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

All right. Subcommitee four, the Senate Budget and Fiscal Review Committee will come to order. As always, we're holding our Committee hearing here at the State capitol in room 113. And I know we'll be joined shortly by our third Member. Thank you, Vice Chair Niello for being present.

We are going to proceed first to take public comment on the items that we heard jointly with Budget Subcommitee number one. This is the Subcommitee that will be ultimately taking action on those items on that item at a, at a later hearing. But the, the new chair failed to take public comment at the end of that hearing.

So we're going to take it now. . So the news. If the sergeant would please allow folks in for the purpose of, or organizing for the purpose of taking public comments. So we're asking folks to limit their comments to. To a minute.

Yes, so we're gonna ask folks to limit their comments to no more than a minute. We will be doing a full hearing on this item again in budget sub 4 in the coming, in the coming weeks and months as well. So this is an opportunity to, for a, a quick check in. So appreciate it. Mr. Bryan.

Speaking on behalf of the Education Trust West, we support the proposal to create the statewide Interagency Coordinating Council. We think there'd be a lot of benefits for equity. And looking back when there's a lack of coordination among our higher ed segments, low income students of color tend to suffer the consequences.

So we think this would be a good thing for equity. We would ask that you consider, if you go forward with it, that you add looking at teacher workforce issues to the scope of work. We have a severe shortage of diverse educators.

We have some recommendations for you for adding an advisory council on that topic and perhaps adding the Commission on Teacher Credentialing to the council. And again, we support the proposal.

Thank you.

Good morning. My name is Cody Van Felden. I'm a senior project associate with John Burton Advocates for Youth. While we support the governor's proposed 5 million ongoing funding to establish the California Education Interagency Council, it is crucial that this council is designed to support all Californians, particularly our most vulnerable youth, those with experience in foster care or homelessness.

We recommend emitting the trailer Bill Language to specifically focus on these student groups who are often historically disconnected from career and education opportunities, and ensure their voices are included in the Council's work. With these amendments, this council could foster system wide strategies and well informed coordination to improve pathways to post secondary completion and high wage jobs. Thank you.

Hello, my name is Wednesday Pope and I am a California college student as well as a former foster youth. While I support the governor's proposed 5 million in ongoing funding to establish the California Education Interagency Council, it is crucial that this council is designed to support all Californians, particularly our most vulnerable youth, those with experience in foster care and homelessness like myself.

We recommend amending the trailer Bill Language to specifically focus on these student groups who are often historically disconnected from career and education opportunities and ensure their voices are included in the council's work. These students frequently face extreme poverty, lack of support systems to guide them in their academic journey.

And for foster youth, California has a unique responsibility to ensure that the systems designed to support them lead to economic mobility. Feel free to change this out to. Oh, sorry. While these. I was like I need to change that, but sorry.

With these amendments, this council could foster system wide strategies and well informed coordination to improve pathways to post secondary completion and high wage jobs. Thank you.

Thank you. And just as a reminder for folks, it's perfectly, perfectly appropriate if you have, especially if you have exactly the same thing to say as another witness. But at the same point you can also me to. As I said, we'll be taking up the substance in more detail. And, and, and as always, the Subcommitee welcomes written feedback as well. So welcome.

Thank you. Senator, good morning. My name is Jessie Hernandez Reyes on behalf of the Campaign for College Opportunity. Higher education coordination is an essential state function that is needed for the benefit of our students, our state's communities and the prosperity of our state overall.

We heard some discussion in this hearing specifically around the need to make sure that our systems of higher education collaborate in a better way. And we think that this coordinating body would ensure that that happens. Specifically, we're seeing state budget uncertainty this year.

We're also seeing an evolving federal landscape and our higher education systems are having to correspond and respond specifically to the state, the state's changes, and also the federal evolving landscape.

And so we ask that you all strongly support this measure to create a coordinating body here in the State of California and especially center the needs of our most marginalized and minoritized students. Thank you.

Good morning, Chair and Members. Anna Alvarado on behalf of the California EDGE Coalition here in support of the council. We echo the comments made by our partners and we'd like to also uplift that adult learners are mentioned as a focused population throughout the trailer Bill language which we fully support.

But we'd also like to recommend the inclusion of Opportunity Youth as well. Opportunity youth are the 16 to 24 year old population who are disconnected from their education and workforce systems. They're also involved in the justice system, homelessness, our foster youth. We also suggest adding a Member of the public to the council.

It could be a student, a worker, someone from the community who represents those that will be directly impacted by the recommendations that the Council will make. Again, thank you for your time and look forward to working with you.

Good morning Chair Members. My name is Su Jin Jez. I'm the CEO of California Competes Higher Education for a Strong Economy. We strongly support this item. California's low income students and working learners face significant barriers and our state's fragmented systems make these barriers even more challenging to tackle.

This Council's A Smart strategy for coordinating education and workforce efforts, creating clearer pathways for students and ensuring state investments are maximized. Our submitted written comments includes feedbacks we believe will strengthen the proposed language and addresses many of the comments you've raised today. We urge your support for this vital effort to improve economic mobility for all Californians.

Good morning Chair Katrina Linden, speaking on behalf of Young Invincibles, speaking today in strong support and echoing the sentiment of my other fellow higher education partners. Statewide coordination is vital to meeting our state's degree attainment goals and ensuring stronger degree and career pathways and economic opportunity for all Californians. Thank you.

Thank you.

Good afternoon Chair and Members of the Committee, I'm A.J. Johnson representing the California Alliance for Student Parent Success, Unite LA, as well as End Child Poverty in California. We support the budget item which would align siloed systems to better Su serve student parents. California is home to 400,000 student parents.

They face the steepest barriers to completion, housing insecurity, unaffordable child care and confusing financial aid systems. All of those different systems do need to come together to make pathways for careers and and education more affordable and attainable for them. And they're some of our best untapped resources. So please support this item. Thank you.

Morning Chair Members Nick Romo on behalf of the Association of Independent California Colleges and Universities, I'm here today to include 10 to urge inclusion of our sector on the Interagency Council. Our sector has 87 institutions throughout the state and educates 20% of the undergraduate students.

We are key contributors to the high knee fields of teaching, nursing and mental health. We strongly believe that any coordination our regional workforce needs must include us at the table. This request is consistent with how we are formally recognized on the governing bodies of the Cradle of the Career CSAC and the Commission on Teacher Credentialing. Thank you.

Good morning, Senators. I'm using this opportunity. I'm here for the next Subcommitee conversation, but I represent the semiconductor industry. We are part of the National Semiconductor Technology center created as part of the CHIPS act. And I also a school board Member in the City of Fremont.

So looking at both ends, we have a workforce issue for the, for the semiconductor industry that is creating a challenge for our startups to actually perform well in the industry.

And to Senator Neilo's comment that the workforce initiative should be driving towards the needs of supporting the new startups, but also looking at the global ecosystem, there are at least 1,000 high schools in the world that have semiconductor related programs, but there's pretty much none in the US So we need to be supporting both ends so that we are creating a workforce for semiconductors, which is really a big future of the global economy.

Thank you. All right, so that concludes our public comment on that item. I'll just note maybe for our staff, it would be great for that council because Senator Niello both and I have both been very active on this topic in the past as well.

It would be very helpful to me listening to everyone talk about what they hope the agency will do is perhaps, and perhaps we could ask Finance or GabOps to share with us a mock up of what at full operation, what would a meeting agenda with action items look like for such an entity?

Because what I'm hearing a dissonance for myself about what the aspirations are and then what the council's actual functions, power, resources and leverage might be. And that's hard for me to imagine what they would be doing month to month at their, at their meetings.

And so the statute says alignment and coordination and all those are all very desirable. But I think understanding how it might be operationalized would be very helpful for when we return with that for our next hearing. All right, so with that we're they're going to proceed to our regular items and.

All right, well, so first let's establish a quorum.

[Roll call]

All right, so quorum. Quorum is present. So our order of business today will first take up our discussion items on the agenda. We'll take public comment at the end of each department's presentation, and then we'll have additional time for General public comment at the end of the hearing. Excuse me.

Then we will close at the end of the hearing by taking votes on those items that are eligible to be voted on today.

Our focus today is going to be on programs and budget proposals related to the Governor's Office of Business and Economic Development, the Governor's Office of Land Use and Climate Innovation, the Governor's Office of Service and Community Engagement, and the Civil Rights Department. We're going to start with the Governor's Office of Business and Economic Development.

So ask our colleagues at Go Biz to please come forward and if Finance and Elio would be prepared to take their regular arena seats.

Welcome. All right. Good afternoon, Chair and Members of the Committee, I'm Scott Woo, Executive Director of Ibank. IBank is part of Go Biz and we serve as the state's General purpose Finance Authority. Our mission is to provide financial assistance that supports infrastructure and economic development. We do this in alignment with our three top priorities.

Creating jobs, reaching underserved communities and addressing climate change. I'm here today to present two requested legislative changes. The first removes the sunset date on the Climate Catalyst revolving loan Fund. Climate Catalyst supports projects that are consistent with the state's climate goals, reduce climate risk and facilitate low carbon tech and infrastructure.

