And then what is the process for a veteran in California to gain admittance or access to living there?

Okay, do you want me to speak? Okay, sure. Happy to. Okay, I'll talk about the requirements and then where they can be found, and then also a little bit about the process. Eligibility is found within statute, military and veterans code, and then also within our regulations for CalVet, the official regulations for CalVet.

And there are a number of eligibility requirements that are more broadly laid out in statute to include the federal VA, deeming them appropriate for long-term care by the department. And so we have that coordination with them as well as the other eligibility requirements. And then in more detail, some additional requirements are spelled out in regulation for including for prioritization for people with certain characteristics or certain accomplishments during their service or certain needs.

And then the process, we have our application online, or it can be printed and mailed in, whichever people prefer, but it's available to them, and they apply to a particular home that can be moved to another home if they wish to change their mind. We have a director of admissions who works all the time with families, and then, of course, our admissions staff in the offices. But we do have an online application that they submit.

Then there is a whole process that the homes carry out, and it involves collecting medical record information that we can use to determine the appropriate level of care and appropriate programming. It involves doing an onsite assessment by a nurse or a physician once it gets closer to time, for them to move in. And that's sort of an evaluation and just collaborative effort with the applicant or their family. I hope that answers your question. If I'm off point, just. Okay.

That's great. Could you get us kind of a copy of how to navigate?

Oh, sure.

Because we, I know all of us have constituents that come to us, and sometimes it's. We want to be able to get information. And then going back to the Barstow Veterans Home, obviously, this is a little bit of an outlier where you're asking for a reduction because you'll be reducing beds by 30 beds. Why is that?

Sure, I'll take that. The 2020 master plan for the veterans homes in California identified areas where we can, specifically areas of levels of care. We want to make sure that the levels of care of each home align with and meet the need for the communities in which they serve. And so in our study for the 2020, in the 2020 master plan, we found that the domiciliary level of care in Barstow was one that was quite underutilized.

And so in the master plan, we suggested that we, through attrition, close the domiciliary program and open up residential care facility for the elderly because there's more demand for that level of care then also increasing their skilled nursing beds by 20. So it was part of that whole 2020 master plan and trying to make sure that we right-size our homes for the community need.

So by closing these 30 beds, that doesn't necessarily mean they'll just be vacant beds. You'll be using them for something else? Is that what you're saying?

Well, there will be, there will be a transition once the domiciliary bed, the number of folks in the domiciliary reach a certain number, then we'll start that transition through the residential care facility for the elderly. I think we're kind of in that process right now. And so there will be utilization of some of those vacant beds, but eventually, there will be some domiciled buildings that will close.

And I know the location also can be a barrier just depending on where people want to be, but maybe a red flag on looking at opportunities to use those beds. And I know there's a lot of federal laws and state laws and counties, all of those, but I would just hate to see beds that could be used for somebody when we have such an issue with veterans who are homeless and so forth.

Certainly, we are. We are certainly exploring opportunities where we can better serve the veteran community in that area with that vacant building.

Any questions? DOF or LAO? All right, well, thank you so much. We appreciate it.

Thank you.

All right. Next we have Department of Human Resources. We will review two budget change proposals and a request for trailer bill language. Welcome and please introduce yourself.

Good afternoon, Chair and members. My name is Monica Erickson, chief deputy director of Department of Human Resources. CalHR's fiscal year 2023-24 budget is 135,000,000 and 453 positions. We are requesting two positions in this budget and if approved, would bring us to 454 positions in 24-25.

This includes 15 positions and an increase of $32 million approved by the 23-24 Budget Act. And I'll go ahead and go over the budget change proposals. The first budget change proposal is workload for the psychological screening program. We are requesting to transition two limited-term positions to permanent and 433,000 reimbursement authority and ongoing to address staffing issues in the psychological screening program. With these resources, the division will be able to conduct timely pre-employment psychological assessments for law enforcement candidates for state agencies.

This request will continue to support CHP in its ongoing recruitment and hiring efforts to address its critical shortage of peace officers. CHP has historically held four academies per year with 90 to 100 candidates in each. But as of 2023, CHP is now holding six academies per year with the goal of 150 to 160 candidates in each. Shall I continue to the next budget proposal, or do you have any questions?

