Senate Budget and Fiscal Review Subcommittee No. 4 on State Administration and General Government

Welcome, everybody. Thanks for your patience. We will convene the Subcommitee and establish a quorum. If the Consultant can please call the roll.

[Roll Call]

Thank you very much, and, again, welcome. We have a total of 12 issues docketed for the Subcommitee hearing today. Issues one through six be taken under vote only. Issue number 11 is an action item, which will be taken up for action after discussion in public comment. We will move to the items for discussion, which are issues seven through 12. First, the Department of Technology could please come forward. Welcome.

Thank you. Welcome. When you are, proceed when ready. Make sure the equipment is working.

Is there a button? Which button?

All right, thank you.

Each of these are different. Oh, okay. Well, thank you very.

You might want to move it closer if you need to, but thank you.

All right. I was expecting a red light, so thank you very much. Good morning, Chair and distinguished Members. Thank you for the opportunity to give a short presentation on the Middle-Mile Broadband Initiative and discuss the budget change proposal that's in front of you today. I am Liana Bailey-Crimmins, California State Chief Information Officer and the Director of the Department of Technology. Co-presenting with me today is Mr. Mark Monroe, who is the Deputy Director of the Middle-Mile Broadband Initiative.

As we painfully saw through the pandemic how important broadband is to one in five Californians across this great state of ours. Thanks to Senate Bill 156 that was signed July 2021 by Governor Gavin Newsom and, obviously, from the Legislature, we are trying to bring equitable, high speed broadband services to all Californians.

California Department of Technology, specific in relation to the Broadband for All initiative, has an important role. It has an important role when it comes to the development and operation of a 10,000 miles broadband network, which is also the nation's largest open access broadband network. We are pleased to report significant accomplishments over the last couple years, including signing contracts to lease, construct, and purchase approximately 83% of the plan network mileage.

In partnership with Caltrans, we also have been leading the way as California looks at our state and federal partners and reducing the time term permit. This has made significant efficiencies across the board. We've also established with tribal entities, local governments, and private partners. Pleased to announce we have letter of intents with the Bureau of City Lighting in the LA area. We also have Fort Bragg, Vacaville, and there are many others that we are looking forward to partnering with.

Our mission is to see that that network provides vital services to Californians, and we have heard loud and clear this is a priority for constituents up and down the state, from urban centers to rural communities. That concludes my opening remarks, and I'd like to turn it over to Mr. Mark Monroe who will give you a few talk about his slides and a short presentation.

All right, good morning Chair and Members. Mark Monroe, Deputy Director for the Middle-Mile Broadband Initiative here at CDT. I've been asked to provide a brief update on the progress of the MMBI project. As noted in the agenda, a total of $3.78 billion has been made available to CDT to develop a 10,000 miles network of open access, Middle-Mile broadband infrastructure that crosses the state. Currently, $2.4 billion of this is the federal SFRF. State, local, federal, I forget what it all stands for, but SFRF.

The federal funding that came from the American Rescue Act Plan, or ARPA, and most of the remainder is from the General Fund. The federal fund must be under contract by the end of the calendar year, this calendar year 2024, with associated work completed by the end of December 2026. Per SB 156, CDT worked with CPUC and the third party administrator, GoldenStateNet, to identify the communities where the unserved populations throughout the state were located to map a network to reach these locations.

The initial map was presented in May of 2022. And CDT had Caltrans began pre-construction activities such as permitting and design work in 2022 as well on all 10,000 miles in order to meet those federal deadlines. CDT also signed contracts early in 2022 to purchase fiber and associated materials to mitigate the risk of supply chain shortages. The state also went out to bid in 2022 for both construction and partnerships at the same time, again, to meet that deadline.

To date, more than 6500 miles of partnerships for lease, joint build, and purchase agreements have been signed, reducing Caltrans construction to approximately 4000 miles. As CDT has signed contracts for these partnerships using what you'll hear us references the RFI-squared process. It's just a way of going out to bid that presents a problem and lets the bidders kind of propose solutions. It has had Caltrans stop the pre-construction that is no longer needed on the 6500 miles.

Currently, CDT anticipates having Caltrans construct approximately 4000 miles of the network. So that is what Caltrans is currently developing and where Caltrans anticipates finalizing pre-construction by the end of this calendar year. However, given the success of finding partners in the first RFI-squared solicitation, CDT went out to bid, went out with another RFI-squared solicitation, for additional partners and is currently evaluating more than 50 proposals that were received as part of that process.

Any additional partnerships generated will further reduce the amount that Caltrans needs ultimately to develop and build. I'll be briefly referencing the handout that I believe that all of the Members were provided with from CDT.

First of all, we have a timeline for the project and reflects the fact that, again, that the federal deadlines of 2024 and 2026 for the federal funds shows that CDT is ahead of schedule due to early state and federal permit streamlining, materials purchases, and the simultaneous bid solicitations for both construction and partnership that mentioned previously. Because leases and purchases use existing infrastructure, these agreements will allow for potential early activation of some segments of the network as early as 2025 and 2026.

This also shows that the funding requested in the budget, CDT anticipates meeting the December 2026 completion deadline. The next page provides some detail on the partnerships the state is using in developing the network. Early solicitations allowed Caltrans to sign master agreements for construction of approximately 1800 miles of the network, and Caltrans is currently moving to construction in more than a dozen locations across the state for a total of 180 miles thus far.

As I've noted, RFI-squared partnership solicitations that were done last year also allowed CDT to secure 10 partnerships for the 6500 miles I referenced, and construction on these segments began this past December. You can see here on this handout that we have agreements for more than 3400 miles of leases, 2600 miles of joint builds, and 435 miles that we're purchasing. And these partnerships are currently under construction as well in five locations totaling 106 miles, with another 670 miles starting construction this quarter.

If you go to the next slide. We can see here it reflects the CDT's expenditure of of funding for the project. Of the $3.5 billion appropriated to date to CDT, 2.9 billion is already under contract for joint build and lease partnerships, equipment purchases, and Caltrans Construction, and CDT has issued work authorizations for Caltrans to start the 180 miles of the network from the 1800 miles in the master agreement and expects to have pre-construction completed again on virtually all constructed segments by the end of 2024.

On the next page you see CDT requests $1.5 billion over the next two years to fund construction or development of the final 2200 miles of the network. CDT's current plan is to continue moving to construction as segments become ready, per Caltrans rollout schedule for the full 4000 miles, including both the 1800 miles that are currently funded and the 2200 miles to be funded from the BCP.

At the same time, CDT is evaluating the new RFI-squared partnership proposals for additional partnerships mentioned earlier, and since these opportunities are often faster and reduce state expenses by splitting the costs of construction with private partners. And then the final page reflects the full MMBI Network.