This program is positioned to take Ibank's well established reputation for our Green bank work to an even greater level by expanding services for commercial developers and entrepreneurs. Failure to extend Climate Catalyst risks nearly $450 million in awarded federal funds. Additionally, Catalyst has $25 million in outstanding investments in forestry and biomass that are expected to be repaid.

Removing the sunset will allow IBANK to reinvest these earnings in new projects in this challenging sector consistent with with legislative intent. The second removes the sunset date for Ibank's current exemption from PRA disclosure for trade secrets and sensitive business information.

I bank has been and remains committed to transparency, having our investments and strategies approved at our public Board Meetings and submitting relevant information in our annual reports. This exemption covers commercial trade secret information that that's collected and stored by both our Climate Catalysts and venture capital programs.

This exemption is critical for gaining the trust of our borrowers and counterparties and enables our public private partnership activities as it allows us to provide assurances that private information will remain private and will not be subject to disclosure.

Failure to extend would prove fatal to both programs, jeopardizing $450 million of federal funds for climate solutions and $200 million of federal funding for venture capital. Thank you. And I look forward to answering your questions.

Right. Are there Senator Niello, do you have questions Department of Finance Any additional comments? Lao so on the Public Records Act exemption so my first question so we've had this special trailer Bill Language that's provided this this partial exemption.

The the I Bank is not the only entity in California State or local government that that deals in these kinds of sensitive information that may or that may not be appropriate for public or act coverage and that that coverage can frustrate the ability of state and local agencies that are charged with economic development.

Has why are we not given the lessons that we've learned about this? Why is the Administration not proposing changing the underlying act so that these kinds of matters are not covered by it generally for the for the other agencies that are also engaged in similar activities?

Thank you. Lauren Greenwood with GOPAS. You know, I appreciate the broader holistic question. I think we're focused in on IBANK and the Climate Catalyst Program and the other program our Director mentioned.

I think we'd be happy to consider a broader approach, but generally we've tried to be pretty tailored in how, you know, what kinds of exemptions we want to provide.

Yeah, I think that for me, the challenge, I mean coming from from local and regional agencies that are charged with the same topic and also having to deal with state agencies that are in similar lanes is that the Administration will sometimes propose something very important to them, a solution to their problem.

But I think as the Administration undertakes very important work on behalf of the people of California like this, that we learn about, you know, kind of the underlying challenges that Senator Niello often talks about that just frustrate our ability to get things done or to recognize the especially in the economic development space, the tradeoffs and the challenges that can and the conflicts that can emerge.

And so I think is in this case, you know, when you identified this, the first round, when the sunset was when it was done with the sunset, that that should be a marker like is there something more to learn here about about this?

So I would yeah, I would encourage you to take a, you know, to take a look and see if there's, if there's, you know, the things that are driving the exemption.

If we, if we could make the, if we could update the Public Records Act so that, you know, infrastructure financing districts and, you know, others that are, that, that also are going to be challenged with this, who may currently not engage with partnerships, PPPs and other things because of this exact same issue, that they could also benefit from the lessons of your important work.

Thank you. Finish. Were you going to. Your head was moving, but I didn't know. zero, it's you. Mr. Edelman. How are you?

Good morning, Senator. Justin. Department of Finance. I think your point is valid as far as a holistic change to the CPRA. I think it would just be something the Administration would have to look at. Obviously, we won't want to weigh economic investments and the need for transparency, but.

Again, in this case, I think we were just focused on Ibank.

So the requirement in the existing statute is that you submit a. For the Climate Catalyst Revolving Loan Fund to prepare and review the budget by November 1st, and you're proposing to eliminate that language. Could you describe a little bit more about what the rationale is for that change?

This relates to the November 1st reporting date.

Yes.

Yeah. So this was bewildering to me and our staff. We believe this is an artifact of the statute that established climate catalyst in 2020. AB 78.

The established at the time statute established at the time reporting and budget information formation timelines unique to Climate Catalyst based on its formation and set the data no later than November 1st of each year.

This was later amended by SB 1489 in 2023 to align catalyst process reporting process with IBMAC's annual reporting process timeline of no later than January 1st. And so, as noted, the Climate Callis program's budget is and will continue to be subject review and appropriation under the annual Budget Act.

So to us, this is an oversight and a cleanup item.

Anything further on the item? Okay, thank you very much. Then we're going to turn to item three, which is new spending for Cal Compete's grant program and elimination of the individual grant cap. Mr. Dosick, welcome.

Good morning, Chair, Senators, my name is Scott Dosick. I have the honor of serving as the Deputy Director of the California COMPETES program here at Go Bizarre. The Governor's proposed budget this year is recommending $60 million to bring back the California COMPETES grant program.

Cal COMPETES was created as a tax credit 11 years ago this month and has been proven to be one of the most effective state tools for recruiting, retaining businesses here in California and putting more Californians back to work in high quality full time jobs.

This has been acknowledged and recognized by both the PPIC and an independent study conducted by UC Irvine.

The challenge with the California COMPETES tax credit is it is a non refundable state income tax credit and there are a number of businesses in California that do not have sufficient tax liability to be able to take advantage of a non refundable credit.

So to that end, in 2020 for the 2122 fiscal year, the California COMPETES grant program was created and it proved to be extremely successful in offering incentives to businesses whose jobs might otherwise, and probably otherwise would have been created in other states.

It was an extremely effective tool, especially when we had federal CHIPS funding coming this way where companies like Lam Research, asml, Applied Materials were able to use Cal COMPETES to serve as matching funds that are required in order to get CHIPS funding.

Likewise, on the tax credit side, we saw companies like Bosch here in Roseville that if it had not been able to get access, California COMPETES would not have been able to move forward with this semiconductor facility here in California would have had no other choice but to look to other states.

So the grant program has a follows the exact same evaluation criteria as the tax credit in terms of the evaluation process, ensuring that this credit or grant would truly be a material factor in the business decision to create the full time jobs in California as opposed to not creating them or creating them in another state.

I'm available to answer any questions that you might have. Thank you. All right, thank you. What is finance?

Is finance just going to send me all my former students one at a time? It's good. Good to see you. Any comments?

All right, LAO, thank you, Chair and Senators. So we concur broadly with Go Biz that the grant does address a valid limitation of the tax credit program. And the evidence for the tax credit is fairly good, especially compared with, you know, maybe the landscape of other tax credits in California and across the country.

You know, there's certain conceptual aspects of the CalCompetes program that lend itself to being rather effective. And you know, the, for example, there are certain milestones that businesses have to hit and if they don't, then the credits are never awarded or they are, they can be recaptured fairly effectively.

Also the fact that Go Biz has, you know, certain standards for the business has to clear for the application to be awarded. It's not the case that they simply award credits until the allocation has been exhausted. So these are things that we think are good elements of the program.

The grant hasn't been separately evaluated from the tax credit, and that's mainly because it's rather new and there's a lag between the grant being awarded and the actual outcomes that we want to observe. But as mentioned, you know, the evaluation process that Go Biz does is essentially identical between the tax credit and the grant.

So that's reason to be optimistic that maybe the results would be similar or the effectiveness would be similar. There might be some differences, you know, because the types of businesses that apply for the grant versus the credit might be different. So there's a little bit of uncertainty, but in General, we're fairly optimistic.

One point on oversight of the program, the rationale for applying for a grant sort of rests on the premise that the business is not eligible for a tax credit. And you know, the explicit requirement is that applicants have not sought a tax have not sought out a tax credit for that proposed expansion.

And so, you know, to our knowledge, the CalCompete staff makes, you know, as part of their evaluation, they make a judgment as to whether the applicant can't utilize a tax credit and therefore should be able to access a grant. But, you know, from an oversight perspective, you know, there's maybe a lack of explicit criteria.

You know, it makes it difficult for us to maybe evaluate whether the people who are receiving grants, you know, truly cannot utilize a tax credit.

One thing regarding the 30% cap, you know, since the proposal for this year is half of, you know, what previous rounds of the grant have been, 60 million versus 120 million, you know, the current cap would be fairly restrictive for go bizarre.

And removing that cap would allow them to award grants to the applications that have the highest perceived benefit to the state.

So in terms of our recommendations, you know, given the track record of the tax credit, you know, funding an additional round of grants, you know, could very well create jobs at a time especially where private job growth has been quite sluggish in California over the last few years.

But we do recommend that the Legislature weighs the priority of supplementing what we consider to be an already well functioning program versus other budget items and other certain priorities, given the year to year nature that the grant is funded.

We also think that working with Gobiz maybe to develop a way of incorporating some explicit requirements for grant eligibility that can be observed by the Legislature or by us, which is help with oversight of the grant in General. Thank you.

Thank you, Senator Niello. I think the LAO just said, if it ain't broke, don't fix it. And the challenge is that it's additional money and a budget that has become more challenged recently with the additional requests relative to medical related expenditures which not the subject of this hearing nor the responsibility of the folks before us.

But I am hoping that we will receive details on why the need is for that $6.5 billion additionally waiting with bated breath but the assertion of the credits creating or maintaining jobs that otherwise would be created in other states, what proof do we have that that is in fact the case?

Senator, thank you for the question. A couple of things.