Just on that proposal, as far as the additional academies, are you finding it harder to recruit just from the beginning of the process? I mean, I know once you get into the process, you need to do the psychological and all the other parts, but just as far as people coming into the profession and being interested, what are you seeing in that?

Well, let me. Michele, do you want to come on up? I'll have Michele Villados, who's the program expert, talk a little bit about that.

Hi, I'm Michele Villados with CalHR. As I understand it, you were asking if we're finding it difficult to recruit into these positions for the psychologists. There are some challenges. Unlike other psychologist positions within the State of California, our positions require a minimum of five years of professional working experience, with three years being post-doctorate. So we do have a little bit of a challenge with recruiting. We're often recruiting psychologists who do not have this specific experience and then training them to do this specific work.

That's actually. I was actually thinking about more of recruiting the recruits to come in, but speak about the profession of being recruiting the psychologist. It's a very specified field, so I can see why you would have either to train or encourage people to get into it, because it's not probably a part of psychology that people think.

I think there's some increased interests over the past few years, but you're right, it is not a very, it's a very niche area of psychology.

And what about the recruits themselves going into?

For CHP and the other hiring agencies? Everyone is experiencing significant difficulty with recruitment right now. And that's not just here in California. That's across the United States. I understand CHP in particular is expanding to recruit across the US simply because the recruitment process has become more challenging than it was previously.

Do you attribute that to any specific?

I think certainly the focus on law enforcement is perceived as contributing to this. There's also a high attrition rate among those who have peace officers who are out, I'm going to say, working on the street versus doing, for instance, investigations. There's a lot of public scrutiny, and I think that that's contributing to both the loss of peace officers and the loss of interest in becoming a peace officer.

Makes sense. All right, thank you. If you want to continue.

Sure. Thank you very much. The next budget change proposal is our technology modernization security. This proposal requests 350,000 ongoing to increase security measures due to the sensitive and confidential data that CalHR systems collect. This funding will enhance security for public and external facing systems such as our CalCareers and our ecosystem by adding a two-factor authentication feature and subscription and licensing funding for a service that will be used to track and archive security logs. This request will align with the direction from the California Department of Technology to establish security controls against threat actors that may compromise digital identities to carry out various malicious activities.

All right, any question? Department of Finance.

Natalie Griswold, Department of Finance. Nothing to add at this time.

LAO. All right, thank you very much for your presentation. Thank you. I apologize. We still need you to speak about the trailer bill.

Yes, CSPS of course. And I will transition this over to my program expert. Thank you.

Thank you. I'm Brandon Rutschmann with Department of Human Resources. I get my new departments mixed up, with CSPS project director for CalHR. The trailer bill proposed is technical cleanup on 11 government codes necessary to support the payroll system project at the controller's office. It supports the movement away from the monthly payroll cycle to a biweekly payroll cycle and we implement CSPS. I'll be happy to answer any additional questions you might have.

Any other questions? I would expect that people who are getting paid bi-weekly would probably like that, but all right. Thank you. No other questions. Thank you so much. Thank you so much. All right. Next we have CalPERS contributions, Proposition Two payments, trailer bill, and vacancy sweeps.

Good afternoon, Madam Chair. My name is Ryan Weinberg with the Department of Finance, and I'll be presenting on the first two proposals included in this item. First, the governor's budget includes budget and trailer bill language authorizing the deferral of one month of payroll costs from fiscal year 2024-25 to the 2025 to 26 fiscal year. This language will allow the state to accrue its payroll costs for the month of June 2025 in the 2025-26 fiscal year, effectively shifting the value of that month of payroll costs, or $3.2 billion, to the 2025-26 budget year. If approved, this language will only shift the fiscal year in which that month the payroll cost is being budgeted and will not impact in any way the date on which state employees receive payment for that month.

And that's a one time.

That's a one-time proposal for fiscal year. 3.2 billion, of which 1.6 billion is estimated to be general fund.

So by doing this, it would be 1.6 billion to the general fund?

It impacted the general fund for savings in fiscal year 2024 to 25.

So this is what some might call creative budgeting. So do we have the LAO to say anything about this?

Nick Schroeder, with the LAO. We do recognize that it's not the preferred budgetary practice and that, you know, the accounting maneuver, though, despite its shortfalls, we think that the budgetary benefit outweigh those trade-offs. And so we recommend that the Legislature approve the language.