Reflected in light blue are all of the areas for which FFA grant applications were submitted to the CPUC. As part of the 2021 Budget Act that funded that began funding the MMBI, funding was provided to the Public Utilities Commission to issue grants for last-mile projects, and so we're working closely with the Public Utilities Commission to make sure that, as we develop the network, we're keeping those locations in mind and making sure we can target those. The Administration's priority remains completion of the entire network, and CDT is continuing its analysis of the network to determine which segments are developed based on the amount of funding ultimately provided by the Legislature, as well as closure of any network gaps, potential inclusion of RFI-squared proposals received, and the location of areas receiving these FFA grants that I was mentioning. With that, we are happy to answer any questions the Committee Members may have.

Thank you very much, Mr. Monroe. LAO, comments?

Brian Metzker, Legislative Analyst's Office. Our office was asked by the Subcommitee to discuss how the Department's Middle-Mile Network proposal fits within the overall broadband infrastructure plan and then to provide our assessment of and recommendations on the proposal. First, on the spending plan, the current and planned appropriations for the three major state broadband infrastructure programs and projects totals $6.6 billion. Of the 6.6 billion, about 3.8 billion, which is about more than half of the total funding, is allocated for the Middle-Mile Network.

Of the 3.8 billion for the Middle-Mile Network, as was mentioned, 2.4 billion is federal funding from the American Rescue Plan and 1.4 billion is General Fund. As was also mentioned, federal funds differ from the General Fund because they are subject to specific encumbrance and expenditure deadlines. All federal funds must be encumbered by the end of 2024 and expended by the end of 2026. General Fund, by contrast, is not subject to these same deadlines.

Of the 1.4 billion General Fund, 250 million is planned for appropriation in 24-25, consistent with legislative intent language that was adopted as part of the 22-23 Budget Act. The Department's proposal, if approved, would allocate an additional 1.5 billion General Fund on top of that 1.4 billion.

Second, on the broadband infrastructure agreement itself, one of the primary purposes of the Middle-Mile Network is to provide the necessary infrastructure for communities and households to make last-mile connections and to secure high speed Internet access. For the Federal Funding Account, or FFA, applications for last-mile project grants are currently under review by the CPUC. CPUC is coordinating its review of these applications with CDT to determine how these planned middle mile network segments do or do not align with those proposed last-mile projects.

According to CPUC, approximately 370 of the 484 applications, or about 70%, or 75%, sorry, might connect to the state's Middle-Mile Network. This number seems optimistic, but more information on the Commission's analysis is expected to be presented in coming weeks. Additional last-mile project grants through the federal Broadband Equity Access and Deployment, or BEAD, Program are expected in the coming couple of years, and the total amount of funding from that program is over 1.8 billion additional federal dollars.

Third, to our assessment and recommendations on the Department's proposal, we find that the proposal derives from an approach that was presented by the Department in July of last year to implement the Middle-Mile Network in two phases. The first phase would have implemented 8300 of the 10,000, now 10,500 miles, of the Middle-Mile Network using the 3.8 billion in current and planned appropriations.

The second phase would have implemented 1700, or now 2200, of the miles using alternate funding sources, including design efficiencies and savings from the first phase, as well as last-mile project funding for Middle-Mile Infrastructure that was deemed essential for connection. In response to negative feedback from Members and stakeholders, including some that were concerned about whether the Middle-Mile Network would be available for their last mile projects, the Department changed that approach and committed to presenting the proposal that is now before the Legislature.

Since last year, however, it has become clear that the state is facing a serious budget problem in 24-25, as well as significant budget deficits in future fiscal years. And so the Department's proposal for an additional 1.5 billion General Fund for the Middle-Mile Network is not sustainable under current revenue and expenditure projections. Furthermore, the proposal does not provide critical information for the Legislature to oversee its implementation.

For example, the proposal would fund standalone Caltrans construction projects, but, due to ongoing pre-construction work, does not identify where those projects would be, how much each of them would cost, in what order they would be constructed, and when they would be activated.

This information is important for legislative oversight because of the first come, first served approach CDT expects to take with these projects. That is primarily funding projects as they complete their pre-construction work, not primarily based on their availability for last-mile projects or overall cohesion and viability of the network.

Other critical information about the need for Caltrans to construct all of these miles from the RFI-squared process, about the proposed last-mile projects that might connect to the Middle-Mile Network, and about the plan to maintain and operate the network going forward caution against moving forward with any additional funding in the absence of language that requires all of this information be presented to the Legislature.

Our recommendation to the Legislature is to approve the 250 million that was planned to be appropriated in 2024-25 but with language that requires that detailed information be provided about the administration's current and future plans for the Middle-Mile Network. However, we also recommend the Legislature reject the Department's proposal for an additional 1.5 billion General Fund.

The fiscal pressure facing the state does not support a General Fund investment of this magnitude, particularly given the significant number of miles that can still be delivered and the possibility of alternate funding sources that may be available for last-mile connections that are deemed essential. And more information about these alternate funding sources could be included in that potential language. Happy to answer questions.

Thank you for that. Department of Finance.

Courtney Massengale with Department of Finance. This proposal is essential to the completion of the Middle-Mile Broadband Network, and, if not fully funded, difficult decisions will need to be made on which sections of the network are not constructed. Thank you.

Thank you. And with that, we'll bring it to the Committee. And, just to sort of play off both the information and comments that were provided by both the LAO and the DOF, what additional detail can you provide sort of on the internal construct that you've created at the Department to identify and prioritize either to go into the pre-construction phase based upon demand and need, ranking the highest need to the lowest need and moderate need, and linking that up. What is the internal process for creating sort of a strategic approach, if we're constrained to where we address the most need?

And how do you reconcile that with the obvious engineering and physical CIP kind of demands that the nature of this infrastructure is constructed in the first place? Which often results in something that's either out of pre-construction or physically more project ready than some other segment of the network. And so, therefore, that goes first. But that first segment may or may not be strategically most critical. So what is the internal process by which we are ranking that and how are we coordinating?

For example, I know another good point that staff had pointed out here for me was, you know, there's a lot of applications at PUC for final mile. You know, that has to be coordinated. You referenced it indirectly in your testimony. So a little bit more understanding of how you've created this internal process and what are the considerations that you're using to strategically rank these priorities, and how are you accomplishing it?

Yeah, sure. Thank you for the question. So in terms of how we're prioritizing the, as has been noted, our current plan is to build a full 10,000 miles, and therefore, kind of, as sections become ready, moving that forward, but we need to make sure that no sections are stranded and that, you know, that obviously is, you know, something that can't happen. If it's not connected, then that doesn't work. And so that kind of goes without saying.

But then the other, in terms of prioritizing, at this point, we're looking at the, at those FFA grant locations. And so I think the Committee is aware that the Public Utilities Commission received almost 500 grant applications that they're currently reviewing. And the PUC had indicated in February that of those, at least 93 had indicated a plan to connect to the network.

So in terms of prioritizing, I would argue that our process really is to target those 93 to be able to make sure that, at a minimum, we provide support to those. And it's a big important element of why we need to build the full 10,000 is that, as the LAO mentioned, it's not just the $2 billion in FFA grants that the PUC is allocating, but another 1.86 billion that will be coming from BEAD and from the federal BEAD program.

