Senate Budget and Fiscal Review Subcommittee No. 5 on Corrections, Public Safety, Judiciary, Labor and Transportation

The Senate Budget Subcommittee Number Five on Corrections, Public Safety, Judiciary, Labor and Transportation will come to order. Good morning. We are holding our Committee hearing here in the Capitol. I ask all Members of the Subcommittee be present in Room 112 so we can establish quorum in beginning our hearing.

Today's hearing will cover the Governor's May Revision proposal across corrections, public safety, judiciary, labor, and transportation. We will be joined by representatives from the Department of Finance, Legislative Analyst's Office, and departments agencies covered by Subcommittee Number Five. This is an informational hearing, so we are not taking any votes today.

This hearing will start with labor, workforce development, employee compensation, pensions, and retirement issues, then cover public safety and judiciary issues and conclude with transportation issues. We will take public comment after we complete discussion on all items. To ensure we have time for everyone, everything on today's agenda, we are asking presenters to keep their testimony under five minutes.

I would also ask my fellow Committee Members to keep their comments and questions concise. Would any of the Members like to say anything at this moment? Thank you. Good morning. So, before we begin discussion, let's establish a quorum. Consultant, please call the roll.

[Roll call] We have a quorum.

Thank you. The consultant notes a quorum has been established. Let's begin with our first issue. Our first issue is going to be an overview of the Governor's May Revision proposal. Andrew March and Aston Tennefoss of the Department of Finance, as well as Chas Alamo from the Legislative Analyst's Office.

Issue one covers the Governor's May Revision proposals for Labor Agency, EDD, the Workforce Development Board and DIR. First, we're going to go ahead and hear from Andrew March of the Department of Finance.

Hello. Good morning. Andrew March, Department of Finance. So, I'd like to start off first with a general overview of the Governor's May Revision proposal. So as noted by the Governor on Friday, the May Revision is the Governor's proposal to bridge the additional shortfall that has developed since the Governor's Budget.

Like the Governor's Budget, the May Revision is a proposal, and we understand that the Legislature may have alternatives, and we look forward to discussions with the Legislature to come to a final budget agreement.

One thing that is maybe different from previous years is that the May Revision proposes a balanced budget and budget year and budget year plus one, where we forecast a significant deficit. So, in order to prevent us from coming back next year and negotiating further reductions, we're proposing a balanced budget in budget year plus one.

As the Governor stated, none of these solutions were made lightly. This is a difficult situation for us all, and we didn't. We would prefer not to be in this situation where we're making these reductions. But we look forward to working with the Legislature to come to a balanced budget with obviously some reductions.

So, now moving on to some of the specifics for this Subcommittee. The May Revision includes $40 million in new reductions and proposes to reduce $215 million previously proposed for delays at the Governor's Budget in the labor and workforce development area.

Some of these major reductions include $150 million reduction to California Jobs First, in addition to a number of workforce programs which are detailed in the agenda.

Additionally, the Governor's the May Revision proposes ongoing resources for the Department of Industrial Relations to implement chapter legislation that was chaptered in 2024 and in 2023 and resources for departments and entities within the Labor and Workforce Development Agency to relocate to the new Labor Agency building which was formerly the Natural Resources building.

Additionally, my colleague Aston Tennefoss with me to speak to some of the more general statewide reductions, including the 7.95% operations reduction and the vacant position suite.

Good morning. Aston Tennefoss, Department of Finance. To set the stage, at Governor's Budget, we brought forward a temporary proposal to cut savings associated with vacant positions for 1.5 billion 762.5 million General Fund. That proposal moved forward as part of Chapter Nine statutes of 2024 or AB 106. As part of early action.

During the May Revision, we're now proposing that we would make that permanent by introducing not only a fund authority reduction, but a position authority reduction in 25-26 and ongoing. This proposal would result in approximately an elimination of 10,000 positions. Additionally, this would be concurrent with the state operations reduction that is proposed. The two are discrete proposals.

The May Revision assumes 2.1 billion in General Fund savings from statewide operations reductions in 24-25 and 2.7 billion General Fund savings in 25-26 and ongoing. These proposed reductions are for state entities and are necessary to address the budget deficit and encourage departments to operate more efficiently and to maintain effective levels of service.

Finance will work with departments to determine which areas within support budgets can absorb those cuts and modify items of appropriation accordingly. I'm available for comment or questions as needed. Thanks.

LAO.

Good morning. Chas Alamo with the Legislative Analyst's Office. Before taking any questions on the specific proposals, our office was asked to provide sort of an early assessment of the overall May Revision package, and so I've got a few notes here to share at the top.

Although a full analysis of the May Revision is underway at our office. We will have some initial comments published later this week and our full assessment published late next week. I can share some sort of early findings or thoughts on the May Revision package.

First, with respect to revenues, the May Revision package revenue levels are about $10 billion lower than the revenue levels presented in the Governor's January budget, and this reflects some recent weakness in cash collections, especially for the state sales tax and corporation tax.

Our office has also very recently produced a revenue forecast, and it is somewhat below the May Revision revenue numbers. So, though we believe the May Revision revenue estimates are reasonable, we think they're probably a little bit too high.

Turning to sort of the budget architecture for the May Revision, in our view, the package puts the state on better fiscal footing than the state was on when the January Governor's Budget was presented, despite the revenue downgrade that I just mentioned. And this is primarily for two reasons.

The first is that the May Revision package more substantially pulls back on one-time spending. It does this by converting some delays that were proposed in the January budgets to reductions.

This has the effect of improving the out-year fiscal picture. And the May Revision also reduces reliance on the state's budgetary reserves, meaning that those reserves remain in the pocket to be used in later years, again improving the state's fiscal position.

At this point, sort of early observations, we think we have two main areas of exposure going into next year that we think that the Subcommittee should have top of mind when it considers these items. And the first, as I mentioned, is we think that the May Revision revenue package is probably a little bit too high.

So, there's some downside risk, meaning that by next spring, when we're all talking about the next Governor's Budget that will come out in January, the revenues for the budget year might be somewhat below what's included in these May Revision estimates, and that means more challenging decisions have to be made next spring.

Similarly, related to the potential risk of more challenging decisions in the spring, we point out that some of the reductions proposed in the May Revision may be challenging to achieve, and specifically, the operating spending reduction across the board of 7.95%. These types of reductions are often take time to materialize.

Departments have to figure out exactly how they're going to approach these types of reductions, and if the savings do not materialize, that is, if the savings are on sort of budgetary payments paper, but not in practice materialize, the position that the Subcommittee and the broader Budget Committee will be in next spring will be more challenging than is presented here in the May Revision package. Those two items to keep top of mind.

I'm happy to take any questions. And I've also joined by my colleague who can answer some more specific questions about the operating reductions proposed in the May Revision. Thank you.

Thank you. Colleagues, do you have any questions for this panel? Senator Seyarto.

First, I want to clarify that this panel is encompassing the EDD all the way up to issue two, correct? So all the pages in between. Thank you. First, in regards to revenue estimates, both of you can weigh in. We heard sales tax, we heard other taxes, income tax.

What are our revenue estimates for income tax revenues going to be? Are they on the uptrend or downtrend? Because I know we have the highest unemployment in the nation right now, so that frightens me a little bit. Yes, sir.

Of course, I did mention the state's sales and use tax and corporation tax for sliding. The flip side of that coin is that there has been some modest growth in the state's personal income tax receipts after the substantial decline that we saw in the last fiscal year.

We as an office think the most likely reason we're seeing strength in the personal income tax but not in the other revenue sources is due to one of the key remaining bright spots in the state's economy, and that's been the stock market over the last six months.

The S&P is up 20% since last October, and that has direct and indirect consequences, improvements for the state's personal income tax. We think were it not for strong equity markets, the personal income tax would be moving sideways, and that would be a deterioration relative to the May Revision position that we're in.

I will say that both our office and the Administration now have personal income tax forecasts that are relatively close to one another. But emphasizing that that modest growth that we have seen in the last year really, in our view, hinges on asset markets, which, as you all know, are subject to considerable volatility.

All right, follow up question to that. Is it of either of your opinions that we are in a recession or are we not in a recession?

I'm not the expert on the revenues, but the May Revision does not forecast a recession.

Okay, so we're dealing with all this in the scope of not being in a recession. I shudder to think what would happen if we were in a recession. So, hopefully, we won't go there. Question about the Unemployment Insurance interest. So, we have a revised estimate for that? Correct? It's $153 million more than we thought.

So we update the unemployment interest payment twice a year. So, in October and in May. In October we were working with the current interest rates at the time and projected it for the 2024 calendar year in May. We've updated that with revised interest rates from the Federal Government. And subsequently, the interest payment has gone up by 153 million to 484.3 million.

So, it's almost a half a billion dollars right now. And we owe $21 billion currently, as of last year.

As of April, we owe 18.3 billion. But it does fluctuate depending on the receipts and the benefits.

Right. And that's the difference of the fluctuation. Okay.

That's correct. But we are projecting around a $20 billion UI loan balance at the end of 2024.

So, in retrospect, the $43.4 billion that we got from the Federal Government, and if we had paid that off, we wouldn't have that payment. Right?

Potentially, if the state had made different choices several years ago to pay the balance, then, yes, there would be.

Yeah. Two years ago. Workforce Development Board. We have some cuts there that concern me a great deal. First of all, we are continuing with, though not as much, but $20 million to go to the California Youth Leadership Corps. Correct? We're going to continue that funding.

No. So that funding was originally proposed in 24-25. We're proposing now to reduce that funding to zero.

Okay. Because I didn't know whether we were doing 40 million and we reduced it by 20. So, it's zero?

The original commitment was $60 million, 20 million each year for three years, and we're withdrawing the last year of that funding. So 40 million has been.

So, it's already gone, and now we're going down to this one. Correct? Okay. So, that alleviates that concern.

However, more concern comes in the Department of Industrial Relations. You know, as our UI debt goes up and we shift those costs, those costs get shifted to, I think we're doing 150 million from workforce training, basically, our employment training.

So, with regards to the Employment Training Panel, the Employment Training Fund, so early action adopted utilizing $100 million from that fund, which was in the fund balance. So, there are no programmatic impacts to using that fund. And then the May Revision also proposes in 25-26 to utilize an additional $50 million that is again in the fund balance. So no programmatic impacts.

So, is the Women in Construction Unit being eliminated, not a programmatic balance issue?

That is. So, as I mentioned earlier, there were many difficult decisions and decisions that we would prefer not to make that are in the May Revision. But we look forward to discussing with the Legislature and prioritizing coming to a balanced budget. But due to the constraints of the budget, we had to make some difficult decisions, and that was one of them.

And I understand that you will be doing some negotiating with my other colleagues. This is our opportunity to talk about our concerns so that when you're negotiating, at least some of our voices can be heard in the back of the back of people's minds while we're going through this.

Women in Construction Unit absolutely does not need to be eliminated. There are plenty of places to get money that we're spending other money elsewhere to be able to maintain a program that helps us get women into a nontraditional field. You know, I've ridden on planes with some of these ladies, okay?

And there is no reason for us to be eliminating that program while we shift money that could be used for that program to pay UI debt. We're actually spending money in unemployment instead of employing people which will help eliminate our unemployment, you know, problems.

So that's something that, as we go forward, I would like everybody to be aware of, that women in construction, apprenticeship stuff, those type of things should not be eliminated with their 10 million or $15 million price tags. And I see your hand on the button. Are you wanting me to move on? Because I'm not done.

I am done, actually. Those are the things. So, those are my concerns about where those cuts are. There are other funds that we can still make those cuts in those other funds and reduce those funds, not eliminate other programs. But eliminating those programs is not an acceptable solution for our self-generated budget woes. Thank you.

Senator Durazzo.

I want to thank my colleague for raising that last issue. I want to add to the question, in addition to eliminating the women in construction, we've cut the youth apprenticeship program as well. There's virtually no money left for high-road training partnerships. And so, with these kinds of workforce programs, cuts all across the budget.

What's the Administration's plan to fund training for the jobs that we know are growing? There'll be growing demand for jobs that are needed, for example, to manufacture, build, operate, and service green future jobs. And they're already out there. Broadband, you name it. There's so much need of a trained workforce that we don't have right now.

So how was this taken into consideration and what is the Administration's plan to fund the training that we already are feeling is needed? And we know it's only going to grow in demand.