All right, Department of Finance.

So if you have no further questions, we're happy to move on to the next proposal.

Let's go ahead and move on to vacancy sweeps.

Yes. So the next proposal included in this item is related to vacant positions. The governor's budget includes the addition of control section 4.12, which would authorize the Department of Finance to adjust Department funding levels within fiscal year 2024 to 25 to capture savings related to vacant positions.

If approved, the governor's budget also includes 1.5 billion in estimated one-time savings in fiscal year 2024 to 25 associated with implementation of this proposed budget solution. We would like to note, as noted on your agenda, that this proposal does not include the authorization for the Department of Finance to adjust or eliminate position authority for any departments based on their current vacancy levels, and that any proposed reductions to department budgets based on their vacancy levels within fiscally o 20254-25 is being proposed on a purely temporary basis.

Any questions? Or just why don't we do vacancy sweeps and then we'll do. Because the others get really technical trailer bills as well. Yeah. Yeah.

Thank you. So just a quick kind of back to the trailer bill conversation. So, one, we just want to confirm this isn't going to affect any timeline for issuing paychecks. Would this put us in a future budget year crunch, I guess, for moving this $1.6 billion into next fiscal year that are we having 13 pay periods then, or would we in that fiscal year?

So the way it works is essentially it's a one-time saving solution for the budget. And we'll carry on going forward. It would be still 12 pay periods each year, but to undo it, we would have to pay a 13th pay period. And so at some future date when the Legislature makes the decision to undo the payroll deferral, you would then have to pay an extra. Yes.

Okay. Into the next year. So everything still shifts forward to 12 pay periods. So essentially only have 11 for this fiscal year.

Exactly. And so the Legislature did this in 2009-10. And undid it about a decade afterwards.

Okay. Okay. On the vacant positions, I mean, how critical of an analysis has been done, really, to ensure that sort of essential positions or ongoing, you know, positions necessary for ongoing work, that they might be vacant today, but we're assuming, or we would need critical functions done, I guess. Is this a broad sweep of all or most vacant positions or how much have you really gotten into a detailed analysis about the necessity for vacating these vacant positions?

Hi. I can answer that. So the administration's current proposal does, we do believe that we are able to achieve those savings if implemented in the fall. We would like to note that the proposed solution will involve working with departments to identify positions that may be needed to continue hiring to meet registry requirements or public safety staffing levels as required by various settlements or any other public safety concerns where this proposal would potentially impact current operating levels or necessary operating levels.

So the goal of this is to implement kind of capturing the savings that may not necessarily be filled in the coming budget year, but that we acknowledge don't need to be filled on a long tail basis and that we're working with departments to help them fill.

Okay. So the positions just wouldn't be filled for this fiscal year? They could possibly be reinstated in future fiscal years.

The proposal. It's, the proposal is to capture one-time savings, fiscal year 2024-25. Any future savings after that would be would be kind of not captured as part of the budget unless the Legislature included another solution in similar years. For fiscal year 2024-25 we're proposing to capture the savings based on the vacancy data that is provided closer to the start of the fiscal year. So once we know what vacancies departments have at the time, then it'll be determined what savings are achievable.

But again, are you just very broadly trying to recapture all of those vacancy savings based on the information that's provided today, or have you really gone through and determined the necessity, I guess, for those positions for the coming fiscal year?

The Department of Finance is continuing to work on the implementation of this drill and working with departments to identify what is feasible. As I mentioned, based on our efforts thus far, we believe that the amount that we've included in the governor's budget is achievable. With those thoughts in mind, but the final implementation of this solution will be dependent on working with departments in the fall to include in the upcoming governance budget.

Okay, and have you had meaningful conversations with any collective bargaining units?

We have not had conversations with collective bargaining units on this topic. However, we note that this proposal does not involve proposing hiring free for departments or laying off any current employees. It is only proposing to recapture savings temporarily for a position authority that is not being utilized by departments. Departments will retain their existing position authority and will be able to continue hiring with any vacancies that are currently available. Or we're not proposing to sweep 100% of the funding related to positions. They would still be able to fill some extent of their positions. We are asking them to focus on filling their more critical needs with the funding that they have.