And for last-mile applicants, a really important tool, a really important piece of the puzzle for them is how do they, they can go ahead and get funding to build their last-mile, where do they connect to Middle-Mile? And so the state's Middle-Mile provides that answer. It actually supports the state getting more of those or a lot of last-mile projects being funded and receiving grant funding because there is a Middle-Mile to connect to.

The only thing else I'd like to add is, in addition, is, as this network goes into operations, it's very important that it's resilient. So if a fiber gets cut, that these communities that are reliant upon the network, that we are also building resiliency into this long haul network and getting as close to those FFA and those households. Because what the Middle-Mile does is it connects both communities and households to the Internet.

So the closer that we can get to those communities of need, the less that, you know, then less dollars have to be spent on FFA and more households can actually be connected to be able to provide more connectivity to all Californians that need broadband. Just wanted to add that. That's a part of the prioritization as well.

That's helpful. I appreciate it. And sort of broadening a little bit, I also note, it appears that when we embarked on the initial programming for the initiative, there were estimates given by the Department about the total number of miles we're talking about, and that's been adjusted upward. And if you could clarify, is that, was that just sort of a truing up post, sort of implement, you know, post getting underway for lack of a better term? Or were there additional factors, information, new considerations, policy considerations that changed the total miles?

So it took it from 10,000 to 10,500, and...

Initially, when the proposal was put together, I think the Public Utilities Commission had estimated about 8000 miles. All right, just to link up those unserved communities that they identified. They went through a robust public process and to really refine that and to really true up where those locations were. But then the other side of that is the resiliency that the Director spoke of. Because, you know, some people may, some of you may be familiar with the way, you know, broader telephone works, right?

If a line is cut, you want more than one line serving areas, right. So if something is cut, people don't lose service. The same applies to this, to the broadband network. And so that was also a large component of where we ended up in the final map is building in that resiliency to make sure that the system is reliable for everybody.

So there's two fold. One is the need, when we went out with the maps, the 8100, when we went through public comment through the CPUC, the need across all California was greater as we started looking at these unserved communities. So it went from 8100 to 10,000. And then when we started going feet on ground and engineering, we realized that as you dialed in, you couldn't actually go through LAX. You had to go around LAX, you know, for good reasons. But, as you were trying to add up the miles, the miles did continue to go up a little bit. And we're at the 10,550, remind me exactly.

10,564.

Thank you. But that, as it was more about the engineering on the ground, we needed to make sure that there was some of that being accounted for.

Thank you. We'll bring it to the Committee. Senator Smallwood-Cuevas.

Thank you, Mr. Chair. And I'm feeling a little confused about kind of the basics of us not understanding the what, when, and where.

Piece of this. I'm going to read this article that came out in the LA Times that had my community front and center. Last month, the Newsom Administration cut projects in some of the neediest, most disconnected communities in the state, including south and southeast Los Angeles and East Oakland, while adding projects in some of the most affluent, tech-connected communities, including Beverly Hills and Culver City. When this article came out on September 8 of 2023, there was a meeting called with those who were impacted.

And you see this child who is sitting in front of the YMCA on Crenshaw Boulevard doing their homework. This is an internet homework hotspot because there are huge swathes of South LA and Southeast LA that don't have Internet. And when this came out, there was a meeting called to explain how the communities that were part of the mandate for digital equity were lifted up at the beginning of the Middle Mile investments and then at the end of the resources last year they were still left unconnected.

The commitment was that we would be have new maps. It would be very clear that these communities would be taken care of in this funding, which I'm assuming is the 1.4 billion we're talking about; can you clarify? Are you saying you don't know if these communities are going to be included? Are you saying that there has not been a prioritization after our conversations with the Administration about this, that we don't know if the community that was laid out in the LA Times?

And also I want to add that Culver City is also in my district. So this also was pitting my district against each other over internet service. And certainly, Culver City is part of the resiliency, so they already had connection, but those who have nothing, still have nothing. So I need you to explain to me whether these communities are included in this 1.4 because I'm not understanding why we don't have the basics of the where, when, and who.

So twofold. So first, so the Administration is committed to the full 10,000 miles, and that is including all of the intersections that we have always shown on the map through the LA districts in Culver City and the gateway cities. There was a mistake when we published a map and we publicly made that available that we had mistakenly put out on the website. Just the alternative delivery, which is like the leasing and all the construction for Caltrans was inadvertently removed by accident within 24 hours, we had that corrected.

So it is accurate on the website. The LA area that we've always shown that we have the intersections is what is on the map. And that was shared with you, with your handle.

Can you tell me if South and Southeast Los Angeles and East Oakland. I need you to tell me. There's a huge map is sort of unintelligible, right? In terms of geography, I'm trying to understand: are you saying these communities are prioritized in the $1.4 billion ask they are to restore? And when, when will those projects, when will that be done?

So Caltrans, it will have all 4,000 miles of what they're supposed to construct, actually done with pre-planning by December. As those areas are, the permitting is ready. We are working with Caltrans to have them issue the work authorizations to go ahead. And we have the construction crews already. Once the permitting is done, they will start that work.

In addition, we are talking to like the LA Bureau of Street Lighting and others communities that want to do joint government to government partnerships with us that would allow us to share cost. So this LA area is a priority, as is the other rural communities and other urban areas on the map.

And so in terms of understanding the transparency, cause I still, I'm hearing that these areas will be included; is there a map that shows us as, Caltrans is requesting these additional dollars, sort of a timeline on what of the areas are prioritized, and we can get the details of when those projects are estimated to be connected?

We can. We have that information readily available, not here today, but we can get that for you by district of when the pre-planning is expected to be completed, which then in turn will then automatically go into construction if the additional 1.5 billion is received.

And as you spoke about sort of the tension, and I'm going to say tension between new infrastructure and resiliency in the first go round, when we, the effort was around the digital equity piece and it was explained that it is more fiscally efficient or expedient to invest in those communities that already have some level of infrastructure to sort of address resiliency and then to go to those communities that have nothing to build.

And part of how the decisions get made is more around not the equity conversation, but more around what is most expedient in terms of what's already there and infrastructure in the request for additional funding, I want to understand what is the way that your department will hold on? Because we lost the equity.

Somewhere we got lost, we started on equity, but we ended up with what's fiscally expedient and what makes sort of the, I want to say, and I'm going to just say technocratic sense to go forward versus the human suffering and the equity that we're trying to address. And when you do that, there's no money left to get to the equity and the human need that you're trying to address. So my question is, how do are you working with the Racial Equity Commission?

Who are you working with to ensure that as we in this very difficult fiscal moment, when we are making hard decisions about whether we're going to fund homelessness or health care, what way are you committing to the Legislature that equity will be front and center in this next round so that we don't have another LA Times Op-Ed that has our children still sitting outside of a Y trying to do their homework, because for some reason we made a mistake and we didn't hold them centered through the process.