Yes. So, the reductions that are included in the May Revision are generally for the last year funding. So there still was significant funding that was previously committed to as part of the 2022 budget package. So, there's, you know, there's still a General Fund there, and that funding is still going out.

So, for example, for high-road training partnerships, that funding is still, even though it was already allocated, it is still flowing through to the grantees.

In addition to the prior General Fund commitments, there remains federal funding through the Workforce Innovation Opportunity Act, and then in addition to funding that's been designated from the IIJA through SB 150, additionally, for hybrid training partnerships. And the state continues to look at opportunities to leverage additional federal funding to expand workforce training.

So, that would have to be a conscious decision by the Administration, by us, by California, to use federal dollars for training. It doesn't come predetermined. So, is the idea to use federal dollars for training?

We don't have a proposal on the table right now, but as I mentioned, SB 150 directs the state to use 50 million of IIJA funding for workforce training. So that is something that the state is pursuing.

Yeah, that's for construction. It's not for non-construction. So, I guess that was my question. And if you're using the Biden, the Biden Administration federal dollars, how is it that you're going to include equity and job quality?

Again, we don't have a proposal in front of us, but happy to continue working with the Legislature on how to access that funding and what utilizing that funding looks like.

Okay. Because that's a really essential part of what the Biden Administration has said. They want the dollars to be used in a way that's going to promote job quality and access and equity to those training programs and to the jobs themselves. On the job. Oh, okay. The California Jobs First.

Could you explain that, where we're ending up on the California Jobs First program, and if their May Revision is adopted, how does Labor Agency prepare to adapt the program to a lower amount of support? I mean, that's gone through, and I'm not. I want to be clear as to where we're ending up after the January proposal, the May Revision. There's a lot of moving parts in that.

Yes. So, at the May Revision, the May Revision proposal. So. originally there was $600 million allocated to California Jobs First. The prior funding would be maintained at $300 million, and then it would be $50 million each year over the next three years.

So, $50 million in 24- 25, 50 million in 25-26 and 50 million in 26-27. And the previous $300 million is fully committed, and the California Jobs First Council has allocated that, respectively. Overall, the $150 million reduction would be a general reduction to, to a number of areas within California Jobs First.

We're happy to provide you specifics on sort of where the various pots of funding end up.

Okay. Okay. And on the California Youth Leadership Corps reduction, there were a lot of partnerships that were required to make that program work. So, what is your sense, or anyone, what is the sense of the impact on these partnerships that it took two years to pull together and really work together?

I mean, so there would be withdrawing $20 million of the $60 million commitment. So, there would still be maintained that $40 million, of which $20 million is still going out in the current year. But we're not naive that there would be impacts across the board with these reductions.

Okay, I think that's it for.

Thank you. So, I have a couple starter questions, and then I have more detailed questions. One, do you have any additional information about how the ongoing reductions to state operations is going to be implemented? And is there accompanying budget Bill Language expected with this proposal?

Aston Tennefoss, Department of Finance as my colleague at LAO alluded to, there is time needed to implement some of these. And so final.

I'm sorry, I can't hear you.

Final decisions are still being made in terms of the implementation. While the expectation is that most departments will be expected to reduce their support budgets by the 7.95%, Finance will work with them in order to determine the impacts and the feasibility of those reductions without negatively impacting their operations.

In terms of a vehicle to carry it forward, Control Section 4.05 was included in the Governor's Budget, and the May Revision proposes minor updates to that language.

All right, and then are there departments that will not be strictly subject to these reductions? If so, which departments and how were these departments determined as exempt?

At this time, most departments are expected to participate in the reductions. The language proposed for 4.05 in the 24 May Revision explicitly exempts the Legislature from these cuts, given its independent status and appropriation process.

We do estimate that at the time of May Revision, we were going to exclude the various public safety and 24-hour operational needs, but generally, most departments will be participating.

Okay, so UC, CSU, CAL FIRE and CDC are exempt?

It sounds like it overlaps with the list, but I don't have the specific list in front of me.

Okay. And with CDCR, I want to be very frank. So, originally the proposal in January was a 0.01%, roughly $15 million. Correct?

I would need to turn to a colleague for that answer.

Any colleagues in the audience.

Allison Hewitt, Department of Finance. So I think what you're referring to is there was one proposal included in the Governor's Budget of a couple of proposals in addition to was one solution that related to a baseline administrative reduction for CDCR that was 15 million in total for solutions.

I think within early action, there was 107.9 million, which included the 15 million, which is a little bit more significant. And then the revision builds on what we included in the Governor's Budget.

in terms of the overall, like, reduction in the budget proposed

Okay. And obviously there have been calls for increased decreases. I should say specifically, you know, we have seen roughly, it's right now at 3%

from May. To, I mean, from January to may, currently. What is the proposal?

Yeah. So from the governor's. From the Governor's Budget, the total change is approximately $146 million in CDCR's budget. That's a net of General Fund solutions as well as a number of a handful of other workload proposals that we'll be presenting to you later in the hearing.

Okay. And then of that, what is the percentage of the overall budget?

It's. I'm sorry, I'm not able to do the quick math in my head, but the. Just to kind of. To my colleague's point, we're still expecting that there are some portions of CDCR that would be held to the statewide.

So the number you stated was 100 and what?

From the Governor's Budget, the net reduction is 146.4 million. But that's a net number. I think there's more. There's a higher number of reductions. I think something like 300 million. It's just that there are some workload proposals that the Administration had to bring forward.

So 146 million of roughly a $15 billion budget, correct. 14.4 billion, but yes, rounding up roughly 15.

And I think you have to take. We have to look at it over a couple of years. That's just the change in mayor vision. We have to. There's some. That number isn't really capturing, like, overall solutions.

I think if you look at the solutions Administration brought forward, it's 169 million across the budget window, and then there's ongoing funding associated with a number of different proposals.

Okay. And I just want to make sure, I know we don't necessarily have Nora, but we went through a bunch of LAOs. Are you guys reviewing a number of LAOs historic proposals for reductions over the course of several years? They have put several things on the table. It has not necessarily.

Main consultant on this issue is here, but I just want to understand, have you guys been reviewing all the historic proposals on the table as well.

I think the Administration looked at a number of different ways to address the overall budget deficit, and that included what was achievable within CDCR's budget. And those are the proposals that are before you today.

What is the definition of achievable?

A number of different factors. So I'd say, and we haven't had a chance to present those proposals yet, but there's a number of different ways that we have to look at CDCR's budget. It is a 24/7 operation. And so that was something that was taken into consideration that they do provide, like critical 24 hours services.

So there's some things that absolutely just can't be cut. That said, there is, and as my colleagues from the Department and from finance can share, there's a number of different things, housing unit deactivations, reversions of prior appropriations. There's a number of ongoing solutions that are proposed as well.

So, you know, reviewing budgets in particular, the ultimate goal is usually looking at for the most bang for your buck, if you will, in a very clear, concise way. This Department is one of the most well funded departments with a population that is decreasing first and foremost.

So I just want to highlight some of the effort around there that we would get the most bang for buck in savings. Here. Again, we spend a significant amount of money on safety net and Medi Cal and things like that. And CDCR comes in right after. Right. So I want people to take a look at that.

I agree with my colleague as well, is that as much as we're taking a look, you know, whether we want to define what we've been in or what we're moving towards, whether it's a recession or not, and it's very debatable. You have experts saying we are or we were or we're going to be.

And so we never really know until we're out of it.

But one of the concerns that I have is, as you know, my colleague mentioned, is we should be investing in programs and projects that put people to work, whether that's infrastructure, whether those are getting women in construction, whether that is anything that allows them to have a future. Right.

And so far we've been seeing, you know, for me, my biggest frustration, and I, and I think I've shared this in a number of different arenas, is services and departments and organizations and efforts and programs that to me are duplicative in nature or could be expanded with significant cost savings.

So, for example, you have a California youth leadership corps, right? And at the same time, we also have a California Service Corps. Right. As well as many other programs that are kind of coming into place that potentially could do the same thing or be consolidated into one.

Are we taking a look at just administrative costs, the overhead consolidation, seamless and efficient programs?

I can't speak specifically to the two programs that you mentioned because I believe they're maybe slightly different, although I agree that they do have similar names. That may be confusing. But generally, there are some proposals across the government or across the state to consolidate various departments and realign programs that are more appropriate.

I think those might be heard in a different Subcommitee for those specific proposals. But that is something that the state continues to look at, is sort of how to streamline administrative costs. And that's part of the, the impetus of the 7.95% operational reduction is that we do believe that we can do things more efficiently in state government.

So we see roughly a $20 million cut to the California Youth Leadership Corps. But we don't necessarily see anything for the California Service Corps, again, which was launched this year, which is a pet project.

So I just want to understand, you know, again, if we're trying to promote youth doing work and supporting their communities and society, why can't we consolidate some of this and not necessarily have the duplicative nature of these programs?

I can't speak to the California Service Corps. The Youth Leadership Corps is under the workforce Development Board, again, although I think they do have similar names. They think they're different in nature. The Youth Leadership Corps is a partnership with community colleges in order to help young people become more engaged in their communities.

Do you think that Youth Leadership Corps can also be engaged with the local colleges and so forth? And again, an extension.

Again, I'm not the expert on the California Service Corps, I think is the title, but we can get back to you on sort of maybe any overlap between those two programs.

So I consistently see, and the reason why I'm bringing this up is I see, again, duplicative types of programs, whether it's in my Subcommitee, however you guys want to divide it out, we're looking at an overall budget. Right.

So at the end of the day, all of us sit as sitting members of the overall budget in the Senate. You know, these touch different things, and, you know, the focus may be slightly different, but overall, for us, we have to take a look at the budget, however we want to dissect this. Right.

So my other concern is I do believe in investing in economic development, investing in, you know, better workers programs, whether it's through a formal education system or through apprenticeships or something else. Right. We have our labor experts here in the back as well that are deeply interested and concerned about these programs.

And for me, when we're talking about labor, one of our largest populations entering the workforce today are seniors. Seniors, and so as we're cutting these programs, and specifically, you know, I want to ask a little bit more.

When we're cutting programs that are safety nets to people who are potentially not able to work anymore, who have done 30-40 years in the workforce, why, as we hear the talking point all the time, the fourth largest economy in the world, why do we have seniors still working, struggling?

And why are the cuts specifically to safety nets and programs that would put people to work and so forth?

I guess. Could you maybe provide a little bit more detail on the safety net programs that are mentioned? Are they the workforce development programs being mentioned here?

There's a number of programs. Right.

The budget cuts that we are seeing largely are affecting our everyday Members of society. Right. We are seeing significant cuts in some of these safety net. We could talk about them. Right. In full depth.

And I specifically wanted to ask, you know, since, since we're going to get into depth, is what at CDCR qualifies for the 8% reduction.

I think, as my colleague shared, and I'm happy to defer, but we were not able to share that level of detail at this point. It's going to be, do we not have it? Do we. I don't.

We have a framework that we're working from, but it's going to require additional discussions with CDCR and the other departments and offices and agencies that would be subject to the reduction.

Okay. Since this is informational hearing, can you brief us a little bit as to what is that framework potentially.

In terms of the overall framework for the reduction? I think that we need to look at the potential overlaps with departments, between departments and try to arrive at the value that we've put forward. Okay.

So we don't have anything, but we're supposed to deliver a balanced budget by June 15.

I think there would be more like, this is something that is being brought forward. It's going to be subject for discussions. There's going to be more brought forward in future budgets for the Legislature to consider, but there is more time needed to figure out exactly how to operationalize these reductions.

Okay. And I do believe that we also need more time to see what's happening. What are the proposals? Where are the discussions going? And not one single department is free from more significant in depth analysis of what's going on.

I do believe in every single department we have, including some of the things that we talked about, whether it's under the sub five committees, jurisdiction or another, there's many, many programs that are duplicative in nature and that with a little tweaking, can be consolidated, potentially save money, save these programs, and allow people to actually partake in them.

Right. So as much as possible, my priority is the lowest income individuals, vulnerable communities, safety nets, preserving all of that for them as we realize whether or not we're in a recession or not. Number one, and then number two is definitely making sure that we're investing in economic development.