So the PPIC and the UC Irvine studies actually have quantitative evidence where they did the analysis to look at the companies that were awarded versus not awarded and tracking the job creation in those areas specific specifically attributed to the tax credit awards is what they were looking at on the front end.

One of the things that we do as part of our evaluation process, and it's funny, I was just joking with my colleague Lauren yesterday about this is I've been with CalCompetes for 11 years. I started with the program two days before it was launched 11 years ago.

The two biggest fears I have during any individual application round is not awarding a company that was truly at risk and losing those jobs, but on the flip side, awarding a credit or a grant to a company that was probably going to do what it was going to do anyway.

So we take an extremely deep dive into every application which includes an interactive process with the applicants where we ask them for all the different factors that are driving their business decision making process. We're looking at site selection data, we're looking at quantitative evidence.

We want to make sure that their cost benefit analyses are truly representative of both sides of the equation, not just potential cost savings or incentives being offered by other states, but what are the cost savings of staying in California, for example, to be in close proximity to the port where the raw materials come in or to be in close proximity to their customers.

And the shipping difference of shipping, you know, 50 to 100 miles versus 200500 or 1,000 miles to bring the products back to California. So truly looking at all aspects of that equation. Thank you. Certainly.

No comment. I can jump in quickly. So yeah, there are two recently published or soon to be published economics papers about specifically looking at the tax credit that are generally favorable with their assessment. One in particular that showed that the early years of the credit did meaningfully create new jobs.

There is some debate about whether to the extent how permanent those jobs are or whether those jobs would have been created down the road. But the Tax incentive encouraged them to create those jobs earlier than they would have been, which also represents a benefit to the state.

And this paper did account for the costs of the program and you know, theoretically what the money would have gone to otherwise. So I think it is a, well, it is a well done study and we sort of broadly agree with the recommend with the conclusion that it came to.

One follow up. Do we have ongoing tracking to ensure that the jobs that are created are continued beyond the subsidy from the state to create them in the first place?

Yes, Senator. So every company that is awarded a California competes tax credit or grant signs a five year contract with Go Biz that clearly lays out how much credit or grant they can claim or receive each year if they achieve the corresponding milestones the jobs created. And we do measure net new jobs.

So it's not just a hiring tax credit. They have to maintain their existent employment and achieve the increases that they committed to the minimum and average wages and the capital investment.

Anytime they achieve an individual milestone and get the credit or grant for that year, they have to maintain the jobs associated with that correlated amount of credit or grant for three subsequent years.

So for those five year agreements, if a company achieves all five years of the milestones, they have to maintain those jobs for another three years in order to be able to keep the credit or the grant that they were allocated. So we do look over an eight year period potentially. My pleasure.

What's the balance in the program right now that could be available for awards?

Are we talking about the tax credit or the grant tax credit. Okay, so moving off of the this budget item but on the tax credit and I believe this is the next agenda item that we'll be segueing into the this year we had about $646 million potentially available to allocate.

And again, it's not an appropriation, it's the amount potentially available to allocate. There's $180 million a year that's allocated in statute that that number goes up potentially based on unawarded credits.

So if we don't award all the credits in one fiscal year, the ones that aren't awarded roll over into the Fund or to the available credits for the next fiscal year. Likewise, any credits that are recaptured roll over to be available to allocate in the next fiscal year.

For the last few years we have not come close to allocating the full amount of the credits. And I think Senator Nilovis gets to your point. We take a really deep dive to make sure that this credit is truly a material factor in the business decision.

Likewise, we're also looking, as per our statute, to make sure that awarding the credit would not give one business an unfair competitive advantage over another local business providing the same products and services, for example a hair salon, for example.

Like while they might create more jobs if they got the credit, is it really net new jobs for the state or is it just giving super cuts advantage over a mom and pop shop or Great Clips for example? So as a result of that, the balance has risen over the last few years.

I think it's also reflective of the economy as a whole right now where businesses are hesitant.

In General, there's a lot of uncertainty out there in the economy and so we're not seeing the kind of large proposed growth that we've seen in the past, which again is the impetus for the grant program as well, is that there are certain sectors that are moving forward that are experiencing growth that are doing multi state site selections.

The types of businesses that you've probably seen that are proposed for the California Jobs first program, a lot of the high tech sectors where there is a lot of movement happening but because of their technology tax situation, are unavailable to take advantage to monetize a non refundable credit.

That creates in my mind another follow up question. In assessing the applicants for the grants, do you also take a look at the type of industry and whether it is part of the economic base as economists call it, I.e.

businesses that are export focused because that's where the growth of an economy comes is things that are made here and sold someplace else with the net margin coming back to the state. Whereas if it's a business that just operates within the state and the business stays within the state, that isn't as valuable relative to to macroeconomic growth.

Do you assess that aspect of it?

I can give you the short answer and say yes, but I'm also happy to give a slightly longer answer if you would like.

Sure.

So. And you know, to my colleagues at LAO in the past, we've heard about tradable versus non tradable jobs. Right. Do the jobs absolutely have to be here?

And we took that into account and when this, when the tax credit was first renewed 56 years ago, the first time we worked with the Legislature to add language into the credit specifically addressing that point, making sure that we would be looking at truly tradable jobs, not the non tradable jobs.

And it gets to my point about the earlier about the giving a credit or a grant to a company that competes with other local California businesses, as opposed to manufacturing is a great example of one sector where we do look at things on their tax return like what percentage of their sales are allocated to California versus outside of California and who's their competition?

Are they competing with out of state manufacturers or overseas manufacturers? And the credit or the grant is what gives them that ability to compete on a level footing with them. My pleasure.

I'm not sure this was the best Committee to come in with a haircut example, but. The. I mean, I understand the. I do not know, I rarely need it. I rarely need a haircut. So I. We're this item we're going to hold open obviously because of the General Fund implications.

And I know I'm looking forward to a may revise where the governor's proposing less cuts to UC and CSU and something for housing and for homelessness as well. This program is. And the questions on the, on the I bank. I have similar kinds of questions here.

Not, not in the detail, but I think this program has been a success largely because it has been very effectively administered. Go Biz has done a, done a solid job of understanding the purpose, the limitations, the market, the trade offs and all of that.

Not to establish and not just Gung Ho economic development for the fun of it. That's really important, but it's also, there's no guarantee that that's forever. So as the, you know, kind of the request for like can you erase this requirement here and this other thing here?

Usually my answer is yes, we should erase as many of those as we can. But also trying to keeping in mind that if Go Biz ever regresses to the mean that some of these, some of these controls are important as well.

So appreciate the testimony and the answer to the questions and the control agencies and ALA's feedback as well. And we're going to hold this one open. So thank you. Okay, next up then is the item that we were leaning into for a second, which is item four, just savings from the unused CalCompete stocks credits.

Are you presenting or is this, this is. So Elio is going to present this one?

Yes. All right. Well, some of this item was sort of preempted a little bit in our discussion that just happened now, but yes. So the CalCompetes tax credit program was created with these annual limits. You know, currently $180 million per year is the allocation that Gobiz receives.

But because of the way the program is structured, a large proportion of these credits are not used. This can be because the set of applications that GoBiz deems worthy of a credit in a given year is below the total allowed.

Or more commonly, the credits that are allocated via these agreements with businesses, they either don't hit the milestones or they hit the milestones and then later don't retain those increased jobs. And so the credits are recaptured.

And there's a fairly good system of recapturing these credits, which contributes to sort of the cost effectiveness of the program in General. Historically, this percentage of credits that's recaptured eventually is like 50% or more. So quite a large amount.

So when the amount of credits that are actually utilized, you know, net of all these recaptures and under utilizations is less than the 180, your annual limit, the balance is recycled, and that goes into the pot of available credits for future years. So more than 180 million can be awarded.

And over time, this net amount of credits actually used has been consistently less than the annual allocation and leading to this buildup of recycled credits of now around 650 million as of this fiscal year. So the average credits that have been awarded over the last several years is about 210ish million.

But because of the recapture rates, the this amount that are actually used ends up being less than the $180 million. So on average, if the current trends of how many credits are awarded each year continues, then this pot of available credits will just continue to grow and grow over time.

We were asked to produce a rough preliminary estimate of the fiscal effect of disallowing this recycling of credits beginning in the budget year. There should be a table in the agenda on this item that summarizes this exercise.

And the revenue gain would be minimal in the first couple of years just because there's a lag between the credits being awarded and then actually being claimed. This would eventually correspond to, we think, maybe a 20 to 25 $1.0 million increase in revenue per year if recycling was disallowed completely.

There are a number of assumptions that are baked into that estimate about the future recapture rate and utilization of the program. And as mentioned also, macroeconomic conditions more broadly play a big role in how many applications there are and how many good projects there are for Gobiz to approve.

The main effect comes from the fact that Gobiz would have to reduce their average annual awards from about 210 million to, at most, 180 million. And we think, you know, because of the way the program's structured, we think maybe the actual awards would be maybe 170 million.

So we're talking about maybe a $40 million a year difference in credits awarded, you know, the degree to which recycling is consistent with the intent that the Legislature has for this program, you know, is something to consider and discuss.

There are some other trade offs associated with allowing versus not allowing recycling that I'm happy to discuss as well. But I'll pause for now if there's any questions.