So I'd love to answer both parts of that question. So first, equity remains center to what we're doing, not in addition to only building the middle-mile, we also are responsible for building the state digital equity plan and giving grants and making sure that we're achieving and overcoming the barriers to digital equity. What we've always looked at is construction and the alternative delivery method like leasing are both priorities.

It's just if there's already conduit in the ground, we don't have to dig, we don't have to do construction. That takes time. So we invest in both construction, and in leasing and joint bills where we can actually get conduit through one area to get it to an area like East LA or an area faster. So we're using existing infrastructure to get to those areas to provide equity. It's not in lieu of; it's a way of getting things there faster.

So that's one piece of it. We are working with increasing a lot of our stakeholder engagement. So we are working with a lot of the Oakland undivided advocacy groups, LA DEAL, the different groups that we are looking every month we have different outreach efforts and talking to local communities, not only understanding their needs both on the equity plan, but understanding their needs in relation to where the broadband network needs to be connected.

So we had, between January and March, we had over 40 stakeholder engagements. And so not only are we meeting with individuals face to face, we're also committed to transparency. So once a month, the last Monday of every month, we make sure that the maps are completely up to date so people can see where we are going and if there's been any changes, that it's very transparent. If there was a change because we had to go around LAX, that people are aware of that.

They can comment and they can come to our existing advisory committees or meet with us in a 1-1 stakeholder opportunity. I don't know if, Mark, you have anything else you want to add to that?

Yeah, no, we appreciate that. And I'll just highlight, too, that the Middle Mile is, you know, it's in partner, as the Director noted, it's really in partnership with the Last Mile and a lot of the other efforts. And so because of the effort of the Public Utilities Commission and how they're allocating the FFA grants by targeting those that also, it's an important partnership for meeting those goals.

Well, I know the City of LA and their applications, and I appreciate the Administration being in communication so that we didn't miss out on the Last Mile because some of our middle-mile infrastructure, we were skipped over in the first round. So I'm appreciating that, that those conversations are happening.

I think would love to work more with you on how we share the updates in real time and ensure that we work together in this process so that we don't have a situation where the reason we started an initiative during COVID those two babies outside of McDonalds's not able to get their homework and do their class work because they didn't have Internet at home. We made this investment. This was about equity. And then when the money was all said and done, they were still outside.

I want us to work together to make sure in this time of very precious resources that we hold on to them and ensure that we are bringing those communities in connection. Am appreciating, you know, the update from the LAO in terms of what missing information we have to be able to make the decisions that we have to make in this really difficult time. So, you know, I'm appreciating the report. I am still deeply concerned and it seems we still have some work to do.

Thank you very much, Senator. And just to note, I think proffering to the Committee staff that additional detail, and also based on the LAO's input, which, which I think is extremely helpful, a detailed breakdown of program structure and timelines as it exists, funded or unfunded, is helpful, and what that may look like, because obviously there's some competing sets of data here, and there's no way for us to make an independent determination about what the accuracy is or isn't.

And I think it's important to get that information, so it'd be very helpful, and thank you for that, Senator Niello.

Thank you, Mister Chair. This project is a very important project for the state. There's no doubt about that. And what we're deciding here isn't necessarily whether we're doing it, but maybe timing because of significant budget challenges. So a question of both Department of Finance and LAO: what is the consequence of the LAO's recommendation of taking the first $250 million, which is in the budget, but not the rest of it? That doesn't mean it's not going to be done; it just means we don't have the money right now. So give me an idea what you think: the consequences, both.

Sure. So to address the first part where if it's not so, to be clear, you're talking about the $250 million that the LAO is recommending and not the remainder of the proposal, correct?

I'm asking about the entirety of the LAO's recommendation, which includes not approving $250 million and the $1.25 billion for this budget year.

Sure. So a large portion of the contracts need to be completed or constructed or beginning construction by 2026. So if this funding is delayed, be a lot more costly, which, if additional funding is not given, then difficult decisions will need to be made based on which areas may not receive broadband, given the availability of funding.

And that would be the sort of deadline of, that is the budget year 2026, or calendar year 2026?

Budget year 2025-26, right? Because--

The next budget year after the one we're addressing.

Correct. The one where the $1.25 billion is being requested, and that, again, is so that we can start construction prior to the expiration of those contracts, which expire in March of 2026.

And the impact would be. So pre-planning would be completed, it would be 2,200 miles would not be constructed, and we would have to make difficult decisions on where the remainder of the miles that we are, the 8,300 miles, and 6,500 of those already locked in. So the 1.5 billion is to construct and do the full 10,000 miles without it. There's 2,200 miles that are not going to be built in the next two years.

In the next two years, but not, never.

Correct.

Senator Niello, Danielle Brandon with the Department of Finance. I did want to add that understanding that if the funding isn't provided in the coming year and the budget year, that the contract will have to be renegotiated. And that's where the costs increase. And so as far as the timing goes, yes, funding could be appropriate at a later date, but to what costs we are unaware of at this time, and at what delay and how long until individuals are connected to broadband.

Metzker, LAO also, we agree with the Department of Finance and CDT that there would be a fewer number of miles that would be constructed. The middle-mile network would be about 8,300 miles, but there are potential alternate funding sources that were presented by the Administration to build out additional miles, were they to be needed for last-mile projects that could come from funding from the last-mile project grants under both the FFA and the BEAD program.

Last-mile Project Grants are eligible for middle-mile infrastructure, so if there were to be a community that needed to have additional infrastructure to connect to the state's middle-mile network that could be funded out of those grants, there could also be other mechanisms that could be evaluated. For example, lease-revenue bond financing.

If you're thinking about customer revenues coming in for the middle-mile network, there could be statutory authority given for them to enter into some bond financing for some additional miles that would be needed. But yes, the consequence of rejecting the proposal would be fewer miles would be available initially, until that initial or additional analysis is done.

Under a lease revenue bond financing measure, who would be the lessee?

Of the middle-mile network?

Well, for purposes of paying the bond.

Of paying the bond, the customer revenues would be used as kind of the basis for paying the bond, but the state would still maintain and operate the network through its third party administrator.

But it would be a true lease revenue bond in that there would be a separate party that would be paying. I'm just getting at what I've seen to be a developed abuse of the original intent of lease revenue where the state is both the lessor and the lessee. But it's another subject. I just wanted to clarify it in this context. Question about the $1.25 billion being deployed with Caltrans construction projects, which are, as I understand it, the most expensive. So why?

Well, Caltrans construction--construction is expensive in general with leasing, obviously there is no construction because we're using existing conduit and then joint builds are public private partnerships. So it's still costly, but we're splitting the cost. In some cases, we were actually able to purchase what's already there. So Caltrans construction is probably in the more geographically diverse, more difficult areas that California has. You know, along the, there's all sorts of areas, mountainous, and the areas that are left are probably the more complex.