That means investing in our workers as well as investing in our economy as a whole. Right. So my district in particular, as much as we're talking about these workforce development programs, my district in one city alone is home to the largest, you know, number of manufacturers in the state, 900. Right.

It covers biomedical, it covers, you know, battery research and development and much more. And I don't want to see my district hurt because of the lack of skilled workforce, because we're not investing in them. Right. And we have, in my city that I represented in Hayward, we have three colleges.

These are natural alliances that we can develop through different programs where we can help, whether you're a college kid or just somebody in the regular street wanting to skill up. So that is where our investment and focus should be, protecting the most vulnerable and also developing the workforce. Right.

Because we are not only competing with each other in business to business, but internationally. And so when we say we're the fourth largest economy, we have to start thinking like it and investing like it. So I appreciate your time. We'll move on to issue number two. Yes. Senator Durazzo, thank you.

And thank you very much for your remarks. I just want to end by giving you a couple of examples of, I think, what we were talking about, the need, the essential need for workforce development dollars. There were 77 applications for high road training partnerships, and we could only fund 33.

So the demand, the need is there for women in construction, there was a demand for $50 million in applications. They could only Fund $25 million. There's about $12 million left in oil well capping. And the money, you know, the high road training partnership funding allowed for creating a partnership between operating engineers, laborers, and a California contractor.

The money that went to fund the actual work came from CalGEM. The bid was won by a Texas company because there were no labor standards in that contract. So we're using our money to do the work of capping the abandoned wells went to Texas instead of a California company. With California workers with high road standards.

These are the things that will only worsen without the funding, without the focus that it needs to make sure that even though we're in a very difficult time in our budget, does not mean that we shouldn't be investing in our workforce today. So thank you very much.

Thank you. We're going to move on to issue number two, employee compensation, pensions and retirement proposals. We're going to start off with Aston Tenefoss, Department of Finance, and then Nick Schroeder from LAO for CalPERS proposals and then Angela Short from the LAO CalSTRS proposals.

Issue number two covers the governor's may revision proposal for employee compensation, pensions and retirement. First, we're going to hear from the Department of Finance.

Please go ahead. Aston Tenefoss, Department of Finance my colleagues will provide the overview for retirement, employee compensation and Proposition two.

Noellle Fa-Kaji, Department of Finance first, the 2024-25 May revision includes 6.9 billion, of which is 3.5 billion General Fund to satisfy the state's required CalPERS employer contribution and this number is inclusive of CSU.

Ryan Weinberg from the Department of Finance. The 2024-25 May revision includes 4.26 billion in expected General Fund contributions to CalSTRS in 2024-25.

This amount, which is slightly increased by 20 million from the post the Governor's Budget and has increased by 318 million from what was included in last year's state contributions to CalSTRS, has grown based on updated creditable compensation data reported by CalSTRS into the Governor's Budget and has grown overall since last year based on increased salaries for California State workers.

We note the CalSTRS board has not elected to increase the state's contribution rate for 2024-25, and we'd also like to point out that the mayor vision includes 519,000 to reflect the state's share of overpayments identified by the system to be paid by the state on July 1, 2024 as required by Education Code Section 24616.2.

Next, the May revision includes 1.6 billion for the Proposition to debt repayments. This is approximately 400 million less than at Governor's Budget.

The Proposition 2, dollars are proposed to be applied as follows, 360 million to pre fund retiree health benefits, 836 million to repay the loan authorized by Chapter 50, statutes of 2017 and 420 million as a one time supplemental pension payment towards CalPERS to pay down unfunded liabilities.

The May revision also includes 1.2 billion of which 639.5 million is General Fund for increased employee compensation and healthcare costs in 2024-25. Included in these costs are collectively bargained salary and benefit increases resulting from contract and side letter negotiations, as well as column of year 2025 projected increases in healthcare and dental premium costs.

This amount slightly decreased from what was proposed in the Governor's Budget by 92.7 million due to updated payroll assumptions.

And finally, the May revision includes a proposal to amend control Section 3.61 to authorize the Department of Finance to transfer Proposition 2 debt repayment funding to the California Employers retiree benefit trust fund in the current or prior fiscal year to satisfy the state's Proposition to debt repayment allocation for the relevant fiscal year.

And with that, we're happy to take any questions you may have on employee compensation items.

Thank you. We're going to go on to LAO.

Nick Schroeder with the LAO we have no prepared statements, but are happy to answer any questions that the Committee might have.

Thank you, colleagues. Do you have any comments, questions? Senator Seyarto

We're supplanting, not supplementing money in the state CalPERS from our debt. Our Prop. Two debt is that we're doing. Is that even like constitutional,

The 400 million is proposed as a supplemental pension payment. I believe you may be referring to the 1.3 billion or 1.7 billion from the prior year which we are proposed are under the early action agreement. AB 106, Chapter nine, statutes of 2024. We are proposing to apply to the unfunded liability in the budget year.

So earlier in this process, in March, we released an analysis of this issue, and at that time we did indicate that or raise some concerns about the constitutionality of using the 23-24 Proposition to debt repayment to reduce the state's CalPERS contributions in 24-25.

LAO is there an issue with that?

And as Department of Finance indicated, the proposal was adopted as part of the early action. That being said, the 24-25 budget itself has not been adopted yet, and so because of that, well, because of that, the Legislature can still choose not to do that. However, it would require revisiting the early action agreement.

Thank you.

That's all.

Alright. We'll be holding this item open and move on to issue number three. Thank you. Issue number three is the overview of governor's may revision proposals. Henry, I don't know how to pronounce that last name. Ng how do you pronounce Ng? No.

Henry Nye, Department of Finance Anita Lee, principal fiscal and policy analyst LAO Drew Soderborg, deputy Legislative Analyst from the Legislative Analyst's office.

Issue number three again, all representatives from the departments are available for additional questions and details, but issue number three covers the governor's may revision proposal proposals for judicial branch first, we're going to hear from the Department of Finance. Please go ahead.

Good morning. Henry Ng, Department of Finance. I will be highlighting a few of the notable adjustments proposed in the May revision for the judicial branch's budget.

The May revision includes early reversions of current year savings identified by the judicial branch for the following this includes $60 million from the funding provided to the courts to increase the number of court reporters and family law in civil cases, 20 million from one-time funding that was provided for court interpreter grants and 17.6 million from child courts for the implementation of care court.

This is due to case law being lower than anticipated. This also includes a reversion of 5 million operational savings and the May revision also includes the following general fund solutions starting in 2024-25. A one-time 25 million unrestricted fund balance transfer to the general fund in 2024-25.

This brings the total amount up to 105 million because we have proposed a transfer of 80 million in Governor's Budget and proposing another transfer of 25 million in bay revision. We're also proposing an ongoing reduction of 10 million for corporate reporters, and this is to align with the actual expenditures with trial courts.

But this still leaves 20 million available for the program and we're also proposing an ongoing reduction of 97 million to trial court operations. This is consistent with the statewide approach to reduce state operations by the 7.95%.

However, the May revision does provide resources to support the judicial branch and they include 21 million ongoing general fund for trial court employee and retirement benefits and ongoing resources to implement SB-331, including four positions and 1.1 million general fund and 150,000 family law trust fund in 2024-25. 1.1 million general fund and 210,000 family law trust fund in 2025-26 and 1.1 million general fund in 2026 and 2027 ongoing.

These resources will allow the courts to expand on their educational programs and materials related to domestic violence and post-conviction probation supervision. Also, I'd like note that the May revision includes ongoing reductions to resources available to implement the Care Act. Again, this is based on the updated caseload estimates and to special fund backfills based on updated revenues.

And lastly, just wanted to note that the judicial branch is also requesting 11.5 million in supplemental lease revenue bond authority. This is to complete the construction of two new courthouses in Santa Rosa. This concludes my overview. I am joined by my colleagues of judicial branch and finance and happy to answer any questions you may have.

Thank you. We're going to go to LAO.

Anita Lee with the Legislative Analyst Office. Just as overarching comments, the public safety proposals which are covered on issues three through eight of your agenda, our office, are still in the process of reviewing and will be providing recommendations and comments to the Committee in the coming days.

With that in mind, specifically related to the judicial branch, I think that there are some high level comments we wanted to provide related to two of the proposals. The first proposal relates to the reduction to trial court operations.

Absent any specific legislative direction, Judicial Council would have the discretion on how to distribute those reductions to the individual trial courts. One possible way this could happen is through the judicial branch's workload formula, which could be reasonable because that's generally based on workload, but it could be distributed in other ways as well.

So to the extent the Legislature has clear priorities for how they want the reductions to be implemented, we would recommend adopting budget Bill language to specify that because in the absence of that language, trial courts would have discretion in how they implement the reductions.

And this could mean that you have different workload or service delays, reductions, or backlogs that are reflected at the individual trial courts. Our second set of comments is related to the proposed reductions related to the court reporters.

In 2021-22 the budget included 30 million in dedicated ongoing general fund support to increase the number of court reporters in civil and family law proceedings. The courts have used this money in a variety of different ways, including to increase existing court reporter salaries, as well as offering retention and signing bonuses.

Our understanding is that there are trial courts that effectively entered into labor agreements that would dictate sort of how this money may need to be used. So that's something that we wanted to flag for the Committee just to keep in mind, because that could mean that the extent to which the desired savings are achievable is unclear.

So as an example of that, the proposal would reduce in 2024 the amount provided by $10 million. In a survey that was done by Judicial Council, the trial courts were estimating that at the end of 23-24 they thought only 6.4 million would be unspent. And so you can see there's already slightly a mismatch there.

So if we were going to achieve that higher level of savings which is currently included in the budget, it could be potentially challenging until we renegotiate some of these labor agreements, because until they're renegotiated, they would remain in effect.

So I think those are kind of the two comments, high level comments, that we wanted to provide for the Committee as you consider these proposals. Thank you.

Thank you. Do we have any comments from panelists? Senator Durazo?

Thank you, Madam Chair. Thank you, to the LAO. Just with regards to the court reporter and the interpreter reductions, we've been discussing this for several years now, the need, the urgent need for both court reporters and for interpreters.

So I guess my question considering, there's an enormous need, people's livelihoods, in a sense, are on the line because so much can happen in a courtroom that impacts their future lives, current and future lives.

So I guess my question, and I understand there's some either proposal or thoughts about pilot programs that help recruit, talking specifically about the court reporter that help recruit applicants. It's a very high-paying, very, very high-paying job.

And it's such a shame that we haven't, you know, with high demand, high paying jobs, you know, over 100,000 probably, plus a year, that we couldn't do more to help fill that need. And it's a need in all levels.

So with that, similar to the court interpreter using funding that, for example, would help pay applicants education costs or make sure that court reporter is going to have the job. So we've talked about these ideas, but here's a time when we shouldn't let go of that.

We're really moving in the right direction as far as conversations to make it real. And this reverting funding that was already ours, and now to give it back and give it away, I think, is a big, big shame. Again with the court interpreters using a portion one time for recruitment bonuses.

Those help us get there with those ideas. And so that next year we're not, again, in this crisis or a worse crisis situation. Yes. You agree? Yeah. All right.

Judge Maria Hernandez. I would certainly agree. I'm the Presiding Judge from Orange County and the Chair of RTCP Jack, and we want to be good partners. We're coming to the table with the legislative branch as well as the governor's administration.

But we're very concerned of the overall impact on the reduction and what that means to access to justice for, as Senator Wahab stated, the most vulnerable population that we serve.

And to your point, Senator Durazo, we don't have verbatim records when we don't have court reporters sitting in those chairs and talking about their livelihoods, but the people that we are serving to preserve their records and preserve that access to justice.

So we have great concerns about the reductions and what that means, cutting hours, shuttering doors, not being able to provide the services and the resources that we all know are needed to continue to provide to our California residents.

Thank you. Senator Seyarto.

Thank you. I have a question concerning the trial court trust fund backfills. Currently, the state has been backfilling because we run short on revenues. We need to run the courts and all of the things necessary to maintain those courts. And this is looking like a 45, I don't know, $45 million that they're reducing it by.

Does the state, the Department of Finance folks, did they anticipate that this need is going away or because general fund revenues are going down?

So that's only going to get wider because this almost seems like just a maneuver to make it look like we don't, we're not going to be spending as much when we actually are because we can't just shutter facilities.