Do we have any questions? This is another recycling issue where we're doing the recycling, but the materials never get reused again. Is that.

Yeah, I mean, that's so.

One thing I want to maybe point out is that obviously Gobbers can speak to this, but from their perspective, having this pot of recycled credits in years where macroeconomic conditions are not so favorable, for example, and there are fewer good applications and the amount builds up, but then there's a chance that at some point in the future macroeconomics conditions will be very favorable suddenly and we might get a glut of applications and applications that provide a net economic benefit to the state.

And having the recycled credits available allows Go Biz to maybe make a lot of awards in a year where there are a lot of good applications. The trade off associated with that is that Obviously currently there's $650 million in credits available.

If in a couple of years, for example, there's a ton of good applications, theoretically Gobiz could award a large chunk of that 400, $500 million in credits, and there would be a big spike in the fiscal impact of the program a few years down the road. Obviously there would be.

Because of the lag of the program, there would be a few years. Heads up, essentially. But that's something that the Legislature may want to consider as well. So can you.

Let me understand. So that you said if we, if we were to curtail this, then we would. Or that. I'm sorry, the, the, the, the, the revenue that we're foregoing is what you say in the 25, you know, your rough estimate and.

Yeah, in the, in, in the out years and sort of ongoing, about 20 to 25 million.

So how does that, but how does that work? So if we're, if go business is allocating fewer tax credits than their 180, then how does the additional balance up to 645 result in reduced tax liability if it hasn't been awarded?

So currently they're averaging around $210 million a year. So it's actually above because the usual limit is 180. And so they're actually awarding more. But because so many of the credits are recaptured or never utilized, you know, around Half of them historically, you know, that brings them back below the 180.

But if we, if we, if we said you can only award 180 maximum every year, then they're awarding, you know, a significant amount of fewer credits every year. And so that's where the sort of different, the fiscal effect comes from.

Okay, but the actual usage is still less than. So I mean, if you said you can only award 180 and it's a new Deputy Director or just like, okay, 180 is now both our cap and our floor. So now we're going to try to get to that. Exactly. If the take rate improves or the usage rate improves.

I guess I only worry that it creates incentives for Go Biz to try to get as close to actual usage at 180 as possible.

Whereas the system that they have now creates, you know, at least some incentive to do, to do a good job of making sure people are delivering what they promised and you know, all the things that are underneath it, which may not be as those power, those incentives may not be as strong.

If you're worried about, I can't, I don't want to award and I only want to award to those ones that I absolutely know are going to use the credit which may not be the ones that we would. They may not be our top priority for economic development purposes because they might use the credit for other reasons.

Yeah, sure. No, that is fair. And yeah, the assumptions baked into the estimate sort of assume that everything carries on and the way the program is evaluated carries on exactly as it is. But yeah, it is.

We would think that GoBiz has a fairly good track record of evaluating these programs and they typically don't go up to the limit of what they have available to allocate, which says that they're, they are, they do set a cutoff point and there is a minimum standard required.

But maybe they can speak to, you know, if they think their strategy of evaluation would change given this scenario.

I'm sure they don't. But the psychological and cultural imperatives change our do change our behavior. Do you have Go Biz or Finance have any response or comments to, to LIO's proposals or commentary?

I'll let my colleagues at Finance respond. As far as the fiscal impacts, if you want response on the policy impacts, and I appreciate Leo's comments on this and especially a number of assumptions are baked into the calculations. There's probably three to four magnitudes of what ifs baked into all of this.

I would say from a policy perspective, you know, One go Biz has clearly demonstrated that we're very judicious in the allocation of the credits. We only award them if it's truly demonstrated to be a material factor in the business decision and ability to create the quality jobs, full time jobs in California.

So that's one of the reasons and obviously the macroeconomic issues that Lao pointed out. One of the advantages of maintaining a surplus in excess of the 180 is the statute caps the maximum tax credit award at 20% of the total amount of credits available for that fiscal year.

We've never come, you know, so this year with 600 or 500 and whatever million, you know, the maximum credit award this year would be about $128 million. We've never come anywhere close to that. But it's really nice to know that we have that capability in this program.

If a truly monumental proposal came our way for a company proposing to relocate to California or open up a massive factory or a massive new headquarters, that we would actually have a tool in our arsenal to compete for a project of that magnitude outside of Cal Competes, the state really doesn't have another tool of that magnitude. So.

And just our ongoing commitment that we don't award credits for the sake of awarding credits, as we've demonstrated over the years, but to finance on the fiscal impacts.

Yeah. Nick Thomas, Department of Finance so Finance. doesn't have an estimate currently for the fiscal impact of not allowing the credits to be recycled. We would just broadly say that Lao's estimate is fairly reasonable. Of course, noting some of what they said with regard to some of the uncertainties that underlie the estimate, we agree.

With that as well. So in terms of their estimate and the potential timing of when those revenue gains would arise, there are a number of factors that could materially change it relative to what the estimate is before you.

I'm less persuaded about no recycling at all concept. I think, you know, managing towards using 180 million, like actual $180 million being being used is the right, is the right approach. And I think they're having.

To me it's, it's a, it's a highly positive that we are that a lot so much so many of the credits aren't actually used. In the end that means that we're setting that we're administering it properly, but also that we're setting some stretch goals that companies are trying to accomplish.

But, but and they try and they barely can't. They can't do it. That means we're, that our standards are for real. So I think that, that that's good.

I do think that having $645 million worth of potential liability out there in case Scott goes crazy and gives all the money out in one year is a major exposure for the budget.

And so that dimension, I think we do need to grapple with that in some way to assure while I appreciate the, the relationship to the cap that if Go Biz were to one day allocate $645 million in a single year and we hadn't had any control system put in place to assure that that didn't occur, especially if it was under, you know, severe macroeconomic conditions, that we wouldn't have done our job today.

So I think we should try to resolve that portion of the issue. I don't know if you have comments about this Senator Nun Low, but, but I, I, I've not been enjoying multi $100.0 million surprises myself so far in the hundred last 120 days or billions. There may be others to come. What? There may be others.

We're, it's never happened to me when I work for a policy Committee. All right. Okay. So we're going to, we'll, this item's for information only but I'll ask folks to put their heads together and see if we can tackle especially that second, that second issue. Okay. So that, then we're going to move to item five.

Thank you Mr. Dosik. Which is capital expenses for the National Semiconductor Technology center design and collaboration facility.

Good morning Chair and Senator. My name is Derek Kirk. I serve as the Senior Advisor for Economic Policy at the Governor's Office of Business and Economic Development and lead our California Jobs first initiative. The Governor recently announced the state economic blueprint, our first economic strategy in over 20 years.

And in the plan we identify four key sectors that the Administration will roll out an all of government approach to including the semiconductor and microelectronics sector given the clear opportunity for near term good paying job creation for Californians at a wide variety of education levels.

The proposal before you is for the support of the semiconductor and microelectronics sector and includes $25 million for Natcas to build out the design and collaboration facility a part of the National Semiconductor Technology center or nscc. This proposal would require natcast to front any costs and would allow them to submit reimbursement on capital expenditures.

Our office has formed a deep partnership with natcast, the Department of Commerce and the University of California Office of the President on the sighting of this facility and support for the semiconductor businesses and workers in California.

Here today are Miriam Cope, the VP of Government affairs, and Vivek Prasad, the Voice VP of Design Engineering Ecosystem Enablement to lend their support. I look forward to your questions. Thank you. Finance.

Yeah. Charles Lasalle, Department of Finance. I don't want to get too in front of the LAO here, but reading the agenda, we understand the LAO's concern as far as the reliance on the federal resources for the construction of the design and collaboration facility.

But the administration believes that this targeted investment of 25 million is an important tool to draw down potential federal resources to the state of California. Moreover, establishing this facility in California there are significant benefits as to drive potentially one billion dollars in research funding and create more than 200 direct jobs over the next 10 years. Thank you.

Thank you. LAO?

Seth Kerstein, LAO. So we have three significant concerns with the proposal. So first, as finance referenced, its heavy dependence on federal funding makes its prospects uncertain. And sort of in our analysis we noted there are some nuances to this in the sense that, I mean these are funds that have already been appropriated in federal legislation.

And also Natcast is a distinct non-profit entity. So some factors could in principle insulate some of this funding from being withdrawn. But arguably similar circumstances have surrounded other efforts that have been subject to federal modification. And so it still remains a concern for us.

Second, due to the state's precarious budget condition, the bar for new spending outside of the states core responsibilities, sort of in our view, should be quite high. And so it's really just sort of a question for the legislature in terms of where how to allocate the very scarce resources at this point in time.

And so then sort of narrowing down to more micro level issues, there's the question of the federal funding, there's the question of just what broad budgetary issues to prioritize in this budget environment. And then sort of within the category or bucket of sort of general fund support for commercial activities.

In our view, other programs such as Cal Competes, which was discussed previously, provide more promising opportunities. I think as far as, you know, Cal Competes is concerned, the Committee discussed some of the empirical evidence on the effectiveness.

I think something to consider here too is even just at a very basic level, sort of the incentive structure of the funding that's being proposed. Here we're talking about a proposal to reimburse $25 million of capital expenditures for a facility where the planned capital expenditures are of a much greater magnitude.