And so the cost per mile has gone up from the original time that we received the monies several years ago. Construction costs have gone up by 40%. And part of that is because of supply and demand, supply chain. And just overall, the cost per mile just has increased the inflation, yes.

And, particularly for the final mile, but middle-mile, too. Have other technological approaches been considered, such as the low altitude satellite network like Starlink? I know in a lot of the final mile places, not necessarily in urban areas, but in rural areas where there's mountains and the like, it's a challenge. But still, that could be an alternative to broadband, could it not? And has that been considered?

Yeah, so we've certainly looked at that. A couple things are the equipment for it is costly, more costly than a lot of Californians would likely be able to afford. Certainly more expensive than--

More costly than the laying of conduit for broadband?

For broadband, more costly for each individual household that has to have the service and has to have the equipment. So that's one part. It's also somewhat unreliable, and I don't want to disparage it. It's going to be a great tool in, I think, in the overall provision of broadband and connectivity. But weather, competing signals all can affect the quality of it. And so that's some of the reasons that I think it's potentially gonna be helpful for some.

But certainly I think in terms of its build out, it's not been as fast as was originally envisioned. So that's another component. It's being built out based on the revenues that it's receiving. And so I think all of that's taking longer. I'm not an expert in that area, other than to know that it's taking much longer. There's not as many of them as was originally scheduled, I think, or they were originally scheduled. But again, there's a reliability and a cost issue as well.

Those are my only questions. Final comment is that I'm inclined to lean toward the recommendation of the LAO, and as we move toward a resolution on the budget, I'm hopeful that we come to an agreement as well to what the real gap is. Right now, we have a gap from the Administration that is $38 billion and a gap from the LAO that is on the order of $72 billion.

Maybe that's been revised since. I realize that nobody knows really what revenues are going to be, but that is such a big gap that it begs the question of what solutions do we really have to come up with? And I'm more inclined to pay credence to the budget advisor than I am to the budget rider. No offense, but there's different pressures depending on those two roles.

Thank you, Senator. Did LAO have a responsive additional comment?

Brian Metzger, LAO, I just wanted to clarify on the last question that you asked Senator Niello about the eligibility of funding for other technologies that could be used that with the CPUC's Federal Funding Account Program, there is a requirement that it be cable or fiber, that there be a reliable wireline connection. And so those Last Mile Project grants must be using that technology.

However, with the BEAD program, there is an option for fixed wireless or satellite or some other form of technology for those areas that are extremely high cost. So it depends on which Last Mile Project Grant program you're talking about; there are some other alternatives available.

Thank you, and just coming back briefly before we move, given the sort of long term investment and return impact of this infrastructure is critical, particularly, and the whole policy imperative here and budget priority here is very critical. I view it so. But the reality also is that we still have estimates that the current constrained scenarios are going to continue, may get worse with new data in the very near term, and may continue in out years. How about contingency planning?

Is there a formal internal departmental process that's thinking about or identifying other ways to complete the program in the event that the out years continue to be difficult?

Right now we are developing, again, part of it has to do with the federal timeframe. We're moving forward as though we're going to develop the full 10,000 miles, depending on the funding we get. We're going to have to do some reassessment of what we have and what we can afford to do. And that, again, will take into account where FFA applications are, where we're going to be able to best serve those communities, any of the communities that are unserved.

But, yeah, we're at this point, given the timeframe, what we need to have Caltrans get done by the end of this year. We're moving forward with the full 10,000, and we'll have to evaluate that depending on ultimately what the funding.

So the answer is there's no anticipatory, proactive, internal contingency planning. We're letting the funding realities drive the near term demands. And so my question was, is there an internal departmental effort to specifically look at contingency alternatives in the event that the budget scenario gets worse, or even identifying that detail for purposes of budgeting and policymaking, that there are other ways to get program completed in light of those constraints?

Yes, internally, we're looking at alternatives for that

Okay, and can you identify those alternatives and provide more detail what that planning looks like?

Not this morning. We're still looking at it.

Right. And I didn't mean to imply that. I expect you to answer that in detail here. But what I am inquiring about is whether that process, in fact exists, has been undertaken, and that that information can be provided. And I'm hearing yes, sort of.

We'll reach out to your staff to make sure we can get what we have.

All right, thank you for that. Senator Smallwood-Cuevas.

Yeah, I just had one follow up question and wanted to just get clarification in terms of priorities. So are there projects in my district, and I've named some of the areas that are in most acute need that are included in the 1,800 miles that has already been funded?

Correct me, but I know that there is areas in her district that pre-planning is being completed here shortly. Is that correct?

Yes. Yes, we believe definitely some of those miles will be included in the existing funding. But again, part of it depends on, as Caltrans rolls out with kind of what's done first. We're going to have to take that information and then compare it to the funding information. But, yeah, I think the expectation is that Caltrans will be ready for a number of those areas by the third quarter of this year.

So maybe I'd love to follow up to get more of a detailed account and timeline because it sounds like there's some that's already been funded. And then in this $1.4 billion allocation, there will be sort of the final sort of communities, and particularly the ones I mentioned to make sure that they're in the first round, and then we look to see, to make sure they're in the second round. So I would want to follow up with you.

I'm glad to hear there was some communities, but from my understanding, the ones actually mentioned in the article are not in that list, but I want to confirm that with you.

Thank you, Senator. Thanks to both of you. That item issue will be held open. We'll move to issue eight, which is information security compliance. Changing a little bit of presenters here. Welcome and please proceed when ready.

Good morning, Mister Chair and distinguished Members. Again, I am Liana Bailey-Crimmins, California State Chief Information Officer and the Director of the California Department of Technology. We have four BCPs, one we just discussed, and we have three more that we will be discussing with all of you from my Department. The Department of Technology has approximately 1,000 staff. Our mission supports the delivery of innovative technology through strategy and delivery. We have both a control agency responsibility from a policy and oversight perspective.

We also have a responsibility as a service provider. We have, we run basically the state's largest public sector data center at this side of the Mississippi that houses a lot of our critical infrastructure. We also oversee the state security operations center. So, security is something that is at the core of everything that we do. I am joined by the Chief Administrative Officer here, Miles Burnett, who will provide details and a summary of our proposals and be able to bring executive leaders up to answer any of your detailed questions. So, I will go ahead and turn it over to Mr. Burnett.

And before we proceed, Director, I just want to clarify on it. We were somewhat distracted, but your opening comment, you referred to all four of the BCPs. Is your intention to present for all four here in one set of comments, or are we--

We're going to do it individually.

That's what I thought. When I caught my attention I thought, okay, what are we doing here? So thank you for clarifying.

Thank you for asking.

Chairman Padilla, Members of the Committee, my name is Miles Burnett. I'm the Chief Administrative Officer for the California Department of Technology (CDT). Issue number eight, information security compliance. CDT requests a one-time $250,000 General Fund budget augmentation in fiscal year 24-25 to remediate the department's security compliance deficiencies. Addressing these deficiencies will reduce CDT's risk and potential vulnerabilities remaining undetected and unremediated, and it will improve the security risk posture of the Department and maintain compliance with the Cal Secure Roadmap.