Yeah. Emma Jungwirth, Department of Finance. This is just an annual adjustment that we do every year for the trial court trust fund backfill, where we assess the revenues that are coming into the TCTF and providing a backfill to keep them whole. So while it looks like.

Well, while it is a $45 million reduction is truly to align with the revenues that are coming into the TCTF itself. And so there is a total amount. Do you have that by chance? I don't have it off top of my head, but there is a total amount that we have included in the budget.

So the revenues are going up?

In the trial court trust fund.

For the trial court trust fund without the state input.

Yes.

So we're just kind of keeping that balance, is that what you're saying?

That's exactly right. Yeah.

Civil filings have improved over the last year, and so that generates additional revenues for the branch.

All right, so I'm just going to make my comments about the judicial branch. I think it's often overlooked as very much an important part of our society and not necessarily prioritized in a lot of the bills that we introduced, let alone a budget request. So I completely understand that.

I also want to highlight and echo some of the comments that were made. I deeply care about the interpreters, specifically California being as diverse as it is. And I often kind of state, even in my own position, I'm a minority amongst minorities, and often I see the elders in my community not have the resources they need. Right?

It's not one of the dominant languages, is not one of the dominant cultures in the State of California, but just as everybody, they also need interpreters, they need translators, they need individuals that can kind of walk them through what's going on, especially as daunting and scary as going to court can be for so many of them. Right?

So I personally, and again, I just want to highlight that I do think that we need to maintain what we're doing for the judicial branch first and foremost.

I know I've had conversations with the Chief Justice as well, who's been advocating for kind of mainstreaming and streamlining a lot of the efforts in the judicial branch specifically, and I've stated this multiple times, even in the last time you guys were here, is if we can have extended hours, right?

If people are working nine to five, they cannot go to court. Right? And sometimes they just sign something. People often talk about plea bargains and plea deals just because it's so daunting.

But I will go even a step further that even on some very small infractions, people take a deeper hit, whether it's their insurance or whether it's just paying the fee and so forth, just because they can't attend a court appointment.

So for arraignments and things like that, I genuinely believe that it should be super quick and super fast and potentially just online for people to be able to do it. I know I told the Chief Justice, I think you should be able to get an email, click a button and move on.

She said, I think you're ahead of, like, where the rest of society wants to go with that. And then also just even the court cases, right? You know, they get a document, they spend literally, potentially the whole day, 8 hours, and there's no clear commitment of when their time is for their actual case. Right?

That is a problem for regular people. Right? And I often state this in regards to our fiscal deficits, is that we should also take a look at it as an opportunity to fix systems that are not as efficient.

And I think that this is an opportunity for the judicial branch to really think about how they can potentially either provide weekend or a little bit late night services. And I'm not talking about the walk in courts, you know, that happen once or twice a month or something like that. I'm talking about more robust later timing. Right?

Because the nine-to-five doesn't always work. And I know it's not most courts, at least in my county, it's not even nine-to-five. It's like nine to four or something like that. So it's not fair to the average society whether they are accused of something or not. Those timeframes do not work for working people. Right?

Again, I do care about the interpreters and the reporters, and I think it's incredibly important to be able to maintain the integrity of the court records as well as much more. So I'm hoping that we can kind of figure out what we're doing here. So I appreciate your time. We'll move on to issue number four. Thank you.

Thank you very much.

So issue number four. I always mess up. Anthony Franzoia from the Department of Finance. Anita Lee from LAO. Drew Soderborg, LAO. Issue number three covers the governor's May revision proposal for the Department of Justice. We're first going to hear from the Department of Finance, so when you're ready, please go ahead.

Good morning Chair Members of the Subcommitee and perfect pronunciation on the last name. Thank you Anthony Franzoia from the Department of Finance. I will be highlighting a handful of adjustments included in the May Revision for the Department of Justice's budget.

First and foremost at Governor's Budget, we proposed $100 million loan from the litigation Deposits Fund going to the General Fund in 24-25. But given some statutory changes, we are now proposing to switch the Fund source to the unfair competition law Fund.

And then additionally, the mayor of vision is proposing another $30 million loan from the unfair competition law Fund for a total of $130 million in 24-25. Moving on to workload bcps at a high level, there are ongoing resources for six workload bcps in 24-25. These amount to $30.7 million in 93 positions.

The General Fund portion of that is $12.8 million. In eight positions, the special Fund component is $17.9 million and 85 positions quickly on chaptered legislation BCPs there are ongoing resources for 13 chaptered ledge BCPs in the budget year.

These total $17.45 million in 47 positions, the General Fund component about $15.9 million and 41 positions the special Fund component a little bit smaller, $1.47 million and 6 positions. In terms of General Fund solutions, there are two included for DOJ in the May Revision.

The first is a $15 million ongoing reduction for the Division of Law Enforcement and the Division of Legal Services. That will be a $10 million reduction for the Division of Law Enforcement and a $5 million reduction for legal services. DOJ has the flexibility to determine exactly how it implements this reduction.

We're not being prescriptive in terms of what DOJ needs to to cut to meet the target.

Given the fact that the May Revision has only just been released, I don't think DOJ has a lot of specifics on what will go into that $15 million, but both the Department of Finance and DOJ are working together on that and we're committed to having conversations with the Legislature over the coming weeks.

The second, smaller solution is a $3 million ongoing reduction for the Division of Medi Cal fraud and elder abuse and for the department's defending California resources, which I'll refer to as decal. For the Division of Medi Cal Fraud and Elder Abuse, there's a $2 million Fund swap between the General Fund and False Claims Act Fund.

Basically, we would reduce DOJ's General Fund items supporting DMFEA by $2 million and then increase the False Claims Act Fund item by $2 million. So offsetting some General Fund expenses and then for decal, it would just be a $1 million ongoing introduction to those resources. And that concludes my remarks and happy to answer questions.

Anita Lee with the LAO so similar to the prior issue, we have a couple of initial high level comments for your consideration. The first is related to the proposed $10 million reduction to the Division of Law Enforcement, also known as DLE.

Do generally supports DOJ's task forces and investigation teams, as well as the Bureau of Firearms, the Bureau of Forensic Services and the Bureau of Gambling Control. All of these, with the exception of the Bureau of Gambling Control, do receive General Fund support.

And so the Legislature might want to consider whether it would like to provide DOJ with direction on how to implement the reduction if the Legislature has clear priorities. So, for example, the Legislature might have a priority that certain task forces or teams maintain operations as a priority over others. So that's just an example.

Specifically related to the Bureau of Forensic Services, we would note that the state has provided General Fund support since 2016 to 17 to backfill a decline of criminal fine and fee revenue that supports its operations. And so most recently, the 2023-24 budget.

So last year's budget provided $46.1 million of a General Fund backfill for three years, and that backfill can also be increased by the Department of Finance if more money is needed through a section letter process.

And we did want to note and remind the Committee that our office has made prior recommendations that could potentially reduce that amount of General Fund that's needed to support BFS.

Specifically, we have recommended requiring that users of BFS services be directed to partially support a cost of its operations, and this would minimize, again the impact on the General Fund, as well as provide users with greater incentive to think about the workload that they are submitting to the bureau.

We raise this again because, given the state's budget situation, this is something that the Committee may want to consider in addition, or in lieu to the governor's proposal. The second set of our comments relate to six firearm related budget change proposals that were included as part of the May Revision.

These six proposals total $15.5 million from the General Fund in 2024 to 25, declining to $8.1 million annually beginning in 27-28. We generally don't have concerns with the dollar amount, but we do question whether the General Fund is the appropriate source to be paying for this, particularly given the state's budget situation.

Specifically, we would note that these costs could potentially be supported by the state's firearm-related special funds, which would include the dealer's record of sale, special account, or DROs, which the Committee has discussed in the past. The DROs Fund is authorized by state law to support a wide range of firearm-related programs and activities.

So a key example of that is one of the proposals on this list is the firearm IT system modernization project, or the fits, some project that would replace a number of existing systems, about 17 of them. And so the governors may revision proposes funding for the next step, but from the General Fund.

And prior iterations of requested funding have actually come from DRO. So that's kind of an example of that funding. These types of proposals from fee revenue that go into the firearm related special funds would merit consideration given the state's budget situation.

We do note that there could be concerns related to the solvency of dros, and so the Legislature could either consider increasing the DROS fee and or providing a General Fund loan that would be repaid from DROS. Our final comments is specifically related to fitsum.

The fitsum project is getting close to the stage where it might then be built. You don't have a proposal for that additional funding, but we thought we would flag for the Committee that it could cost a couple hundred millions of dollars to build.

So, given this upcoming cost, the Legislature may also want to consider directing DOJ to provide an assessment of how much fee revenues may need to be increased to cover that cost. And the Legislature could then use that information to determine how much to increase the fee while balancing its priorities.

And by balancing its priorities, it can include ensuring that there's sufficient monies for enforcement activities while also balancing how much firearm purchasers are being asked to pay. Thank you so much.

Thank you, Committee Members. Senator Seyarto.

All right. Right now we have, what, $4.7 million in 24-25. Another $4.7 in 25-26. And does that second for the. I'm sorry for the climate litigation. Nuisance. Climate nuisance litigation against the oil companies. So it's $5 billion. So is it $10 million total, or is it 15? In other words, is that 2nd, $4.7, is that for the next two years?

Anthony Franzoia at the Department of Finance. It's correct. It's $4.7 million in 24-25, 25-26 and 26-27. So three additional years of funding.

So $15 million to chase after a climate nuisance lawsuit.

Correct. I will note that the 2023 Budget act already appropriated, I think, $3.8 million one time. That was the General Fund, and these are special Fund resources. Okay.

Because that's absurd. That's ridiculous. That's a ridiculous expenditure of money. And then the other one is, again, the firearms information technology systems. We haven't had a very good track record with this stuff, with our IT systems, shifts and stuff.

And those are the kind of projects, when you're looking at a budget that needs to be cut drastically, there are some programs that don't need to be done right now because they're not going to have an immediate impact on the lives of anybody.

And so, you know, I'd like to see us being a little bit more, I don't know, careful about what kind of programs we're cutting versus what kind of programs can sit and wait for a little bit. And I'm going to take one that's a little out of our context.

But when we're talking about $500 million for electric buses and we're cutting $10 million from some of our workforce development stuff, that doesn't make sense.

Some of that stuff can wait a couple of years while we're in this crisis, while we dig ourselves out of the self imposed crisis, our self generated crisis that's not in a recession, that's the kind of tough kind of cuts that we should be looking at and yet I don't see those.

I see us funding a ridiculous lawsuit for $15 million for the next two years that I doubt very much that we're going to prevail in.

So I think there's a lot more work to be done in rooting out some of the nonsensical expenditures that we're using my taxpayer money and other taxpayers monies for because that stuff like that is not the stuff that we think is very helpful in our lives.

And so those are the only comments I have about this particular section. But there's a lot of work that needs done in the DOJ to ferret out stuff that is actually useful versus stuff that is more of a messaging tool because those messages are really, really expensive to us, the taxpayers. Thank you.

Thank you, Senator Durazo.

Thank you. Hopefully, this is not out of order, but there was in the original proposal from the Administration a $30 million cut to public defenders. And I'm concerned because the may revise doesn't speak to it but also doesn't restore it, as far as I understand.

But I just, I want to raise that issue if there's a way of responding, because as I hear, as I understand it, the spending on indigent defense across the state is about half, a little over half of the amount spent on District Attorney's offices.

So here we have people who have little to no resources to spend on their own defense. And yet in total, the system is really cutting out half the people who very desperately need that defense. So if anybody could speak to that.

Hi, Cynthia Mendoza, Department of Finance. Yes, that proposal that was proposed Governor's Budget under the state and community corrections budget is still up for negotiation. It was proposed and no action was taken on it during the early action. So it is still, it is still there. Okay. And it's $40 million reduction for the 40 million.

Yes, I was wrong. More than 30. Okay. Thank you. I appreciate that. So let's negotiate, you and me on this, and we can figure it out, but let's put more into defense for indigenous people. Thank you.

Thank you Senator Newman

Let me just add my voice very strongly to Senator Ross says I give or my proxy to negotiate with you to restore those funds. Nowhere are those funds more needed. I don't think you'd find instance where these cuts are going to be more negatively impactful. So I'm glad to work on restoring those funds as well.