And so that sort of incentive structure in our view is not materially different from just sort of a lump sum transfer of funds which then presumably would be used for whatever Natcast pursues as far as its mission of supporting the domestic semiconductor industry.

So I think those are sort of our initial comments on the issue, but happy to address any questions you may have.

Did you want to respond to LAO any further?

I mean, I appreciate the sentiment and we had lots of conversations in the navigation of this process. In terms of the first item, the fear that, my words, the fear that dollars will be taken away. We've had lots of conversations with the Natcast team and the US Department of Commerce.

I won't ignore the fact that comments have been made at the federal level around the CHIPS and Science Act, which is where these dollars have come from.

To date, the Secretary of Commerce and the entire Administration have stood behind the research and development dollar portion in the CHIPS and Science Act, which includes the National Semiconductor Technology Center as well as awards like the $100 million investment to Applied Materials in several UC Systems systems in partnership.

And so we're confident that whatever happens on the incentive side of the CHIPS and Science act, that the R & D dollars will remain and these dollars won't be touched.

However, it is the reason why we negotiated as part of this support opportunity a reimbursement of capital expenditures to make sure that they are actually spending the dollars in this space. I won't touch on the fiscal uncertainty part unless the Department of Finance wants to.

I would note in terms of, you know, should we be spending dollars in this particular type of way? An organization like Natcast as a federally created nonprofit organization is not eligible for any of the incentives that California offers from California Competes to the the full sales and use tax program at CAEATFA.

There is nothing else that we could have used to in order to attract this facility to California. And we do know as a matter of fact that other states were offering upwards of $100 million in incentives for this facility to land in their state. Natcast wanted to be in California.

We have more than 63,000 semiconductor jobs in this state. We churn out more semiconductor-related engineering students out of our UC system and the CSU system. We've developed the first in the nation apprenticeship programs lifting up career opportunities.

However, due to the costs of creating a facility like this in the state, the $25 million was a significant factor-- Our support for the request of the $25 million was a significant factor in their decision.

Senator Niello.

I gather this facility in California is very likely to move ahead regardless of the 25 million, right? Is that what we're thinking?

No, Senator Niello. In fact, the lease agreement between the facility and the landholder has not yet been signed.

And unfortunately, because of some of the articles that came out after the LAO's report, some considerations have been pushed on pause waiting for the state of California to figure out the ways in which we might be able to support this particular project.

And so while we hope and do, you know, will continue working with them to make this happen, there is no 100% guarantee that the facility will move forward if we don't make this investment.

Well, I realize no 100% guarantee, but it's such a small portion of the total and they've indicated they want to be in California, the connection with our technical capabilities being an obvious one.

Kind of seems like with regard to the tax credits for job creation, we don't want to provide those if it appears that those jobs are going to be created anyway. So if this is that kind of situation, it would seem to me prudent to save the 25 million.

But I suppose that's speculation, but I think that needs to be part of the consideration.

Yeah, I, I absolutely agree. I think Mr. Dozing has left. I was going to ask if this would have gotten money if it was eligible, would this have survived Cal Compete's rubric and rigorous evaluation? So I'm not exactly sure how we, we got here and maybe you can share a little bit like did we.

Was our money in the original proposal? Proposal as in the line was it the Governor, you know, simply making the statement that, you know, I would support putting this in the budget in a sort of an abstract way and there's no shade on if that's the case as mayor. I did that. A million. A million.

I, you know, I committed to ask for money that I didn't. Wasn't sure I'd get in order to close an economic development deal probably a couple hundred times. So no shade sessions of a prior mayor. It worked. It worked. Welcome to the A's game coming up next week.

So can you, I mean can you like dive, dive into the sort of the chain of events and really like, what is, what is the commitment that we have made and how much of that commitment was the drive was the driver behind the award in the first place?

Yeah, absolutely. Chair and Senator, I do appreciate the question in the comments. So the CHIPS and Science act, many, many billions of dollars funded between the research and development portion and the incentives portion.

In the summer of last year, our office did a deep dive into the way in which the amount of funding in which California had received from the CHIPS And Science Act. Our own Democratic Congressional delegation would tell you they are the ones responsible for pushing the Chips and Science act over the finish line in Congress.

And the reality was we had received less than 1% of all chips and Science act funding to date. That was obviously prior to the announcement of the award for Bosch and Senator Niello in your district, as well as a few others that we had received.

Our Office went to D.C. and started navigating through conversations directly with the then Secretary of Commerce and ideating on a few other pieces to pull research and development money down into California, which the R and D space is where California has historically been the strongest.

Right around that same time, the Natcast team had formally procured the services of a national site selection company to run a formal site selection process across all 50 states for what was ultimately determined to be three formal sites to make up the National Semiconductor Technology Center.

One of the sites, Microelectronics Nanotechnology Hub was, was ultimately landed at the Albany Nanotech Lab in New York. And that was pretty self determined given a variety of other factors.

And so the design and collaboration facility and the advanced packaging and prototyping facility ran through a national site selection process just as Deputy Director Dossek was talking about other companies doing, trying to find sites, mapping out expenses and navigating through what those look like.

California competed for both the, the design and collaboration facility as well as the advanced packaging and prototyping facility. Other states in our competitive set were offering upwards of $100 million cash with no strings attached to this effort to, to, to support the, the landing of these facilities in those particular spaces.

Quite frankly, our initial overtures were we can offer you a handshake and come to California because we know you want to be here. Our education institutions are here.

Ultimately the University of California Office of the President coalesced a core group of UCs that began to offer really non financial partnership opportunities like externships for the faculty, internship opportunities for the students and really coordinating.

And we really leaned hard on the reality that the semiconductor industry was born in California Silicon Valley and that the R and D is still largely headquartered in this space.

Not to go too specific into conversations, but ultimately where we landed within the Administration was Natcast was in our interpretation, days away from moving this facility either to the State of Arizona or the State of Texas, both of which were offering hundreds of millions of dollars in incentive funds.

And so we collaborated with Natcast to ideate around this idea of would $25 million move the needle to get them to come to this space to offset those costs. We made the pitch that the Governor could not arbitrarily or singularly do that, but that we would include the proposal in the budget.

And that is what we believe, ultimately ensured that they landed in California.

And I guess we'd just add, Lauren Greenwood, that as you know, we all need to be fiscally responsible and accountable to our state government. At the congressional level, the same holds true.

And so if they're doing a competitive site selection and they don't see any other applicant have some skin in the game, that does matter at the federal level.

Okay, all right. If there's no. Yes, Mr.

Chair, if I may, I wasn't very clear about this. I think in my comments that our primary recommendation is to reject the proposal.

But if the Legislature were inclined to move forward with something similar to what the Administration has proposed, but potentially has some concerns about the incentive structure, one alternative that could follow a similar model, but perhaps create greater incentives to spend the projected amount of capital expenditures would simply be to alter the structure of the reimbursement such that, similar to what's being proposed, the natcast could submit capital expenditures to GO-Biz, but that the reimbursement would be zero up to a certain point.

And then the reimbursement could be potentially a very significant percentage after a certain threshold is reached, up to a maximum of 25 million.

And so within sort of the general framework that they're talking about, that at least would, I think, in our view, somewhat improve the sort of incentive structure as far as really having the proposal augment capital expenditures on the facility rather than have the more lump sum type of structure.

Yeah, Senator, I'll just add quickly, our office and the Administration are happy to have those conversations.

I will note as an anecdote that the chief administrative officer for NATcast is the former budget Director for the State of Colorado and is eager to have those conversations and structure a deal that makes the Legislature feel comfortable as well as the Administration.

Okay, all right. We're going to hold this item open as well. Obviously, I think the questions about just General Fund condition, the issues that Senator Niello raised, I've always been committed to a strong federal state partnership and keeping our word and all of that is important.

I think the Governor was very measured in the way that he approached this and recognizing the budget process and the branches of government that we have our independent roles to play. So I'm open to it. But the Federal Government also has to do the same.

And obviously one of the reasons why the $25 million is a much bigger issue than it might have been in the fall is is because of the same the corollary challenges that we're facing from agencies withdrawing commitments that they haven't just made in words, but in the law.

So we'll need to consider all those issues if we take this up again. Thanks very much. Okay. And since that's our last G-Biz item, this would be the time for Members of the public who wish to provide.

I'm sorry I missed it. There's one more.

There's one more G-Biz item. Poor Tara Lynn is okay. So item 6 is extending Cal Rise for two more years.

Good morning Chair and Members of the Committee. Chair Cabaldon, you are my Senator. And it is an honor to present the work of California's Office of the Small Business Advocate. I am Tara Lynn Gray. I am Director of the office which is housed within GO-Biz.

The Governor's Budget includes $17 million to support CA Rise, which is renewed funding which will provide direct support for employment social enterprises across California in customized technical assistance to build capacity at individual organizations.

The current CA Rise program provides financial and technical assistance to ESCs for the purpose of accelerating economic mobility and inclusion for individuals that experience employment barriers. Launched in 2023, CA Rise is the nation's first statewide capital and capacity building investment in escs. The additional funding for the program will support economic outcome reporting through 2027.