Okay, thank you. I think it'd be helpful. I just want to, I'll flag this issue, I guess, to see how things evolve, maybe especially after the May revise. I think it'd be helpful to understand on a department level or agency-level analysis, you know, how many positions are we talking about? And importantly for me, what might that translate into in the form of operational impacts for the goals that we're trying to achieve through these departments?

Noted. Thank you.

Thank you.

And my questions are in line with my Assembly member. My concern is that all the departments are not equal in sense of their needs. So you may have one department that's much smaller. So not backfilling some of those positions can have a much bigger impact than maybe a department that's triple the size.

So if there's any way before we really get into the weeds here in May to get some kind of numbers that might say how large the department, department is and how many positions we're looking to, in essence, to put on hold before hiring? Because the other issue that I've heard several times, not necessarily here today, but in other hearings, is the recruiting long term, trying to get people back on board.

I know we heard that in, I think, workers' comp, that one of the issues there was, they couldn't hire people to do these investigations. So then if we are actually going to not backfill those positions, you're going to prolong some of those situations. So just if we can get a little bit more information on that, I think that would be helpful. But I do hear you on the bargaining. That was an excellent question. It's good to know that it's not going to affect that.

All right, we will move to the next part, which is our debt payments. And please introduce yourself.

Noelle Fa-Kaji, Department of Finance. The 2024 to 25 governor's budget includes 6.9 billion, of which is 3.5 billion general fund for the state's required CalPERS pension payment. And that is inclusive of CSU. Additionally, Proposition Two requires debt repayments every year until 2030. And so the governor's budget includes an 885,000,000 one-time supplemental pension payment under Prop Two towards CalPERS state pension plans.

And the last piece is the governor's budget proposes to apply a prior supplemental pension payment in a manner that will reduce required employer contributions for the budget year. For context, the 2023 Budget Act included a 1.7 billion Proposition Two supplemental pension payment. This has already been transferred to CalPERS. However, it has not yet been applied to the debt on CalPERS state plans or factored into the required contributions.

So under this proposal, the state would direct CalPERS to apply that prior supplemental pension payment to reduce required employer contributions in 24-25. We estimate that this will save 1.7 billion in budget year, which is 1.3 general fund, billion general fund.

All right, thank you. I see. If you have any questions. Yes, it's good to just say that. Can we hear from the LAO?

Sure. Nick Schroeder again, of the LAO. We don't raise concerns with their proposed use of the 24-25 Proposition Two payment, but we do raise concerns about the use of the 23-24 debt payment. In particular, we think that the proposal which would reduce, as finance said, would reduce the budget year contribution to CalPERS. We think that that would be a supplantation instead of supplementation of the states pension contributions and would therefore be in violation of the Prop Two. So we think that it appears unconstitutional by that standard. And we do propose some alternatives that could potentially have greater likelihood of being constitutional and have similar financial benefit.

And what's the department's response?

Based on what we know at the time, we would need additional details to fully evaluate. We do. As we understand the alternative, we don't believe it would be a similar magnitude of savings. We estimate if it would be about 885 instead of 1.3 billion general fund.

Okay. Obviously, it's a big number that we're talking about that we want to get right or have to deal with. Pretty significant issue down the road. Madam Chair, I don't know if it's appropriate that we maybe request Legislative Council get back to committee as well on their opinion and just sort of take, you know, information from all of these very professional opinions into consideration as we're trying to, trying to make a decision about this issue.

Yes, I agree. That's, you, you said 830.

As we understand the alternative, it would be to take that 885 million currently proposed as a supplemental payment to CalPERS and instead direct it to CalSTRS. And that would be the level of savings.

All right. Now, I definitely think we need more information and an analysis on this. Any other comments? All right, report out on the CalSTRS.

Chair, if I may add, we actually believe that there would be more than 885 million available for 24-25.

And what is that number?

I think we have the analysis that it would be about a billion on the CalSTR side and about 100 million on the CalPERS side. So potentially 1.1 billion.

Do you want to introduce yourself?

Oh, I'm sorry. Ann Hollingshead from Legislative Analyst Office.

Okay. So there's a big, a substantial discrepancy in numbers. So I think that needs to definitely be vetted and get a little bit more legal analysis. Thank you. All right. So then we'll move to the CalSTRS. Thank you. So, on our final issue for the day is the CalSTRS California State teachers retirement system. For this issue, we are requesting the panel to cover the CalSTRS statutory required contributions and two budget change proposals. Welcome.