Thank you. One, I do appreciate your time. I'm going to move on to the next issue area. So, issue number five, again, the overview. We're going to have Eric Swanson, Deputy Director with Office of Emergency Services, Vy Nguyen, Principal Program Budget Analyst, Department of Finance. Tesh Scherkenback, sorry. I'm so sorry.

With the Department of Finance, Jared Sippel, Principal Fiscal and Policy Analyst, LAO, and Drew Soderborg, Deputy Legislative Analyst, LAO. Again, representatives from the departments are available for additional questions and details. Governors may revision proposal again, the flexible. So, we're going to start with the Department of Finance.

Excellent. Thank you. Tess Scherkenback with the Department of Finance. I'm just going to provide a quick brief overview of the five General Fund solutions for Cal OES' budget and then turn it over to my colleague Eric Swanson with the Department to talk about proposals in the May Revision.

Thank you.

The General Fund solutions that are proposed in the May Revision result in a total of 142.8 million in General Fund savings from the 2023-24 through 2027-28 years. 7.3 million is in 2023-24, 22 million in 2024-25, 69.5 million in 2025-26, 22 million in 2026-2, and 22 million in 2027-28.

So, I'll break these out now. For the state disaster warehousing operations 2022 to 23 unencumbered balance, the May Revision proposes reverting 640,000 in General Fund and this maintains 99.5% of the total original appropriation for this program.

Then we have the FireFleet vehicle replacements, and the May Revision proposes reverting the remainder of the current year funding for the fleet vehicle replacement, which will result in 6.62 million in General Fund savings. Next, we have the Listos California Emergency Preparedness Campaign, and the May Revision proposes a reduction of 12.5 million General Fund ongoing.

This maintains 50% of the total original appropriation for this program. Next, we have for warehousing operations, a proposal to reduce 9.5 million General Fund in 2024-25, 2025-26, 2026-27, and 2027-28 maintaining 82% of total original appropriation for this program.

Lastly, we have the Flexible Cash Assistance for Survivors of Crime Program, and the Governor's Budget proposed reverting the remaining 47.5 million for this program in 2023-24 and then delaying this funding to 2025-26. But given the magnitude of the budget problem has increased, the May Revision does remove the proposed delay, resulting in a straight reversion of this remaining funding. That's it. I'll turn it over to my colleague.

Eric Swanson, Deputy Director, Office of Emergency Services. We have two, consistent with other departments, we have two BCPs related to chaptered legislation totaling about 900,000 and 3 positions. One is for the newly created Cancer Firefighter Cancer Prevention and Research program, and one is related to changes to our California State nonprofit security grant program. A couple other proposals of note.

We have proposed 15.8 million in the budget, federal funds for a second round of our State and Local Cybersecurity Grant Program. And we've also proposed an increase for equipment related to a January proposal associated with a for purchase equipment related to our state emergency telephone number account program or for a public radio proposal.

I wanted to mention there was one proposal that got left out of the agenda because it was part of a capital outlay, late breaking BCP.

We've proposed a net increase of 3.2 million General Fund related to the construction phase of a communication facility replacement at Red Mountain, which is near Del Norte in Humboldt County, and provides public service radio communication to those counties.

Drew Soderborg, Legislative Analyst's Office. We don't have any specific remarks. We're still reviewing the proposals, but happy to answer questions as they come up.

Thank you. Members? Senator Durazo.

Thank you, Madam Chair. I have a question about the flexible assistance for survivors that is being completely. Is it, is it now defunded? And so, it won't. I guess on paper it will continue to exist, but. Or I don't know if at all. But if you could tell me some more about it. How is it that that funding helped organizations meet the needs of crime victims?

I'll just provide a quick comment and clarity. Yes, you are correct. The Governor's Budget have proposed that as a delay in funding. But given the magnitude of the budget problem has grown since then, the May Revision does propose a straight reversion of that funding. So no longer delaying it is a reduction.

Senator Durazo, I think you're correct in that the chaptered legislation that created that program will still exist. It just would need to be funded in a future budget appropriation.

And could you tell me some more or someone tell me some more about the program and the impact on the crime victims when it will be funded?

I think in general, in a prior hearing, we noted that we felt like this was a great idea. It fits a niche in victims' programs that hasn't hit by other programs. It was selected, I think, because of the nature of it being a pilot program and it haven't being implemented yet. This was something we felt could be put on hold until future years.

And I just would note a quick comment, if you don't mind, regarding the impact. So given that this program is still under development and no grant guidelines had been released, there's no loss of additional benefits that survivors will immediately experience because those benefits have not been provided yet.

The program is still under development, so the situation will remain status quo until funding is provided.

I appreciate that, but can anyone give me an explanation as to what kind of services would have been and will be when we get the funding?

Sure. The legislation itself set up an Advisory Committee which had Members appointed by the Legislature and the Governor. That Advisory Committee has already met and sort of come up with a framework for the program. What's different from this program, from other programs is that it's meant to be more flexible cash assistance, rather than some of our other victims' programs, provide support services such as housing or other kinds of things.

But again, because we felt like it was a pilot program, hadn't been tested yet, we didn't have any evidence of how it worked. We wanted to put it on hold until future fiscal rosiness, if you will.

Thank you, Madam Chair.

Any other Members? So, I specifically wanted to highlight, Office of Emergency Services also handles the issues that happen in our school campuses, correct?

Issues in terms of?

UCs, CSUs, you know, things that are happening in the news.

We do have sort of, we have a coordination. We're not the primary person, group involved, but we do have a coordination effort in that. Yes.

Okay. And specifically, when we're talking about security and much more. I genuinely am concerned with the survivor's reduction. This is incredibly important as we're trying to prioritize vulnerable communities. And obviously, this is important as well as, you know, just again, trying to maintain the integrity of equipment and response time and much more.

And I just want to highlight, do you believe that there's anything else? Do you have any comments for the proposed reductions on their impacts, including the state operations and vacancy reductions?

I think in general, consistent with what prior departments have said, we're going to work with the Department of Finance. Now. I would note specifically for Cal OES in this area that, you know, we're going to obviously, make sure that we meet our mission as far as disaster preparedness, response and recovery and make sure that that is, that those reductions take place in that light.

But then we also think that there, we can look and see if there's inefficiencies that can be realized through these proposed reductions.

Okay. And then specifically with the flexible assistance program, why is OES maintaining the administrative portion?

Some of that, a lot of the administrative part of it has been done already, a lot of the work ahead of time of the program. We worked with the advisory council to come up with the request for proposal. So, most of the administration has been taken care of ahead of time.

There would be some Administration administrative savings that we can work with you a little bit in terms of maintaining if the grants aren't, you know, constant communication and technical assistance with the grantees as they go through the program.

Okay. I think that we have a little bit more work to do, but then I'm just going to move on to the warehousing reductions. Does that have an operational impact or are those projected savings based on the current leases or savings from other sources?

This reduction is just a reduction in the amount of PPE levels that we are purchasing. This proposal originally came about because of what we were going through in COVID. As time has gone on, we've come to realize that we think we don't need the levels we thought we needed at that point.

Okay. And then what is the impact of the reduction to the Listos program? What will be the remaining 12.5 million be used for?

We haven't come up with an exact plan of how to allocate half the funding. It's basically half the funding is left on an ongoing basis. I will say that because in prior years this was fully funded, we have been able to develop education materials and statewide communication that we can draw upon to work with to prioritize making sure that funding gets to local nonprofit organizations where sort of the intent of the original program itself.

Okay. And then I specifically want to ask about the California Firefighter Cancer Prevention and Research Program. Can you give a little more detail into that?

Sure. This is a piece of chaptered legislation. I think the bulk of the funding associated with the piece of legislation is actually in the UC budget to provide the research grants themselves. But the legislation gives Cal OES a role in determining to go, going through and kind of rating those proposals and working out with recommendations for USs of how to fund that, those grants.

Okay. So, you know, there's a couple of programs that you guys oversee that I think is incredibly important to me, the State and Local Cybersecurity Grant Program Funding Authority. I have said this in multiple hearings so far, that cybersecurity and privacy is priority. And there was a lot of money on the table from the federal side.

And, you know, we just had a quick trip to Washington, DC, and met with a lot of folks there, and there's a lot of, again, funding on the table that's not being utilized or absorbed. So even, for example, when we're talking about transportation, right? There is roughly $40,000 on the table if the vehicle is considered a green vehicle. Right? If the purchase of that vehicle is a green vehicle.

And I don't see enough of the departments, cities, localities utilizing those funding opportunities, I would like to see that just because it is literally money on the table for new equipment, new ideas, initiatives, and so forth, and also hopefully meeting our climate goals and other more innovative efforts. But specifically the cybersecurity grant program, it is of priority. I've spoken to your leadership about this.

A lot of the localities, including in the Bay Area with the fourth largest economy, and obviously the innovation that we're seeing and much more and everything being done online, we need to be able to provide some of these localities with more resources when it comes to cybersecurity and build out the Cybersecurity Department within the OES operations. Right? And I just want to understand what is the projected vision for this.

So, this grant program, and I appreciate what you're saying about trying to work with Federal Government to get as much as we can in California. In this particular program, I think our state share is pretty, is pretty generous compared to other states. The program itself, 80% of the funding will go to locals.

And there's a percentage, I'm not recalling it right now, but there's a percentage that's supposed to go to rural areas as well, but. And 20% would be used for state. We've had our own state issues, State Department issues with cybersecurity as well, as you know. So that is how the grant is set up.

We do plan to do a traditional RFP or request for proposal from cities and counties too and try to allocate the funds to where the greatest need is possible.

All right. I appreciate it. I definitely want to prioritize cybersecurity as much as possible. We're seeing a lot of the localities being kind of hung up on being able to defend itself with these attacks. So, we're going to move on to issue number six. Again.

Overview of the Governor's May revision proposal. Issue number six, to be clear, is going to be Alyssa Cervantes, Staff Finance Budget Analyst from the Department of Finance, Orlando Sanchez Zavala, Fiscal and Policy Analyst of LAO. Drew Soderborg, Deputy Legislative Analyst from the LAO.

Issue six covers again the governor's May revision proposal for the office of the Inspector General. We're going to first hear from the Department of Finance.

Good afternoon. Alyssa Cervantes, Department of Finance so this solution is a reduction of 1.9 million in 24-25 growing to 3.9 million in 25-26 and ongoing. The proposal would return staffing levels for the Office of the Inspector General's medical inspection unit to the levels that existed prior to the recent augmentation included in the 2022 Budget Act.

The intent of this reduction is to decrease frequency of medical inspections only for delegated institutions while maintaining the shortened period for non delegated institutions. The solution allows the Administration to realize savings while still protecting the OIG's core mission, including employee discipline monitoring, clinical incident monitoring and staff complaint and inmate grievance monitoring.

Happy to answer any questions the Committee has.

Thank you. LAO.

Drew Soderborg, Legislative Analyst's Office. Before considering approving this reduction, we'd encourage the Legislature to ask the Department whether or not this reduction would impact the timetable on which the state is able to take back control of its prison medical care program.

So the OIG inspections are a key metric that the federal receiver uses to assess whether or not an individual prison is providing an adequate level of care and making a determination about whether or not that prison can be delegated back to state control.

To the extent that this proposal delayed the ability of individual prisons to be delegated back to state control, it could eventually result in the state not being able to take over control of it of prison medical care as soon as it otherwise would.

We would note that to the extent this is a concern of the Legislature, there are other reductions the Legislature could consider in lieu of this one. So in the 2023-24 budget, 3.2 million General Fund, increasing to 6.1 million annually, was provided to allow the Department to seek accreditation from the joint Commission.

This was intended to provide an external source of oversight over the level of health care provided by the Department at the time. Because this is so similar to the function provided by OIG, we felt that this funding was duplicative and unnecessary.

So this is a place where the Legislature could cut in lieu of reducing the office of the Inspector General. We do note that it would result in greater ongoing General Fund savings. Happy to take any questions.

Thank you. Members? All right, so does the Office of the Inspector General have any comments on the proposed reductions and how it will impact their programs?

Good morning. This is Neil Robertson. I'm Chief Deputy Inspector General. I do not have any prepared statements. I am happy to answer any questions.

Aside from stating the obvious, the reduction in the positions would have, in our opinion, a very negative impact on how we are able to timely perform our reports and oversight of the medical programs at CDCR.