Funding for participating employment social enterprises grants in the amount of 100,000 to 500,000 each for the ESCs in the expanded program and then lastly administrative fees for CalOSBA which are required to support successful implementation. I look forward to your questions. Sorry.

Yep. Charles Lasalle, Department of Finance. I'll just reiterate that this is the second round of funding and this funding will help foster greater economic mobility through the inclusion of individuals that have experienced employment barriers through resources provided to the employment social enterprises.

So Mr. Lasalle how do we. If we don't have the evaluations back of the. How do we. How do you know that that's going to be the outcome of the second round if we're not yet have the full evaluation from round one?

I'll turn this to Tara.

So one of the things that we do in our office is we go a long way in documenting the outcomes of our programs. And actually we prepared a handout for you all that has much of that data and we'd be happy to share those with you.

We, we know that this is an investment in building the capacity of the organizations. The employment, social enterprises, and we have asked for reporting which will be done and provided. Technical assistance is ongoing under the initial program through 2025. So excuse me, through September 2025.

So there hasn't been a completion of the program and therefore not enough data to really assess the entire impact. However, there has been interim reporting that suggests that the program is on track and that it is creating the output that is intended across the 61 grantees that were included in the first iteration of the program.

We we are supporting currently 13,000 jobs.

Thank you LAO.

Thank you. Thank you Senator. Alexander Bentz. LAO. First, I just want to put in a plug. We have more analysis on our website, on a post on our website for all of our issues and I don't think my colleagues brought that up.

Give it a like and a follow. Subscribe. Share.

So we recognize the need for effective programs in this area, but given the evidence, our analysis of the evidence, we believe this program is unlikely to be effective for serving the individuals that they want to serve. So we suggest that the Legislature consider rejecting this proposal.

We also have some suggestions for modification if the Legislature would like to prioritize it. This program was modeled on a similar program run by LA County called LA RISE, had similar goals, it supported many of the same organizations and it supported many of the same populations.

It was also supported by the same contractor as the first round of CA RISE grants and at this point we have very little information about the first round of CA RISE grants, but we do have a lot more information on LA RISE and so we inform our analysis based on that Data from LA rise, as has been alluded to, shows that individuals participating in these programs have real needs and I'm happy to go into that data and this points to the importance of effective programs to that population.

However, participants while they were in LA RISE, according to a rigorous evaluation by a third party evaluator, had higher earnings and employment while they were in the program, but did not have higher long term employment.

And given that the program's objective is to lead to long term stable employment for this population, we believe that this means that the program is ineffective at this.

And so given the similarities between these two programs, we believe that these results are highly informative RISE and therefore we recommend that the Legislature consider rejecting this proposal if you do want to move forward with us. We have three recommendations.

One is to request additional information on the first grant round to understand whether the program is serving the intended populations. The second is to as a small suggestion about how the funding is prioritized to prioritize it towards the most qualified organizations, including the ones that were selected in the first round.

And the last is to require a rigorous third party evaluation of the programs. And so we can understand which, if any, programs are successful at leading to long term employment outcomes and to be able to prioritize for future investments in this area. So thank you. Happy to answer any questions.

If I may respond. Unfortunately, LAO has made the assumption that LA RISE outcomes are predictive of CA RISE outcomes. But we need to note that those programs are structured very differently. The LAO correctly summarizes the LA program is based on on subsidy to support headcount at individual organizations. But that program is more about job placement.

Whereas the CA RISE program, statewide program, not just regional, makes a significant programmatic investment in the capacity building for the grant recipients. So rather than basically a per head investment for a specific job, this is building the capacity of the organizations to continue building the ability to train and hire. So structured very differently.

Is it? But is it structured better in order to. To. For us to be able to assure the accountability for the outcome? The individual. I mean our objective here is to. Is to support the individuals through the social enterprises to long term economic success and prosperity, not the organizations themselves. I mean I know something about this area.

I've worked with REDF quite a bit. When I chaired the US Conference of Mayors Jobs Education Workforce Committee, we did a nationwide tour of exactly these enterprises. So I'm a fan of them, definitely of the concept and their potential. But I also know that the rigorous evaluation and program design are also. They also matter a great deal.

And we don't know what the perfect one is. There isn't an example out in the country like this design always works. But I do think that understanding how we would know how we're doing, whether we're producing those results is kind of important.

And so is there a reason to number one, is there a reason to believe that that capacity building investment as opposed to individual level funding still funding organization but for the individual success is the right design?

And then second is how will we answer these questions about California RISE that we have some insights at least into LA RISE if we conceive of the focus, if we conceive of our measure of success being did we improve capacity of the organization as opposed to did we improve the outcomes for people?

Well, I think the approach in the second iteration of the program is a both and that is exactly what we seek to prove.

And the reporting through 2027 would seek to answer many of those questions and to document exactly what the LAO is suggesting, we've actually included that in our proposal is very rigorous reporting component on those outcomes. Both the investment in the organizations and the investment in the individuals in terms of jobs created.

And, but in outcomes or in the outputs. I mean are we talking, are we the, I think this, this distinction between, in the LA RISE data, between you know, what are, what are your, what is the, what are, what are the impacts for the participants while they are, while they're working at the enterprise and then, but then when that time is over then what are their long term income and intergenerational wealth outcomes look like at that stage?

Is your proposal paying attention to both or is it focused only or mainly on the outputs inside the program?

Again, both. We are looking at length of employment employment for those that are placed at the ESCs and if I think of a specific example of one I, I toured recently in Oakland, the organization is 17 years old. It is growing its capacity, hiring more people. And the employees that I spoke with there have been there several years.

It's our expertise expectation that as we grow the capacity of the organizations that the quality jobs that they are creating will be long term jobs because they are doing things like creating products that can be sold in the marketplace that have a life that extends beyond the term of the program. Right.

So it's a useful commercial function in the economy that these jobs are supported. So we see it as jump starting that capability.

I don't know if questions are Niello or but I guess the only, what I'm deriving from the conversation is if the LA RISE study is identified this weakness in that part of the program outcomes. And you're right, both are important outcomes.

But if that's identifying a weakness in that space, it seems to me we should be particularly attentive to that in our own evaluation because that's, that's the challenge that we, that L A has thrown down for us.

Basically how are we assuring that the long term outcomes are what we're trying to achieve and so the design is important. Did you have more to add?

Yeah, I would just add that this sort of model can be hard to evaluate because there are many different models. Money is going to many different organizations. They each have their own model.

And I would just say that our assessment of the LA RISE evaluation just leads us to believe that we should be concerned that these programs aren't having their effect. It could be that there are models that do work.

And so I think that's where our recommendation goes to doing that proper evaluation so that we can understand that in the future.

Senator Niello.

I think the point is that the results and success are matters of interpretation, at least to a certain extent.

And given the budget pressures that we have for the upcoming budget year, but more importantly the huge deficits we're looking at in subsequent years, which, by the way, we should start identifying those potential budget actions for 26/27 and beyond now because the fall and the beginning of next year will be too late for that magnitude of analysis.

But my point is that we're going to be faced with, with declining revenue or expenditure requests for things that might appear to have some success just because we don't have the money, quite frankly. And this being interpretive, that kind of pushes it to that side of the ledger in my mind.

So we have some significant challenges over the next 34 years.

If I may, regarding the data, I want to just step through the timeline really quickly. Our grantees received their first funds in June and July of 24. Programming began in June. Most of that initial year was planning the program, developing the application, selecting grantees and internal program management between osba, REDF and our third party administrator.

We have already received, I don't want to leave the impression that we have no data to date. We have already received preliminary impact data in report format, quarterly reports and report outs during meetings.

The midterm assessment is due shortly and we expect by the end of the month that we will, or, excuse me, by April that we will be able to provide our first comparison to the baseline data that was collected in the initial assessment.

So just want to be sure that we're leaving you with the impression that data is being collected. We are not waiting until the end of program to collect that definitive data.

All right, thank you. We're going to hold this item open as well, but appreciate, appreciate the hearing of the questions. We have devoted six and a half hours to GO-Biz over the last two days. So we're going to say get the heck out of here. We have other agencies that need us too. But thank you.

So now we are going to move to public comment on the GO-Biz items that we've taken up to day.

And so if you please, as is already happening, come to the front where the stand up microphone is and we're going to ask you to limit your comments to 30 seconds to a minute on whatever items you wish to testify about.

Mr. Chair and Members, I'm Darby Kernan, I represent REDF. That was mentioned earlier today and that is working with the ESCs I think it's important to note that the work REDF is doing is evidence-based and there are studies both with EDD and as well as Mathematica that show this work is really effective.

And I think one of the key points to make is as you're putting billions of dollars into homelessness, addressing homelessness and CDCR, Department of Corrections, those individuals in hard economies are the ones who get pushed to side quickest and what the businesses, the employment social enterprises and REDF are doing are making sure that those people have skills, skills that can stay employed and have long term jobs.

And so we're very supportive of that work and you'll hear from many ESCs today that are doing it. Thank you. We support the Governor's Budget.

Thank you.