Thank you. Good afternoon, Chair, Madam Chair, and members of the subcommittee. My name is Julie Underwood. I am the chief financial officer for the California State Teachers Retirement System. Now, the funding for the two budget change proposals that are before you today have been approved by the Teachers Retirement Board and will be funded through the Teachers Retirement Fund. Now, overall, both proposals advance our strategic plan goals and objectives, as well as support our continued operations, ensuring that we continue to meet our mission to our members, which is to secure the financial future and sustain the trust of California's educators.

Now, regarding the operational support BCP, the 1.9 million is permanent funding to establish 12 authorized positions, and those positions will assist us in maintaining continuing business operations as well as to assist us in achieving some strategic plan priorities and initiatives. Now it is worth noting here that CalSTRS has limited our resource requests this year and we are not requesting any additional operating expenditures, and that's in support of the state's mandate or the state's directive to mitigate costs.

Now, for the pension solution BCP, the 205.8 million is one-time funding to complete the modernization of CalSTRS benefit administration system. Now that system is scheduled to go live in the fall of 2025, and the funding also supports additional stabilization and maintenance and operations activities through June 30, 2027. Now I should also note here that this amount also includes all internal resources as well as all external costs for all of these activities through that June 30, 2027 date.

Now, our new system will support CalSTRS growing membership of over 1 million members and will also pay out over $18.5 billion a year in payments to nearly 330,000 retirees and beneficiaries. So with that, the details for the amounts are included in the BCPs before you today, and I'm happy to answer any questions you may have.

I did have a question, but you answered it in your testimony on the BCP. But I will just make a comment generally of what the hearings that we've had are under the technology umbrella. There is a huge amount of money going into updating all of these technology systems from EDD to CalSTRS, and it's quite an investment and they're obviously needed.

We've seen some of the breakdowns with old systems, yet they're very costly and it's very difficult in a tough budget system or situation to make a U-turn on them when we want to see them, whether it's fiscal others, we want to see these systems completed, but the dollars are pretty hefty. So I'm just making that comment. But we appreciate not only CalSTRS, I'm a member myself as a former teacher, and we like the work that you do to make sure that over, did you say 1 million?

Over 1 million members.

Are making sure that the retirement is safe and sound. So thank you. We don't have any other members up here, but do we have any comments from DOF or LAO?

Ryan Weinberg, Department of Finance. We have nothing to add on this item. And then after, you know, if you have any questions on this item, afterwards, I can give a presentation on the state contributions to CalSTRS for the upcoming fiscal year. Thank you.

Angela Short with the Legislative Analyst Office. We have no concerns with the two BCPs presented.

All right. With that. Thank you for your testimony. This concludes our presentation, and now we will, will be accepting public comment. Do we need to do Cal State contributions? All right, wait. Yeah, go ahead. Okay. Sorry about that.

Ryan Weinberg, once again, my name is Ryan Weinberg with the Department of Finance. The governor's budget includes 4.24 billion in estimated general fund contributions to CalSTRS in 2024 to 25. This amount, which will be finalized at the May revision based on updated creditable compensation data that's been reported to CalSTRS, is expected to increase the state's contribution levels from the previous fiscal year by 300 million based on expected growth in creditable compensation for CalSTRS members. The CalSTRS board has not elected to increase the state's contribution rate for CalSTRS in the upcoming fiscal year, and the state is currently projected to fully eliminate its share of unfunded liability for the Cal State's defined benefit program well before 2046, which is the target date outlined in the Cal State's funding plan as passed by the Legislature.

Can you restate that date that you just said, the last date for the unfunded?

2046 is the target date outlined in the CalSTRS funding plan for when the funding plan would end, if the state has not paid off its unfunded liability by that point. So that's the target date for us to pay it off.

All right. We want to stay on track. Thank you. Sorry for that. All right. I think that that is the end of our presentation. If we have anybody who would like to speak publicly, please come up. You're all so quiet today. All right, well, then that will end our hearing. To pay for the amount. That, I guess, is because there's no stir, there's no additional. So, I mean, it's essentially. It does still redirect supplemental stir statement, to use word for what would be a jet operation. Right. So it is taking money away from sterns. What did they get? The 2324 something. It's a 2425. Yeah. So we're saying for 24. Essentially, instead of achieving savings, maybe I should have registered.