One of the main goals and main mission statements that our new Inspector General came on two years ago was to pick up the pace on providing these reports. In the past, we were around a three and a half year range to provide a cycle of reports for the institutions. So in 2022, we did get the budget increase.

We got 18 additional positions to enhance the speed with which we were providing those reports, and we have filled all of those positions in this upcoming cycle, the cycle that we're currently in, and we are seeing an increase in time, and our projection is that we will be able to get this down to a two year cycle.

What is your response to the LAO's previous comments?

Regarding the?

The questions that.

The beginning of the.

Would you like to repeat yourself?

Sure. We basically raise concerns that this reduction could end up delaying the timetable for the state to take back control of prison medical care from the federal receiver.

Yeah, we would agree with that analysis. I think that it would slow down the process. It's stating the obvious, the positions we need to get out to the institutions and do these types of reviews. And I know that the receiver does rely upon our reports to make analysis on whether to delegate institutions back to the institutions.

And so we are feel we're a critical mission towards that and providing that report.

Thank you. Department of Finance.

Just a quick clarification. So the intent of the reduction is to only reduce the time for inspection for already delegated institutions. We're not suggesting to reduce time for the ones that are not. And only 10 of the remaining institutions are no longer, not yet delegated back to the state.

Perfect. Senator Durazo.

Are there legal implications for this? I mean, there's one thing, is the timeframe not being able to do it in the timeframe, but does that hurt us on the legal front as far as what we're expected?

I'm not sure exactly on the legal front. So in the federal receiver's office, they're delegating the prisons back to the institutions for management by the institutions and not oversight by the federal receiver.

Our role has been traditionally when we came on board, which was to provide additional oversight in quality of care and in policy, compliance with our policies. Those are the reports that we put out. So if it's assisting in getting prisons delegated back, it would slow that down.

I'm not sure how that would play out legally, but it goes towards how long the federal receiver would need to continue its work in monitoring and working with those institutions that are undelegated at this point.

Okay. I guess because there is a receivership that is illegal.

That's already happened. Right.

Right. But I'm saying is, would this hurt anything that the receiver expects of us?

I can't really answer that on behalf of the receiver's office. I know that we are just providing those reports, and he utilizes those reports in his analysis.

I'm not sure that I would defer to representatives from the receiver's office. I don't know if there's any here that could talk, but it's not my understanding that this would necessarily put us in breach of any requirement placed on us by the federal receiver.

Our concern is mostly, though, that it would just delay the overall process, meaning that it takes longer for the state to get it back. At this point, we haven't identified a concern that this would mean that we're violating any requirements put on us by the court, if that makes sense.

Thank you. Senator Newman.

I guess I'd ask of Mister Soderborg, can we translate this into dollars or prospective costs, which is to say is the savings of $1.9 million this year and the ongoing savings of just under 4?

You know, is there a chance that we could wind up spending more over time in the event that we do either breach our obligations or extend the receivership?

It's difficult to say for sure. Basically, so long as the federal receiver remains in place, the federal receiver is going to be controlling state prison medical policy to the extent the state is able to take control of prison medical policy back, it would have more flexibility to do things that it might otherwise not be able to do.

But the question of how much difference, the different type of decisions the state would make in the absence of the federal receiver is hard to know. But it's possible. But they wouldn't be possible to identify a specific dollar amount. And it's possible that the state may make similar decisions to the federal receiver.

But there is some chance that we would see some exposure monetarily, either through legal expenses or some other costs associated with extending this timeline.

Possibly. So if the state. If the absence of the federal receiver allowed the state to take an action to reduce costs that it wouldn't otherwise take, then that would be where the state would be negatively affected by this.

Chair, if I may, I feel like it's important to clarify. So what the Administration. The Administration looked at recent one time and ongoing proposals. This was an augmentation that was included in a recent budget to speed up the cycles of their medical inspections.

The administration's proposal is not suggesting that we're eliminating medical inspections and we're not even suggesting that they be delayed for institutions that have not been delegated. So there are delegated institutions that are backup under the control of the state and there's institutions that are under the receiver.

This reduction should still doesn't impact and should still allow the OIG to perform medical inspections at a faster rate for institutions that are not delegated. I think the delegated institutions, what we're saying is that it's okay if those timelines take a little bit longer.

And I would just say it is very hypothetical that this proposal in front of you would delay the end of the receivership. The OIG medical inspections are one thing that the receiver. And I'm not. The receiver cannot speak on behalf of the receiver. He's not here today.

But would just note that it's like very hypothetical that this proposal would have an impact on that. It's not completely out of the realm, but it's one thing that the receiver is looking at. And again, the majority of institutions have been delegated back to the state.

And if the OIG prioritizes these resources to perform more timely inspections on non delegated institutions, would essentially not have an impact, kind of towards the end of the receivership.

Let me see if I can paraphrase. You can tell me if I'm right. The argument here is that's a natural reduction for the expenses that would be associated with already delegated institutions. That it's sensible because it's no longer necessary at the levels at the previous levels. Is that correct?

I think that's what the administration's proposal is based on. That said, if the OIG, who we'll be working with, kind of on an implementation plan or the Legislature fault differently, I mean, we're certainly open to that.

But yes, I think that's what we're, what the kind of the basis for the proposal was not only looking across departments at recent augmentations and trying to kind of look at those thoughtfully while protecting many OIG core programs and core programs for other departments.

So it's just that we're, we're saying that perhaps the delegated institutions, which are under the control of the state, do not need quite as frequent medical inspections as compared to the than non delegated. But again, this is kind of a little bit for discussion as well.

Mister Soderborg, you get the last words.

Sure. I guess there's a couple different things I would note. First, it's possible that institutions can, the receiver could take control back over of institutions, which then would leave the OIG short in terms of resources to inspect them.

And second of all, from our perspective, even if the risk of delaying the end of the receivership with this proposal was slight, we see really no risk of using the alternative option that we identified having any impact on the timeline of the receivership. And that option would create greater ongoing General Fund savings.

Thank you. We're going to move on to issue number seven, please. Issue number seven again covers the governor's May revision proposals for CDCR. We're going to first hear from the Department of Finance.

We'll have Patrick Plant with the Department of Finance, Alyssa Cervantes with the Department of Finance, Amanda Garcia with the Department of Finance, Orlando Sanchez Zavala with LAO, Caitlin O'Neill with LAO, and Drew Soderborg with LAO. Finance.

Good afternoon. My colleague and I are going to provide an overview of the May revision proposals for the Department, and our CDCR colleagues are also here to answer any questions that you might have.

So, to address the projected budget shortfall, the May revision proposes general fund solutions for CDCR, which result in a net reduction of 169.2 million in the budget window and 117.1 million ongoing starting in 2025-26.

As noted in the agenda, these ongoing solutions include a reduction of 80.6 million for deactivating various housing units across 13 prisons, a reduction of 8.5 million in 23-24. 13.8 million in 2024-25 and 22.6 million ongoing.

To reflect a reduction in annual training for correctional officers and a discontinuation of the use of the Reality Based Training Center. A reduction of 4.1 million to reduce the number of COVID-19 tests conducted at the reception centers, a reduction of 4.1 million to reduce visiting from three days to two days for individuals in level four housing, and a reduction of 4.8 million for the proposed cancellation of the fire suppression services contract with the Los Angeles County.

Additionally, the May revision proposes a reversion of 54.8 million from prior budget acts for expanding the managed access system, the parolee data outcome project, and estimated current-year savings for both COVID-19 mitigation and the TransMETRO bus contract.

Patrick Plant, Department of Finance. The may revision also includes various workload proposals for CDCR, and we highlight the following 26 million ongoing to address the increased costs of renegotiated sex offender management treatment contracts 7.5 million in 24-25 and 14.4 million ongoing to support continued implementation of CDCR's revised staff misconduct processes. 1.5 million growing to 3.3 million to support peace officer death benefits consistent with AB-621 of 2023, 4 million in 24-25 and 25-26, shifted from capital outlay to continue the hope and redemption team through which formerly incarcerated staff lead weekly rehabilitative programming and serve as mentors to those currently incarcerated.

Savings of 44.2 million one time and 24-25 related to the accelerated closure of Chuckawalla Valley State Prison. Savings of 8.5 million 25-26 and ongoing to reduce CDCR's downtown Sacramento headquarters lease. A reduction of 6.3 million ongoing to better reflect anticipated ongoing needs associated with COVID-19 mitigation.

Also, the May revision reflects a net decrease at 21.2 million in 24-25 and 13.5 million ongoing associated with updated population projections for the adult incarcerated and parolee population. With that, we will pass it off to our colleague, Amanda Garcia, to cover capital outlay.

Thank you, Patrick. Amanda Garcia, Department of Finance. On the capital outlay side, we have two proposed adjustments to the $20 million that was included in the 2023 Budget Act for the San Quentin Rehabilitation Center improvement program projects.

We propose reverting 8 million on the capital outlay side and shifting that for use on the support side as discussed by Patrick. In addition, we propose re-appropriating the remaining 12 million to be used for improvements to the upper yard consistent with the California model and the recommendations made by the advisory council.

Additional details will be presented for this project as part of the establishment package at the June 14 State Public Works Board meeting.

LAO?

Drew Soderborg, Legislative Analyst's Office. We have comments on two of the governor's proposals, the first being the proposed housing unit deactivations.

While we appreciate the administration's proposal to try to achieve some savings related to prison capacity reduction, we do not recommend approving this proposal and continue to recommend that the state instead adopt a strategy of deactivating entire prisons as opposed to portions of prisons.

Recent deactivations of entire prisons have generated savings of around $50-$60,000 per bed deactivated. Each prison is composed of around four to six yards. In recent years, the state has deactivated eight yards, and those deactivations create savings of about $29,000 per bed on average.

Under the governor's proposal, rather than deactivating prisons or yards, they're proposing to deactivate housing units which make up prison yards. Specifically, the Governor is proposing to deactivate 46 housing units representing about 4600 beds across 13 prisons. That would save an estimated $18,000 per bed.

Reducing a similar amount of capacity by either closing by deactivating prisons as well as additional yards would create an additional about $100 million in savings annually, in addition to what would be created under the governor's proposal.

Additionally, after accounting for the governor's proposed deactivations, there would remain about 10,000 empty beds in the budget year, a number that would grow in future years. And if the Legislature were to reduce this capacity through prison deactivation, it could create hundreds of millions of dollars in additional savings.

This foregone savings under the governor's proposal is notable given the condition of the state budget and, if adopted, could result in the Legislature needing to make deeper reductions to other cuts in order to afford this level of prison capacity.

While the Administration has noted that prison deactivation can create difficulties such as access to rehabilitation programs, we think there's easy ways to mitigate those concerns, such as by using a portion of the savings to build additional classrooms at existing prisons.

Accordingly, we recommend, as I said, rejecting the proposal and directing the Department to identify prisons foreclosure and to also report which prisons it would deactivate, any concerns it has about such deactivations, and potential strategies for mitigating those concerns by January 10, 2025. Happy to answer any questions.

Thank you. Committee Members? Senator Seyarto,

Thank you. We'll start with that, prison housing unit deactivation. So far, we've already taken several prisons offline, and we have another one that I'll talk about in a little bit that is scheduled to be offline. Isn't it easier to reactivate a housing unit than it is an entire prison? Because there is a point at which the population of inmates will level out and there's a potential for it to increase back up. And so I think it's important to maintain that flexibility.

And so my question to you, LAO, since you favor closing prisons, is at what point do we stop closing prisons so that we have that flexibility to be able to accommodate what we need to keep our public safe?

So, historically speaking, the state has maintained what we refer to as a buffer of about 2500 beds. So what this buffer is, is the number of beds that we keep open below the federal limit on prison overcrowding. And so in 2019 and years before that, that buffer was around 2500, when we had a much larger prison population.

However, since then, because our deactivations have not kept up with the decline in the population, that size of that buffer has grown significantly. So under our proposal, we would suggest that it would be reasonable for state to try to aim for a 2500 buffer.

In addition, speaking to your concern about the need to be flexible and potentially bring additional capacity online, you are correct that activating housing units and yards, reactivating them, would be easier and faster than reactivating entire prisons.

But it is important to note that the prisons we've closed to date have been put on what's referred to as warm shutdown, meaning that there's still staff at the prisons who are trying to maintain them and prevent them from going into a state of disrepair, which would facilitate them being reactivated in the future.