CDT will use external security consultants to reduce the current backlog of internal vulnerabilities. These consultants will develop and document, and, where needed, execute the missing processes and procedures. Contractors will also be used to perform consistent oversight of departmental vulnerability remediation efforts. And with that, we are here to answer any questions you have on this item.

Brian Metzger, LAO, we have no concerns with this proposal.

Department of Finance.

Courtney Massengale. Department of Finance. Nothing further to add.

All right, we'll bring it back to Committee for questions. Senator Niello.

Some of these dilemmas remind me of budget sessions when I was on board supervisors many years ago. And sometimes we would just say, "find the money within your operating funds." Sounds kind of cruel. But when we're experiencing the kind of deficit that we are, sometimes we budget deciders. Well, I'm a Republican, but sometimes that's the approach that has to be taken.

Thank you, Senator. All right. With that, this item will be held. We'll move to the next issue item.

Intrusion detection and prevention systems replacement. CDT requests $809,000 in General Fund in fiscal year 24-25, $374,000 in fiscal year 25-26, and $393,000 in fiscal year 26-27, and ongoing, to replace data center intrusion detection systems and intrusion prevention systems hardware that will be reaching its end of supportable life. CDT submitted a BCP in fiscal year 23-24 to replace end-of-life IDS/IPS infrastructure and support the protection requirements of the California Governmental Enterprise Network.

However, these previously approved IDS/IPS infrastructure replacement efforts only enhance the IDS/IPS infrastructure supporting north-south inspection and protection, which specifically pertains to security monitoring protection that takes place on the outer edge where all departments interconnect to both CGEN and the Internet at large. The IDS/IPS devices currently protecting the data centers maintained by OTEC are also reaching their end-of-llife and now need to be replaced.

These specific IDS/IPS devices monitor and protect the internal perimeters between the various networks inside both of OTEC's respective data centers. These include internal database zones, crucial web servers, mainframe, and other mission-critical services that reside within both of CDT's data centers. These IDS/IPS devices provide vital east-west inspection and protection by supporting against potential attacks that may move laterally between the internal hosting environments. And with that, we are here to answer any of your questions.

Thank you very much. LA?

Brian Metzger, LAO, we have no concerns.

Thank you. Department of Finance?

Courtney Massengale, Department of Finance, nothing to add.

Thank you. Bringing it back. There was a recent update to some of the hardware that was appropriated in the prior cycle, and the very nature of this space is difficult and evolving quickly. What are the considerations here? If there's additional appropriation for hardware update, what's the durability and adaptability piece look like? What are we getting and how? Just to put it in people's terms, just, you know, lifespan. Yeah, go, please.

To answer that, I'm going to invite Mr. Vitaliy Panych to come up, the statewide ISO.

Thank you.

Vitaliy Panych, I'm the state chief information security officer, so yes sir. To address your question directly, these are hardware based devices, but also depend on subscription services to really feed our threat intelligence so that we kind of keep abreast and monitor the threat landscape out there in the community, on the Internet, in the world. These hardware devices are typically range as far as life lifespan is concerned between three to five years.

So this is one of the myriad of security controls that we manage for not only CDT and the data center, but also for the state agencies that may exhibit certain gaps. So generally three to five years is what a hardware device may last.

All right, was there, did you want an additional comment? Thank you very much. I appreciate the response. Are there other questions from members? All right, thank you very much. We'll take up the next issue, which is issue 10, statewide tech services.

CDT requests the inclusion of provisional language to allow the conversion of up to 10 million from the technology services revolving fund to the general fund for fiscal year 24-25 to support statewide technology services. CDT is responsible for developing, implementing and maintaining several statewide programs and functions that do not lend themselves well to a cost recovery model because there are not specific customers that can be billed for the services provided.

CDT offices, programs and perform statewide functions includes several, and I'm going to go through just a few of these like for instance, in strategic initiatives, facilitating stakeholder communication and engagement, development and implementation of statewide it digital strategies, overseeing strategic initiatives and specific projects, governance and policy formulation.

Most of our office of digital services perform statewide technology services, including things such as domain and web service management, statewide web hosting and cloud modernization, digital accessibility and broadband expansion consulting, infrastructure modernization and software development support, data analytics, GIS services and policy enforcement. Most of our Office of Enterprise Architecture performs statewide policy functions or or statewide services, including statewide enterprise architecture, statewide enterprise architecture program, statewide business transformation consulting, statewide modernization consulting, and statewide architecture oversight.

Several areas under the Office of Strategic or Statewide Policy, I'm sorry, statewide project delivery also provide statewide services, for instance, implementation of the project approval, life cycle and improvement to oversight, policy interpretation, excuse me, sorry, policy interpretation and updates, training and compliance, budget analysis and this is for statewide bcps that we do in conjunction with Department of Finance review and testimony preparation, project and portfolio support.

Yeah, we also other offices within CDT that also have statewide functions include the Office of Professional Development and there are scattered areas in other offices as well. And with that we open it up to any questions you may have.

Thank you. LAO.

Brian Metzker, LAO. We recommend the legislature reject the proposed provisional budget bill language. The fiscal pressure facing the state does not support a potential request from CDT for additional general fund to mitigate increases in statewide technology service costs. The department can instead continue to recover the cost of these services as administrative overhead through its technology services revolving fund.

Furthermore, the department can complete its three year rate reassessment process by the end of 24-25 and pursuant to state law, report back to the legislature on how it plans to provide these services in a cost effective, efficient and strategic manner.

Thank you, Department of Finance.

Courtney Massengale, Department of Finance nothing to add.

I'll bring it to one of the obvious things on the horizon, and it may or may not be this particular mechanism that is being requested by the department, but certainly with the executive order on generative AI from the office of governor and also with, I think, 37 policy bills in both houses dealing with this, this department is going to get deeply involved.

What can you briefly comment about the relative impact here and the work you've done with other agencies thinking about implementing both, at least with the existing eo on AI considerations and how we may be thinking about that for what's on the horizon? Again, I think there's something like 37 policy bills in both houses trying to address this very intersectional and universal and quite impactful technology assessment and deployment need.

So generative AI is not included, obviously, in these BCPs. When we receive, we received the executive order, one of the things we looked at is what we could utilize our existing resources. So today, Department of Technology partners with cloud providers, and we already have a managed environment. And so leveraging our current resources, we were able to stand up a sandbox. Any costs associated with departments proof of concepts in and those sandboxes are actually being paid for through the departments themselves.

So if there is storage or compute that will be passed through from the vendor, that is the cloud provider to those departments based on the size and complexity of their specific proof of concepts. But at this point, there's been no cost other than through the RFI square process. There's a dollar for any vendor that gets awarded to be able to utilize that, but at this point, there's no expense being requested through this effort.

Senator, Smallwood-Cuevas.