Chair and Members on Alvarado on behalf of the California EDGE Coalition in support of the Cal RISE program as well. We believe the program will expand access to economic mobility for Californians who are experiencing barriers to employment and skills training opportunities. We respectfully request your support for this item as budget discussions continue. Thank you.

Good morning, I'm Peter Leroe-Muñoz the Silicon Valley Leadership Group. Very happy to support the Governor's proposal. With regard to funding for the Natcast facility in Sunnyvale.

We recognize that California has built the fifth largest economy in the world by largely investing in the tech sector which supports so many different discoveries, but also research institutions, visionary startups and global leading tech companies. We also recognize that semiconductor chips are used in the most in almost every.

Electronic device imaginable, whether it's the most advanced AI computer modeling systems through Quantum computing or simple consumer products in basically everything, whether it's dishwashers, automobiles, computers, video game systems, you name it.

We have to continue to make an investment in this technology and certainly in our larger innovation, especially in the face of increasing competition from other resource, um, excuse me, regional areas of innovation around the country. We know that this is a relatively small amount vis-a-vis the hundreds of millions of dollars that are being invested in New York, Texas, Michigan, Arizona and other places.

This is an investment very much in our future and we support your support in terms of making sure that this investment continues. Thank you.

Hello, my name is Matthew Huff. I represent the Beacon House Association of San Pedro, CA RISE grantee located in Los Angeles County. We ask for your support of the governor's proposed one time $17 million investment into Caris.

With the help of CA RISE, we've been able to employ eight workers in our employment social enterprise at the average hourly wage of $24.80 with the full compensation package with the 403 matching PTO cell phone stipend. And not only that, These individuals have two to three years of sobriety.

They're leaving with about five to ten thousand dollar nest egg, their name on the lease of an apartment and the title of a car. So these individuals, just like me, struggled with substance abuse issues, formerly incarcerated, mental health issues as well. And you know, an investment in CA RISE is an investment in individuals like me and them.

So thank you for your support.

Thank you.

Hello everyone. My name is Gregory Nottage and I represent Downtown Streets team, a proud CA RISE grantee operating in six Bay Area counties. I'm here to urge your support for the governor's proposed $17 million investment in CA RISE.

Thanks to the support of CA RISE funding, our capacity building has allowed our social enterprise to in 2024, hire 306 individuals generating over $2.7 million in taxable payroll income. Every one of our participant employees is overcoming barriers like homelessness, incarceration and behavioral health challenges.

Investing in CA RISE means investing in talent, equity, and a workforce that reflects the resilience of California. Thank you for helping building California and the economic workforce that we work for. Thank you.

Don't bury the lead. Downtown Streets is also in Yolo County and Sacramento county, which is the two. The two of us.

Hello. Good morning. My name is Ilana Trejo. I'm representing San Jose Conservation Corps. We're located in Santa Clara County. We request that you support the governor's proposed 1 time 17 million investment into CA RISE.

With the support support of CA RISE, our employment social enterprise has employed about 250 Californians, many who overcome homelessness, early parenthood, mental health issues or domestic violence as well. For core Members, this is a program that is so much more than just a job. It's stability, it's confidence. It's a sight into a better future.

When investing in capacity building, we're able to serve our population with more support, thus enhancing programmatic success and success in our population. Thank you for investing in the economic stability of our young people in California.

Hello, my name is Belen. I'm a corps Member at the San Jose Conservation Corps. As a California RISE grantee in Santa Clara County, San Jose has a workforce development program that connects youth to green careers and professional growth, which I myself have benefited from.

Before joining the Corps, I was a foster youth impacted by homelessness, struggling to see a future for myself in General. It was really, it was really hard to see a future for myself without the Corps and Thanks to the Corps, I was able to get my. I was able to graduate first in my family.

Now three of my family members are enrolled. I've gained financial independence and stability and I'm continuing to build a lasting future. Thank you for supporting pathways to economic mobility. And for young people like me, I hope to see your support in the future as well. Thank you.

Thank you.

Good morning, Mr. Chair and Committee. I'm Erin Schirm from Meristem. We serve adults on the autism program. And are grant recipient of CA RISE. I believe that a tailored education model for different needs is really important. I believe the same is true in workforce. And I think the social enterprise meets an essential need for certain individuals because.

You can tailor the way you help them develop work skills. We've hired three of our individuals full time. We've had 10,000 hours of internship go. Through our social enterprises. We have hope that our social enterprises are long term sustainable as a result of Cal, Cal Rise for support.

And I think the biggest thing is. A network of social enterprises that come together that help each other across the state to do. To do work. So I thank you for your consideration and thank you for your time.

I've come to tour Meristem, isn't it in your district? Okay.

Yeah. Okay. I thought so.

My name is Marcello Magana. I represent UC Theatre out in Berkeley, California. We're an economic social enterprise that serves the community of Alameda County. As a grantee of California RISE, I'm here to express the strong support for the governor's proposed $17 million investment in CA RISE the UC Theater.

Our mission is to empower the next generation of leaders through job training and career pathways in the live music industry and the nonprofit world. And to date we've served over 200 participants, primarily from marginalized communities where participants of our program see an 80% job placement post graduation.

Thanks to CA RISE funding, programming resources and their mentorship, we've been able to expand our staffing, increase our cohort sizes and elevate our program goals and outcomes, further advancing our practices in equity access and transformative workforce development. Backing CA RISE means unlocking the potential and creativity of of marginalized communities that are so often miscounted from the workforce. Thank you.

Thank you.

Hello, my name is Victoria. I work at the UC Theatre and I'm an alum of the Concert Career Pathways Workforce Development program that we offer. I currently work as the education program coordinator.

As a participant, I gained valuable hands on experience in the music industry and the confidence to navigate new and unfamiliar spaces as A Member of our education team, I've gotten the chance to mentor and foster a safe space for people in the same position that I was in last year, hoping to find their place in an in an industry that's often closed off to young people.

Because of my involvement in the UC Theater's Concert Career Pathways program, I've been presented with countless opportunities to break through barriers to work in the music industry and I now get to pass on my knowledge and experience to talented individuals that I know will be the future of the music industry.

Investing in CA RISE opens the door for more people who come through our program to get the opportunity to advance their careers. Just like I did. Thank you for your time.

Thank you.

Morning Senators. My name is Jonathan Jungwirth. I represent AlliedUP. We are the nation's states and industry's first and only allied healthcare cooperative. As a CA RISE grantee, we connect job seekers with FQHCs, skilled nursing, physical rehab and local clinic employers across the state.

We have currently placed over 500 majority minority and majority women Californians in gainful career building employment with true living wages in addition to our ongoing career coaching and placement service professional training. As a cooperative that gives allied healthcare workers company ownership and generational wealth building opportunities, we are unique in our offering.

CA RISE has been vital in that in our ability to stand up and do that providing healthcare employers that are under supplied with accessible talent and access to skilled and certified professionals that would otherwise have not been able to get that opportunity. My father turned 66 in January. He's a young guy by 2025 standards.

In the last 18 months he's had a minor heart attack. He's broken a hip. You know, black ice can be a nasty thing when you're on top of it.

Your support in this program means workers have the opportunity, access and resources they need to achieve, thrive and bolster a health care infrastructure and an economy that has only begun to be stressed by a generation of patients that require high touch and high frequency and time sensitive health services. Thank you for your time.

Good morning. My name is Stephen Norris. I'm with Juma Ventures. We're a nonprofit social enterprise and a CA RISE grantee located in Sacramento and San Francisco and San Jose. We also request that you support the governor's proposed one time 17 $1.0 million investment into CA RISE.

Not only have we been able to employ over 400 young adult Californians, but we have also been able to dramatically increase our supportive services and remove critical barriers to those young adults who would otherwise fall through the cracks and not be able to expand their core competencies and get long term employment.

It's also allowing us to track that long term data to ensure that these young adults are not just receiving benefits through the program, but after they exit the program and continue a really beneficial career pathway. So we appreciate your support. Thank you.

Good morning, Chair and Members. I handed a letter to the Sergeant to present to the Committee, and I'm sorry that it was last minute. We are kind of late to the dance, but I am here. Lori Kammerer on behalf of the National Association of Women Business Owners, California Chapter, as well as the Women's Business Centers.

I wanted to read very quickly a letter that you have in front of you that has been signed by our Senate Budget Chairs, Senators Valladares and Grove. Also signed on by Senator Megan Dahle and Senator Choi and Senator Perez, and then by Assembly Member Stefani. And that list is growing. So I will have an updated list of Members that are coming on supporting the requests that we are making on behalf of the Women's Business Centers. We are requesting a budget...

We don't have time to read... We have the letter.

Okay, I'll just tell you the, the quick, the quick things. You have time to read.

We will read, I promise you. But we don't have time to read it out loud.

So that's fine. Thank you. So we are requesting a $9.5 million augmentation over a three year period to continue the funding for the Women's Business Centers. The programs that they have done have helped women entrepreneurs of all backgrounds to start businesses.

And most importantly, what they have been doing over the last couple of years is expanding the childcare developments and for childcare spaces. And they've had over 51 new childcare spaces moved or opened over the course of the last three years. And so without this funding that didn't make it into the Governor's proposal, these programs will be extinguished. So thank you for your time.