Okay, let's move on to the LA County fire camp contract. What's that contract cover right now?

So right now, that contract is approximately $4.5 million. We kind of have a relationship with Los Angeles County to provide services to camps in those areas operated by Los Angeles County. And the proposal here would eliminate that contract fully beginning in 25-26.

What did they do for us?

They provide fire suppression services for Los Angeles County in Los Angeles County camps. We have other CAL FIRE conservation camps throughout the state, though.

Who's going to do the work that they do currently?

Presumably, Los Angeles County would have to support those services.

So you're suggesting that the county absorb those services?

They would have to take on the additional fire suppression services that would be--

So the state is paying the county 2.4 million?

It's a contract, so it's 4.5

Or 4.8 million dollars? So if the state is paying the county for something, the county has to be doing something for the state.

They provide the infrastructure for those camps that we support with incarcerated--

And for the incarcerated camps, correct?

It's an CDCR incarcerated population that operate in those camps.

Okay. And so you're suggesting that the county should absorb that, the CDCR population for the prison camps?

No, they would have to take on the fire suppression services through municipal fire services or other means, not CDCR incarcerated populations.

What happens to the camps?

That would be up to Los Angeles County to determine how to operate those.

So bottom line is there's a potential that those camp crews would go away?

It's potential, yes and--

And so you're cutting the camp crews that are in those camps?

Correct. That is a reduction in the camp crews and acknowledging the state fiscal picture. We are maintaining those camps through the 24-25 fire suppression season, which is why there are half year savings.

Are we anticipating that there's not going to be a fire season in the next two or three years because this is all about vegetation management?

Correct.

And right now with our insurance rates, part of the problem is we need vegetation management. And especially now, we've had two really wet years. So things are growing fast. So who's going to do that work if we're taking that tool away from whoever it is that we want to do that job? You think CAL FIRE is going to go do that job?

I can't speak to other departments or the local municipalities that would be required.

I'm going to take a wild guess on their behalf. No, because they have plenty to do with what they have. Reducing fire camps and also reducing the-- one of the better programs that we can get some of our CDCR people in, I'm talking about the population of incarcerated people.

That's one of the better camps, both women and men. And they do great work. And we're taking that away and reducing our ability to do the vegetation management that we need to be able to show insurance companies that it's okay to insure our homes in those areas.

Again, it's just the elimination of the contract. We would still maintain the existing CDC.

Right. That contract is about $5 million. And we're going to wind up spending hundreds of billions of dollars in consequences from not having the work that they do get done. That doesn't make any sense.

So I think that needs to be looked at really carefully in regards to not just how much money we can cut, but the good to the persons involved in the program, the work that they do and who's going to do it if they're not doing it because certainly I doubt very much that CAL FIRE is going to be able to install camp crews into those areas because those camp crews, by the way, augment everybody in California.

When we have catastrophic wildfires up here, a bunch of our camp crews from LA County come all the way up here. So we're actually creating problems within that system itself, too, our response system, by saving $5 million on this. So that's something that is of great concern to me, is reducing our ability.

We've been trying to increase our ability to not have catastrophic wildfires, and this is such an important part of that. And yet we're going to save $5 million so that we can spend hundreds of billion dollars-- hundreds of millions of dollars later in catastrophic fires. So I think you understand my concerns about that.

The visitation, we're going to skip that. Okay. Let's talk about Chuckwalla. So have they taken in-- How are they going to do this? I mean, it's a year away that they were thinking about doing. They're trying to do it. How are they going to accelerate it to six months? They just going to move everybody out?

What's the impact on the communities that are there and the impact on the workforce?

Apologies for not introducing myself previously. Justin Adelman, Associate Director with the Budget Management branch. I do have representatives here from the Division of Adult Institutions. They might be able to speak additionally with kind of the process of, you know, notifying labor and working with the community on reducing or accelerating the closure of the prison.

That'd be great. Thank you. Are they coming up?

Yes, one moment. Sorry.

Part of the-- While they're coming up, I would say part of the notification process and part of the whole process is enabling people that are directly impacted fiscally and by the closure of a prison. It's not just the prison, it's the community surrounding it. It's the people that are working there. Are they getting reassigned somewhere else?

Yes.

Hi.

Well, Raquel Buckel, Assistant Deputy Director.

Yeah, move the mic up. Yeah, there you go.

Hi. Raquel Buckel, Assistant Deputy Director for Facility Support. When it comes to Chuckwalla, you are correct that there is notices that need to go out.

And one of the things that we are looking at is obviously the placement of staff to make sure we minimize the impact of those employees there and the population to make sure that we are also transferring them to areas where they will continue with their programming, both rehabilitation, education and also any healthcare that's needed.

So, yes, again, we were able to move some of the population with the previous transitions of non-designated programming facilities and we were able to absorb some of that population. There is still population at Chuckwalla and we are working on again transferring those as well.

So they have a lot of education programs at Chuckwalla?

Yes.

Okay. So the other, all the prisons I've visited, which is four so far, do have education programs that are far, they're over-impacted by a long ways.

So how are we going to continue to help people to straighten their lives out if we're going to shut down yet another facility and try to stuff them into the same closet-like atmospheres that some of these other prisons are being forced to live with? Because we don't have the facilities right now.

And I understand we're trying to do something at San Quentin and CRC has a good facility, but they don't have the capacity to be able to absorb more of these folks. So how are we going to help them if they can't even have access to a program going to a different.

And to speak to that-- Sorry, to speak to that, I think that's one of our kind of disagreements with the Legislative Analyst Office who refer to kind of that buffer of 2500 several years ago, and that is a bed space, kind of the operational use of those beds. But we want to maintain additional space because of the programming, because we believe it's important to have opportunities for individuals to have, you know, adequate space for education or other vocational programs.

Okay, thank you. Labor force, what are we doing with them?

So the labor force, we're actually going through different processes to ensure that we mitigate the impact. Some of the things that we are doing is actually affording them an opportunity to move to within the county and outside the county to vacancies to minimize the impact with the labor force. We are working with them.

We continue to work with them. The goal is to minimize the impact on the employees and their families.

Is everybody going to be employed when we're done in six months?

I don't have--

Are they going to add to the 5.9%?

I don't have a--

I think it is not prudent to move something like this, this massive of a project up six months more than it already is. It's already a strain to get it done in a year.

But six months is a little much for the workforce, for the communities that depend on some of that economic development or the economic impact that these prisons have in their communities, for all that change to get pushed into six months to save whatever they think they're going to save, I don't think is worth it. Thank you.

I do, you know-- less probably consequential, but I think important nonetheless, I have a question. I think it's for CDCR, but the item on data collection analysis now comes funding, the revocation of the $6 million to you, if I can.

Yeah. So that was a one time allocation fund several years ago to kind of increase and to contract out for data collection on parole outcomes.

So let me give you some context. So this was an item, I think, that was adopted a couple years ago, and it was a result of Senator Becker and a bunch of us wanted to support the development of a state system, a dashboard for better insight and real time outcomes on parole.

And my understanding is it took a couple of years to move this forward, and we had the RFP is, my understanding has been done. There were submissions received prior to May 3, when it was paused. And so first question, why would it have taken two years to simply get an RFP done and responses received on something that was pretty straightforward?

Sure. So one of the issues was that CDCR has delegated authority for IT contracts and issues like this up to one million dollars. And because this contract was valued at $6 million, we had to work with CDT on kind of getting the RFP ready and kind of working through that process, and that process had some significant delays in it. There were also several kind of interested parties who kind of had a complicated bid proposal in the initial RFP. And so that whole process with CDT kind of is why it took so long to effectuate.

So I guess two additional questions. One is, to the extent that the RFP has been done, and is there some consideration to at least following that process through and maybe revoking some of the monies later and then picking that program up at such time when funds are available.

And I guess the point I would make is the problem persists. A lack of real time data is a real problem, and a solution to that that a dashboard might provide actually might yield significant savings over time that would far offset the cost of that program. So is this, you know, does this make sense, all things considered?

Because at some point, we'll probably start from scratch, if this is, in fact, a good idea. And I'd love to hear a response there.

So I can speak to some of that. And I also have Jana Sanford-Miller, the Acting Director of the Office of Research here, as far as what we can and can't afford, I can't speak to that. I know that, again, it's still in progress that bid. So I don't know if there are any funds that have gone out or that are issues with that.

I think with regard to the ongoing data research, we do have a robust office of research, and they are working with our division of adult parole operations to kind of do some new dashboards internally and in house and have some additional data reporting.

And again, the original problem we were trying to solve was there was a substantial lag in data reporting and analysis as long as three years in some cases, which clearly handicaps our ability to identify best practices and then implement those best practices across the system.

So does this not seem to be a good and reasonable expense, especially considering the benefits it might provide?

Hi, Jana Sanford-Miller, Acting Deputy Director for the Office of Research. Thank you for the question. I think it's important to recognize that CDCR is committed and determined to provide, to better serve the public and our population and our staff through measurable outcomes.

We have, in the last short period of time, we've really expanded our ability to provide data analysis. We've actually provided more on our existing, more data on our existing recidivism dashboard. We've expanded our recidivism, our supplemental reports based on our statewide recidivism report. So we've really come a long way in a short period of time.

Concurrently, we have also partnered with the Public Policy Institute of California PPIC, and we have allowed them unprecedented access to our data, our CDCR data. We anticipate a partnership with them over multi years, and in fact, their first report we anticipate this summer. So, like I said, we've allowed them unprecedented access.

They, of course, are an independent group, so we look forward to those measurable outcomes with that partnership as well.

So do I understand from your response, have we solved the data lag problem around rescission? Does that now obviate the need for this pilot, or are we simply making do? And again, I mean, you know, we're looking at a whole host of fairly meaningful sort of cost reductions. This is not huge in the scheme of things.

And again, my understanding has been to the extent that we started this, there was a real problem needing solving, and that if we could solve that, we would then be able to secure a whole, you know, a bunch of savings over time by applying, you know, better thinking and best practices.

I do believe that we have the current skill set on our team and the ability to handle this in house.

Okay. Thank you.

Thank you. I have a couple of questions. One, I want to ditto the remarks and comments made by Senator Seyarto on the fire camp contract. That's a particular concern since I'm from Los Angeles. I also wanted to talk about the third day visiting reduction. We spent a long time really struggling to get that done, and obviously for very, very, very important and big reasons.

We know research has found that regular visits between family members and incarcerated really improve the mental health of both the family and their loved one who's incarcerated in prison.

When we passed this, CDCR spokesperson person said, "frequent, high-quality visiting programs for inmates have been proven to reduce prison violence, maintain family bonds, break the intergenerational cycle of incarceration, and smooth the reentry process, thereby reducing recidivism rates." It's a very small amount of money, but the impact is enormous.

And the kind of impact that's not just dollars and cents, but results in dollars and cents not only for those individuals, but our whole community. So could you explain. I know-- Don't give me the canned response. You know, while we had to cut it from somewhere, please give me something a little bit more substantive.

Senator Durazo, first of all, I appreciate your comments, and I echo the sentiments of my predecessor that made those statements. Just to frame this reduction, this reduction impacts 23% of all Friday visits. So when we talk about our Friday visits, we're talking about 23% that are impacted. It represents 6% of all visits.

So we're talking statewide, we're talking an impact to 6% of the visits. What I would say is the department does value family ties and understands the value of family ties, and we believe that visiting does strengthen those ties. I would also just highlight that we've rolled out a robust tablet program simultaneously to expanding to three-day visiting.

And that tablet program allows the population to visit with their families at their convenience, through video visiting and through audio visiting or audio calls. So there is some light there. This was a difficult decision made because of difficult budget times.

And also, if I may, this is again, specific to level four institutions. And so one of the kind of reasonings for the department to kind of make this difficult decision is that we wanted to emphasize progression and kind of rehabilitative effort.

So for individuals in level four facilities, by allowing, you know, additional days of visitation in level three and below facilities, to kind of incentivize individuals to program and reduce throughout their incarcerated career. And again, we believe this maintains the rehabilitation effort and kind of the incentive and the overall goal of the inclusion of the additional day of visiting.

Yeah, I mean, visiting is a very important motivation for the incarcerated to be able to see it. Not a punishment, right, but a motivation. And that's been something that we worked really, really hard on. I understand it's somewhere, it'll impact people in 13 prisons.