I just have a clarifying question in my head, because you mentioned that some of these technologies are used for compliance and enforcement. Is there a sense that these technologies generate revenue for the state through some of those functions? And has that ever been looked at?

So, Department of Technology, I know, Miles, you can, majority of our budget is cost recovery. So there is General Fund and General Fund typically for the SOC, which is security operations center, which is one of the BCPs for the hardware replacement.

But the majority of how CDT operates is through cost recovery through other departments. So when we have no customer to bill, when we're doing things that are across the state for the good of everyone and there's not a single department, we are then trying to figure out on our budget how we can absorb that when we don't have funds, they either have to be passed through to a customer and we have to raise our rates to customers that may or may not be necessarily benefiting from that particular statewide service. So maybe, Miles, you can explain it a little bit.

Yes. So as Director Bailey-Crimmins said, so most of our budget, about 75% of our budget is cost recovery fee for service that comes through mainly the data center and some of our other offices. But that's the primary one. The services that I articulated are statewide services that aren't revenue generating, their policy oversight or their compliance or they're standing up websites for the state, but they're not traditional revenue generating. And so they don't really lend themselves to a fee for service model.

And that's the conundrum that that CDT finds itself in. The fee for service model works well for what we do and we've worked hard with the Department of Finance to pull our rates up to break even on those areas. But it isn't really designed for the kinds of statewide services that CDT is providing that are not really revenue generating. And there's really, as Director Bailey-Crimmins articulated a customer to bill.

So if I'm understanding part of the issue is that as before service, that maybe not all departments utilize all of your services and they contract some out because it's less expensive elsewhere. Right. I don't mean that as a pejorative comment, just is that part of the problem, part of the challenge?

Say that. Say that again.

Well, you're sized to provide services to the entire state, all departments, IT services. And if I'm understanding correctly, and maybe I'm not, that some areas are accessing services that you provide elsewhere because they perceive it to be less expensive and that compromises your size and scale because it reduces your number of customers from whom you collect fee for service. Am I understanding that that?

That is correct. We have had customers who have moved some of their services off Prem.

Yeah.

And that has had an absolute impact on our revenue stream. It doesn't account for the statewide services.

I'm going to get to that separately. So I appreciate that. I am part owner of a business that has a central operations that provides HR and accounting and IT services to all of the dealerships and some of the dealer operators. The general managers may think that the charge is too much, but they have to pay it. So there's a little bit different.

There's a bit, I guess, interesting that a small business would have a stronger central command and control than a larger organization would. But I appreciate that challenge and I think it gets to the LAOs comment about finding a way to provide the service that's cost competitive given the entire marketplace. I know that's tough, but probably something that you'd have to do to struggle with that. Now, as far as the other sorts of services driven by initiatives that are statewide and you can't bill for, where do those initiatives come from?

Some are statutory, some are executive order, some are mandates from other organizations.

So they come from either executive orders or us, the legislature. I want to make that point because if the legislature, I can't deal with the executive. The executive is the executive. But if the legislature is going to impose project requirements on you that are unfunded, we're creating the problem and we shouldn't be. Now they already exist. We could probably propose legislation to reverse them and none of them would get out of committee.

But I think it's incumbent upon us to realize that when we do that, we create this problem and we create for ourselves a serious budgetary problem that is compounded upon an already existing budgetary problem. So the three of us are here anew this year, so we can say we're not part of it. But it is an institutional issue, and I think it's important for us to understand that.

Thank you, Senator. Appreciate the input. I think somebody somewhere thought it's a good idea to have fresh eyes on the departments of state government. I suppose. But thank you. All right. That issue will be held, and that concludes that department. Thank you very much for the presentations and the work. We'll invite DGS up to get settled. All right, Director, welcome. I understand you'll be doing a departmental general overview, and then we will take the two issue items up separately and individually. I understand that's the request and happy to accommodate that. Please proceed when ready.

Thank you, chair Padilla. And good morning, Senator Smallwood-Cuevas and Senator Niello. My name is Ana Lasso. I'm the Director of the Department of General Services, and I'm accompanied by Heather Carlson, our chief financial officer. She will present our budget requests, and thank you for this opportunity to provide this overview.

DGS has worked closely with GovOp's agency, the Department of Finance, and the governor's office to balance priority services and take a thoughtful, sustainable approach to recent fluctuations in the state revenues. In accord with the administration's commitment to maintain investments in safety, climate change, and sustainability while maximizing the efficiency and use of the existing state resources, DGS's budget requests include several proposals consistent with these values, including support the reopening of the Bateson building to effectively manage, operate and maintain this newly renovated building, respond to sustainable energy legislation and executive orders for all agencies that are impacted by sustainability related initiatives, and continue the administration's commitment to climate change issues, address information technology infrastructure improvements, including wireless Internet and enhanced cyber threat protection against ransomware, support the Office of Fleet and Asset Management statewide parking program to implement a comprehensive preventative maintenance plan for state parking facilities to address necessary fire life safety projects and extend the useful life of these revenue generating facilities and maximize the efficiency of the existing state resources and address the fleet operations program increased maintenance and repair costs of the state fleet and maximize the useful life of the fleet vehicles.

Finally, allocate resources to the Office of State Publishing for materials purchases to support the increased cost and order volume of paper and commodities, which have extended lead times now and production capacity in an effort to help meet DGS customer demands. Thank you again for giving me the opportunity to present our budget requests in summary, and I will turn it over to Heather Carlson

Good morning, members, chair. Heather Carlson, chief financial officer for the Department of General Services. The first proposal for DGS is a request for $4 million in the service revolving fund to support increases in required paper and commodities used by the Office of State Publishing. Over the last three years, we've encountered a 40% increase in the cost of raw materials and paper commodities. This increase does not appear to be to appear to be short lived, and therefore we're asking for ongoing authority for these increased costs.

I do have with me today Brent Jamison, who's our Deputy Director over our interagency support division. If there's specific questions or additional information about the types of things that the Office of State Printing does.

Comment from Lao.

Thank you, mister chair Jared Sippel with the LAO for this proposal, we're recommending approving it for two years as opposed to ongoing as proposed by the governor. We find that the ongoing need for additional resources is uncertain because it is unclear how long current paper supply issues will continue.

Relatedly, we think it could also make sense for the legislature to consider similarly modifying ongoing funding provided in last year's budget for a new warehouse lease to store additional paper and related materials, because the Office of State Publishing will be evaluating the continued need for that warehouse in a couple of years.

Thus, the timing would align such that the department could both consider more holistically reassess the need for both purchasing and storing an increased supply of paper and related materials, and submit an ongoing request for consideration to the legislature at that time. So happy to answer any questions. Thank you.

Natalie Griswold, Department of Finance nothing to add at this time, but available for questions.

All right, thank you. We'll bring it back to committee members.

We have is the status on our paperless process. I wonder, is there a projection of what that will save us down the line? I know we're moving to tablets. We're saving as many.