Correct.

So, you know, 23%, 13 prisons is a big, huge impact. And again, in thinking about the amount that's saved with these individuals. So I would really urge you very strongly relook at that. When you compare the potential dollar savings with the impact on humans, it's pretty massive. So appreciate that. Thank you.

Thank you very much. Appreciate you. We're moving on to the next item, item eight, overview of the May revision proposals.

Okay. Department of Finance.

Hello, I'm Skyler-Myles Clinton Cobb. I'm representing the Department of Finance. Today I'm going to walk through an overview of the May revision proposals for the Board of State and Community Corrections.

So, to begin with, our solutions, in order to address the projected budget shortfall, the May revision proposes General Fund solutions for the Board of State and Community Corrections to achieve a balanced budget.

The solutions for the board result in a reduction of $81.7 million in the budget window, and these solutions include an additional budgetary loan of $75 million in 24-25 from un-obligated funds from the Cannabis Tax Fund to the General Fund.

These resources are not currently projected to be used for operational or programmatic purposes in the coming year, and this loan is proposed to be repaid in 2025-2026.

So the next budget year. For the adult reentry grants, a reversion of $54.2 million in General Fund in 2023-24 and a reduction of $57 million that was proposed to be delayed in the Governor's Budget.

Next, we have a reduction of $9 million in General Fund in 2024-25 for the California Violence Intervention and Prevention Grant Program or CalVIP. This will be replaced by funding from the newly created Gun Violence Prevention and School Safety Fund starting in 2024-25 per Assembly Bill 28, statutes of 2023.

Next, we have the elimination of $4.4 million in General Fund, a proposed Governor's Budget for additional payments to counties that may be still experiencing impacts resulting from any additional incarcerated individuals released to post release community supervision as a result of Proposition 57 which was approved by voters in 2016.

Then we have a one time reduction of $3.6 million General Fund in 20240-2025 from the organized Retail Theft Vertical Prosecution Grants, which represents the remainder of unallocated grant funds from a total of $30 million that was appropriated in 2022-23.

Then we have reversion of $10.5 million in General Fund appropriated in 2022-23 from the medical for the medication Assisted Treatment Grant Program.

In terms of budgetary adjustments, we have in this May revision the inclusion of a workload proposal for the BSCC, which includes funding for the chapter legislation to establish a new in custody death review program for SB 519, statutes of 2023.

We are proposing to phase in $3.3 million General Fund and 15 positions in 2024-2025 and then $7.7 million and 35 positions in 2025-2026 to implement an in custody death review program that will investigate deaths that occur in local correctional facilities.

The May revision includes trailer bill language to shift Administration of 2011 realignment grants from the Board of State and Community Corrections to the Office of Youth and Community Restoration. Happy to take your questions. Thank you.

Drew Soderborg, LAO. We do not have any comments yet, but we will be releasing them in the coming days.

Yes, Senator Seyarto.

Start it off. Thank you. So let's talk about the post-release community supervision funding. So from Prop 57 people released, the state was able to offset the cost for that to the counties. Did we confer with the counties on their impact, or are we just expecting them to absorb this cost now?

Cynthia Mendoza, the Department of Finance. We have been evaluating those impacts. These funds were considered temporary and determined annually. So in terms of what the counties are experiencing, we didn't go directly to the counties, but we are noting those impacts through our allocation formula. What we see is very, very much reduced impacts.

This was passed in 2016, and it is largely assumed that that initial group of individuals had already gone through the system and impacted PRCS. We continue funding post release community supervision through the 2011 realignment funds. This was just that extra amount where quite a few of the counties were noted as having zero impacts.

As we should. So, yeah, making them pay for something that we did is probably detrimental to the good relationships that we want to keep with our counties. Right? So let's go to the reduction of $3.6 million for the organized retail theft vertical prosecutions.

And all this is doing is authorizing or taking, reducing the amount from grant funding that never got used. Correct. So that was, we didn't really have to make that grant.

That's correct.

Okay, good. And because those are good reductions, when we find something that we funded and then we really don't need it, we should be reducing those.

The $9 million reduction from the California Violence Intervention. And that's the Cal VIP grant program. It says the Administration has proposed shifting the support from Cal VIp, from the General Fund to the new ammunition tax. So when did the ammunition tax go into effect?

It goes. I'm not sure if I know. Cynthia Mendoza, Department of Finance. It goes into effect July 1, 2024.

Okay.

We have revenue projections where we estimate that the board of state and community corrections is likely going to get their full appropriation, which is 75 million annually, up to 75 million.

And they base that on the hope that people continue to buy their ammunition here.

That is correct.

The law abiding people. Good. So anyway, that was an unfair policy in the first place, but I guess that's what we're going to do. So anyway, that's all the questions I have for now. I appreciate your answers.

Thank you. I just have a couple of questions. On the in custody death reviews. What's expected is an increase in the number of positions. Could you explain why, what's going on that we need to more than double the number of positions needed?

Sure. I'd be happy to. Good afternoon, Senator Durazo and Members of the Committee. I'm Katie Howard, Executive Director of the BSCC.

So, the new responsibilities under SB 519, which was Senator Atkins bill from last year, establish an office of in custody death review, and there is a director to be appointed by the Governor, and that person will be a Member of our staff.

And then there are significant brand new responsibilities coming to the agency that we don't currently do. So what the Department of Finance was explaining is that we did the best job that we could to anticipate the workload that's going to be involved in reviewing somewhere between 130 and 145 in-custody deaths that are anticipated annually.

The new responsibilities go into effect in July of this year. So on July 1 of 2024, the Director needs to be appointed, and that person will be appointed by the Governor. And then we need to establish the staffing. And that information, of course, is all available.

But we have 15 FTEs that are proposed in the budget change proposal for that legislation this year and then an additional 20 positions next year. Any number of different kinds of functions.

Inspectors out in the field, people with medical backgrounds, the Director themselves, analytical staff, data staff, and then some of the administrative infrastructure, all totaling up to 35 positions over two years. And 15. That's right, 15 are recommended for this year.

And I guess, is it. Is the number? Were we tracking the number? I know that this is a different responsibility altogether.

Yes.

Were we tracking the number before? Is it that the number of deaths in custody have increased, or what is it about the increased number of positions?

Sure.

Is that based on an increased number of deaths?

Well, up until this new law takes effect in July, the BSCC has had for many decades, as you know, responsibilities to inspect adult correctional facilities across the state, county operated facilities, some of the city ones as well.

But we didn't have specific responsibilities to review, investigate, and make recommendations to local entities in the event that there is an in-custody death. So that's all a brand new function, and that's what the staff are being brought on to do.

If I may add something, please.

Part of this phase, like they're phasing in over two years, it's really to make sure that, as the BSCC is developing this program, they're doing it not in a slow way, but doing it correctly and trying to bring these new positions that they've never had, these new classifications that they've never had, to ensure that they're building the program out with in a very deliberative, intelligent way so that they're bringing, like, the critical folks on in the beginning, and then over time, they're going to develop further with that.

That's why they really anticipated the full 35, but it's just going to be a phased in process.

Thank you. And then last, Director Howard.

Yes, thank you.

Yeah. How do we make up, how do we address the needs of those who are incarcerated, who will be released? How do we, for helping them get out and not come back in? Because there's a very direct connection to recidivism.

I just wanted to ask, in terms of this very, very huge cut of over 100 million, I want to make sure that I get this straight. $100 million in the adult reentry grant program?

Yes.

The adult reentry grant is absolutely a very important grant that the BSCC administers, and I know it's one of great interest to this Committee. There are currently several cohorts of adult reentry grants operating and running out into the field.

The program has been pretty well funded in the recent years, and we actually, the resources that are recommended to be reduced have not been committed out into the field, into grant programs.

So there, if you just sort of want to think about it that way, there's a little bit available that has not yet gone out to the field. So those are the funds that are recommended for reduction. But we intend to put a budget change. Sorry, wrong, wrong three letter acronym.

We intend to put an RFP out into the field so that will coincide with the wrapping up of the current cohort, so that there's no gap in the delivery of services out in the field for the adult reentry grant.

Okay, got it.

All right, Senator Seyarto.

Thank you. A little follow up question on the in-custody death reviews. Who does that currently?

There's no specific state-level entity that's responsible for reviewing in-custody deaths. However, counties are required to do an investigation and provide a report to the Department of Justice.

And we've changed our regulation in anticipation of the new function at the BSCC to right away, beginning in July of this year, that we will be able to get those reports that counties are required to do.

And then we have additional responsibilities, in addition to look into those in custody deaths, review how they happened, and then, where appropriate, make recommendations to the locals to, ideally, let's hope, prevent in custody deaths that can be prevented.

One of the in custody death issues that is going on is the fentanyl overdose.

Absolutely.

While in custody. Right. And they're getting those from various sources, visitors, etcetera. They're still able to sneak these in?

Is that what we're going after so that we can identify programs maybe, that we've set up that are actually enabling those things to happen? Because if it goes down that path, are we going to fix it, or are we going to shy away from that because there's reasons that those death rates are going up?

Well, the issue of in custody deaths across the State of California have been a topic of tremendous interest to this Legislature and the people of California in the last few years.

So I would say for sure the issue of understanding, you know, what are the causes of death and to what extent is the use of opioids accounting for some of the recent increases? I think that that's undeniable.

One of the other things that the BSCC has done, our board just approved a survey on opioids at the April board meeting.

So we're beginning to collect some data, asking a whole bunch of information of all of the locals across the state, both adult and juvenile facilities, about how they address opioids, if they are using those substances like Narcan and other things, when an overdose appears to be going on.

And also, we're asking questions about how the locals believe or what information they have about how opioids are getting into those facilities. Our board's been interested in this issue for the last, more than a year, and we wanted to get that survey launched.

So we're beginning to have that data to assist the Director of in custody Death review division in our office, which is a brand new function.

That just seems like a bigger, broader study, as opposed to this type of a very expensive review of a review, because we don't trust the counties review.

And that seems to be what this is, is we're not trusting the counties to tell us what really happened, and so we're going to review it and find out that it was an opioid death or it was a hanging, which is, most of them are suicides or opioid deaths, and we don't have one to one, 24 hours supervision of inmates.

So it's kind of like. And we've pretty much loaded the county with a lot of these, a lot of offenders. And so it just seems like we're spending a lot of money to find something that we kind of already know the answer to, and then we're going to.

And hopefully, what this money will do, really, is identify and stop the speculation as to what the answer is, identify what the answer is, and whatever it is that we become comfortable with that and move on, because this obsession with going after counties because there's inmate deaths related to opioids or whatever needs to end.

That's an expenditure of money that we should probably not be doing. And if we know. If we already know why these things are happening, because it's not always the. It just seems like they want to place the blame on the agencies because they don't have 24/7 supervision, because they just don't. We don't.

We can't afford that. Thank you.

All right, I do have a couple questions. I'm gonna start with one from this. The state criminal alien assistance program, baseline adjustment. Specifically, can we stop using the word alien and incorporated it undocumented. And is there a specific purpose of why we use the word?

Cynthia Mendoza, Department of Finance. This is a bureau of justice program, and so we've just modeled it. I mean, it's. It's basically funding we get from them, and that's the name of it. But we also agree with you. It is.

We can look and talk with management about changing that name and not using it to model it after what the federal.

Thank you. In California, we have obviously, higher standards, and where we go, the nation goes, as they say. So if we can utilize the word undocumented, if need be, I'd like to see that. And this is the last time I hope to see this on any of the documentation. And then, Senator Seyarto, would you.

Whatever is appropriate that does not dehumanize individuals and human beings. So I want to highlight that. And I also want to ask a couple questions on the medication assisted treatment grants. I see that it's for substance use disorder, but this has nothing to do with the court ordered medication. Right. This is two separate functions.

This is a grant program that was. It's a pilot program.

So let me just clarify at least my part of it. The court ordered meds is also kind of a pilot. It was during COVID to allow for the county jails to be able to provide the court court ordered meds for those that suffer from a mental illness. And I just want to make sure.

Are we talking about the same thing? Are two separate things. This is specifically for substance abuse and not necessarily substance abuse is a mental health issue. I just want to make sure that we're talking about two separate items.

It is two separate items.

Okay. I am very concerned with the fact that we are.