And I will probably bring up Brent Jamison. What we can say is that we know that we'll never be able to go 100% paperless until we're completely connected. Right. The Office of State Publishing is responsible for doing all of the like, the voter initiatives, so the ballot measures, the daily files, so there's things that will always be in print and available. But I will allow Brent Jamison to.

Good morning. Brent Jameson, Deputy Director of Department General services thank you for your question and adding on what Miss Carlson said. Yes, there are certainly trends ongoing paperless throughout publishing, but by and large, we respond to the needs of our customers. We're seeing big increases in variable secure digital printing, think Department Healthcare Services, Medi Cal printing and whatnot. So there is still really demand for secure printing and mailing, and that's where we're still seeing growth.

Is there, I guess, is there sort of projections in terms of the paperless plan? We're part of it too, in the State Senate and glad to have my tablet, but just trying to figure out, is there sort of a real cost analysis in terms of where the, it's a tremendous amount of money right, on paper when we think about some of the cuts that we're making right now. So I'm just curious, is there a sense of where, when will we get there and what is the sort of goal that we have?

So it's such a broad question because again, it's customer specific. Right? So every year we do poll our top 10 customers to get an idea of kind of where things are headed. As an example, DMV forms, are they going to continue to print those forms? Are they necessary, et cetera, et cetera. But at the end of the day, we are here to serve the needs of our customers.

So we don't necessarily have a plan beyond that which our customer is planning, but we do regularly check in so that we can plan accordingly and figure out, you know, what machines we need to put online, what machines we need to take off, how we recover our costs and our rights.

Thank you for that. It sounds like we have more work to do to figure out ways to be environmentally conscious in how we're using, using this natural resource. So thank you.

Any additional questions or comments? All right, this issue is, there is a recommended action on this, so we'll take it up in conjunction with other action items. Thank you very much. We can move to issue 12. Please proceed when ready.

Thank you. Chair Randy Katz, Department of Finance, cap outlay. The administration proposes a request to repeal trailer build language that would sunset the design build mechanism. This is a procurement method that the state has been using for, for close to 30 years. Typically on our much larger projects, it helps to streamline the process and in the end, on these large projects, save the state costs on average.

All right. Thank you, LAO.

Jared Sippel with the LAO. We have no comments on this language.

All right. To the committee members. Are there questions or comments? Senator Niello.

I'm shocked, you might even know what my comment is. Why not just run a policy bill? I mean, we could, this is the beginning of next year. If we passed a bill this year to extend the ability to use design build, we'd get it all. Why is it a budget trailer bill?

This is generally part of the administration's process, just to the world of legislature that directly affects our administrative processes. We noticed that this one was one that was about to sunset. If we didn't get it addressed, we would risk losing this method and many of the projects currently in this method.

So due to already having projects funded as design build in the budget proposals in the budget for design build projects, the administration felt it most prudent to move forward with this as a trailer bill.

So it's the administration that's been driving the abundant use of trailer policy, trailer bills in the budget. I don't expect you to answer that question. I just, I am, I've said many times on the floor and elsewhere that the explosion of policy, not budget related, being dealt with in budget trailer bills, I believe is an abusive process. And if you need an author to extend the use of design build beyond January 1, 2025 you can talk to me and you can talk with a lot of others, too. It may be controversial in some sections of the organization, but I don't know how so much how in the, in the legislature. It just seems to me this is in the wrong spot

Other additional comments or questions from the subcommitee members. If not, thank you very, very much. That item issue item will be held that'll take us to the public comment portion of the docket today. This is an opportunity for folks to address justice subcommitee on items that are docketed. When you please come forward, state your name for the record. Try to limit your comments to 1 minute for us, please. Thank you and welcome.

Horacio Gonzalez, on behalf of NextGen California and the California Alliance for Digital Equity, that photo of the two little girls.

Hey guys, if you'll just suspend for a second, just make sure the committee room remains in order. And folks, please, please keep your voices down so we can hear the testimony from the public. Sorry for the interruption. Please proceed.

Sure. That photo of the two little girls that were forced to access wifi from the parking lot of a fast food restaurant was fundamentally a result of a hands off approach by the state towards ensuring equitable access to broadband. To your credit, you invested $6 billion to build a middle mile in the State of California, but unfortunately, the investment only gets us 80% there. Stopping now is akin to building half a bridge to Senator Smallwood Cueva's point. Yes, there are program improvements that need to take place.

We need to prioritize these communities that have been historically left out, and that is something we could certainly do through oversight. But that does not negate the need to provide the additional $1.5 billion so that we could finish the network. We urge you to approve the full 1.5 when you get the opportunity. Thank you.

Good morning. Nicole Wordelman, on behalf of the Children's Partnership in support of the governor's proposed funding for the middle mile, I wanted to make just two quick points today. First, when you think about digital access, I want to encourage you to think of it as a core children's health equity issue. I say this because broadband access has a profound and compounding effect on health that starts in childhood.

We consider digital equity to be a super social determinant of health because digital inequity, in fact, compounds inequities in other systems, from impeding education to interrupting healthcare, all the while limiting access to resources that could address adverse social conditions, such as applications for housing and income assistance programs. These social drivers of health affect individuals at all stages of life. But the effects are particularly significant to the health and development of children.

In closing, I want to stress that persistent inequities in access to high speed, affordable Internet have lasting effects on our children's abilities to grow up healthy, to learn, and to develop into thriving adults. We respectfully ask you to fund the middle mile. Thank you.

Thank you.

Hello. Amanda Gualderama with CalBroadband. Regarding issue item seven. The Department of Technology has not presented the legislature with a business plan and revenue model to demonstrate successful operation and maintenance of the state middle mile without the need for continued General Fund support. Considering the condition of the General Fund throughout the budget forecast window and the lack of a viable business plan, CalBroadband agrees with the LAO that the legislature should reject the governor's proposed new funding on the state's middle mile project. Thank you.

Thank you. Individuals wishing to address subcommitee under public comment. Seeing none, we will then thank everyone for your participation. We'll move to the items for action, which first are issue items one through six in total for vote only. We will segregate those items first into issues 3 and 4, and the chair will entertain a motion. All right. Those items are moved. Approve as budget. Is there any discussion? If not, consultant, please call the roll.

[Roll Call]

All right. Thank you. Those issue items are out. We'll then take up issues 1, 2, 5 and 6, and I'll entertain a motion. Thank you. Though the motion is to approve as budgeted. Consultant, please call the roll.

[Roll Call]

Thank you. The vote is 2-1 and those issue items are out. Then we'll take up issue number 11. Under the Department of General Services Office of State Publishing Material Purchase Authority, the staff recommendation is now to approve as modified. I'll entertain a motion,. All right. Consultant, please call the roll.

[Roll Call]

Thank you very much. Then that issue item is out. Thanks to everyone for your participation. Anyone who wishes to provide input to the sub on this docket can also do so through the website and by submitting comments to staff in writing. With that, thank you very much. The aubcommitee adjourned. Thank you, ma'am.