Hello. And I just want to provide some additional comments to what Lori was saying. Thank you, Chair and to Members, for your opportunity to speak today on behalf of the California Women's Business Center Network. My name is Sophia Kanaan, and I am a Director for the Women's Business Center here in Sacramento.

We are here, respectfully, as Lori mentioned, to request 9.5 to support the continue to continue and expand the Women's Business Center Enhancement Program, which has already demonstrated substantial impact statement statewide. And rather than sharing our aspirations for the program going forward, I thought I'd share just a few key impacts that we've made in 2024.

Just last year, WBCs helped create and retain 26,761 jobs, reflecting a 21% job growth since 2023. We facilitated 36 million in access to capital, and for every $1 invested in the network, 79 goes back into the local economy to benefit the local economy. So I just want to come here to say to you that investing in the Women's Business Center Network is an investment in California's economy, working families, and small business growth. Thank you.

Chair and Members, Nick Romo on behalf of Stanford University. I'm here to urge the Legislature to support the $25 million state allocation to help establish the National Semiconductor Technological Center, the headquarters, Agatha Design and collaboration facility right here in Silicon Valley. Stanford, as a premier research institution, is excited about the opportunity.

This facility will bring together great synergies between academia, industry, and government. The allocation is a strategic investment that leverages Silicon Valley's unparalleled ecosystem of innovation, expertise, and resources right here. And to ensure California continues to lead in semiconductor technology, we urge the Legislature to support the allocation to catalyze substantial economic returns and innovations over the coming decades. Thank you.

Hi, this is Maryam Cope. I'm Vice President of Governmental Affairs for the National Semiconductor Technology Center operated by Natcast. I just wanted to come in and offer a couple of public comments about Natcast and the NSTC. The NSTC is a public private consortium of more than 130 members, which span academia, nonprofits, startups across the entire semiconductor value chain. It's a once in a generation opportunity for the United States to drive the pace of innovation, build a skilled workforce, and strengthen global leadership in semiconductor R&D and manufacturing.

The nonprofit is dedicated to strengthening US leadership in semiconductor technology, reducing the time and cost for for members, including in California, to bring new technologies from the laboratory to the fabrication facility and building a robust US semiconductor workforce development ecosystem.

I want to talk a little bit about our national impact, and then I'll just wrap up. But the leadership in semiconductors really is a national bipartisan priority for the US Congress. The legislation was passed as part of the National Defense Authorization Act. And I think we can all see in the news today how important supply chains are.

I think we all remember the chip shortage. You really have to bring R&D and manufacturing together here to the United States. The semiconductor industry, particularly the design ecosystem, is very strong in California, but it's very strong in many other states. And this $25 million incentive was a very important part of our decision to locate here.

Vivek will talk a little bit about what they will use the funds for. The last thing I'll just flag for the legislators is that the Semiconductor Industry Association did a study of the impact of federal and government funding in semiconductor R&D on GDP, and they found for every dollar the US government, including state governments, spend on semiconductor R&D, they get a $15 return.

So this $25 million investment can actually impact California's economy to $375 million. And that was done before the AI boom. So we imagine that it's a much higher number now. So we really encourage you all to approve this incentive. And we believe that there is a very dependable federal funding source that's available if California can meet its commitment to provide this $25 million incentive. Thank you so much.

I'm the last one, I suppose. I am Vivek Prasad from Natcast. So I'm here to support the $25 million allocation that has been proposed. So just to give some background, my last 30 years I've worked with in the technology industry, seeing the growth and the investment in China, Taiwan, Korea, around the world.

And it's about time that the US is investing with the CHIPS Act here. Taiwan, we talk about the 1 to 15 ratio. Taiwan, they have four such complexes that they created, and the revenue from those complexes is $187 billion. So over the last 10 years that's what the investment has produced. So here we are with this partnership between California and federal is important to showcase that we are really working together to keep the facility in the Bay Area. So in general...

You're wrapping up?

Yeah. So overall, the employment that we want to create here is important for our startups, and for my particular role, we are trying to support the very early startups that need the funding support, the expertise, as well as helping build the interest in semiconductors from high school into the college system. So we want all your support there. Thank you.

Thank you. That's seven hours now. All worth it. I just, you know, thanks everybody for their, for their testimony. The challenge that we are in is the, as Senator Niello has described and everyone else has, is our overall fiscal situation. And the Governor has proposed quite a few 25 million here, 50 million is there, 400 million there.

It adds up, while proposing no new money for homelessness to build any affordable housing. And three quarters of a billion dollar cut to the University of California, the California State University. So we are, we are grappling, although each of the programs are really important and I, and it's critical that folks come here and share with us their, the need, the commitments, the value.

And we share, I think broadly, you know, that interest and that commitment to the programs that we're also over the coming months just to be grappling with a lot of very challenging choices that are before us for the whole host of conditions I don't need to cover today. But thank you.

I know some of you came a long way to be here, tell your story. We very much appreciate it, and so we will hold that, each of those items over. We'll be taking a couple votes at the end, but thanks so much. Now we're going to proceed to... Sorry, Governor's Office of Land Use and Climate Innovation. Oh yeah, which one do I say? So welcome to welcome to GO-LCI. That's never gonna stick. Our first item is item seven, which is the 2024 Climate Bond Expenditures at the Governor's Office of Land Use and Climate Innovation.

Yes, Senator. Good morning, Chair and Committee Members. My name is William Robinson, and I'm the Legislative Director of the Governor's Office of Land Use and Climate Innovation. As requested by Committee staff, I'd like to begin by providing a brief overview of LCI and its history, touch on our role in the LA wildfire recovery, and then briefly present on our Proposition 4 items. LCI was originally established in the early 1970s as the Governor's Office of Planning and Research, or OPR, a cabinet level entity and comprehensive state planning agency.

Last year, OPR was renamed or reorganized to refocus on its core functions, providing leadership, planning, research, and formulating long range state goals and policies to address key areas, such as land use and planning, climate risk and resilience, environmental protection, sustainable economic development, and other targeted long range research needs.

The extensive reorganization LCI underwent over the past year involved multiple efforts, including a transition of staff from appointed positions to state civil service, the transfer of multiple programs to other state agencies with more direct policy alignments, and the standing up of its own IT functions.

This was a significant effort, and I'm happy to report that each of these pieces have been successfully completed. As a note, the Governor's Budget does not include any savings for LCI associated with the vacancy elimination and government efficiency reduction drills. However, we are continuing to implement a positive realignment of resources to focus on our core functions.

Through its Planning and Policy Branch, the Office oversees key efforts, including implementation of the California Environmental Quality Act, or CEQA, General Plan guidelines, streamlining environmental review for climate aligned projects, and supporting local and regional planning efforts. It also manages the Integrated Climate Adaptation and Resiliency Program, or ICARP, which drives policy alignment, delivers climate services, advances actionable science, and directs critical investments in resilience.

The Office also houses the Strategic Growth Council, which coordinates and works collaboratively with public agencies, communities, and key partners to realize healthy, thriving, thriving, and resilient communities for all, providing direct grant funding to projects demonstrating the value and feasibility of sustainable communities, ensuring that California's long term vision for climate and land uses informed by the people it serves and is connecting state priorities with community needs.

The Office is additionally home to the Racial Equity Commission and supports the state's Military Council. Regarding wildfire recovery, LCI's wide breadth of policy scope puts it in an important position to bridge the gap between the state's land use work and its environmental goals. Because of this unique perspective, LCI has been providing important input towards the LA wildfire recovery efforts. LCI serves as the lead for the community planning and capacity building or CPCB recovery support function under FEMA and Cal OES.

Our role is to coordinate assistance and support from across federal government, non-governmental partners to help the county, cities, and tribes effectively plan for and manage their recovery. We recently completed the Rapid Needs Assessment along with our state and federal partners and are moving into the long term recovery strategy development phase.

Additionally, per executive order N-4-25, LCI was tasked with working with HCD and others to identify statewide permits for potential streamlining. Lastly, the Office sits on the executive committee of the Wildfire and Forest Resilience Task Force and is participating at the Task Force meeting taking place in Marin as we speak here this morning.

And finally, regarding Proposition 4, the Administration's climate expenditure plan provides for funding for three programs under LCI. This includes 16 million for the Extreme Heat and Community Resilience Program in fiscal year 25-26 and 31.6 million in fiscal year 26-27. with initial funding provided in 2022. EHCRP is California's first comprehensive and solutions driven approach to mitigating extreme heat, which is the state's deadliest weather related hazard.

Climate Bond Investments will build upon prior funding by leveraging the existing infrastructure, partnerships, and community trusts established during those earlier funding rounds and will result in extending expanded funding for up to 150 additional community projects. The expenditure plan additionally includes $150 million in fiscal year 26-27 and fiscal year 27-28 for the Transformative Climate Communities Program.

This flagship program will fund the implementation of neighborhood level proposals with multiple integrated projects and empower communities to choose their own strategies to reduce greenhouse gas emissions and achieve community benefits. Lastly, the expenditure plan also includes $784,000 in fiscal year 25-26, $427,000 in fiscal year 26-27, and $55.2 million in fiscal year 27-28 for the Community Resilience Centers Program.

These funds will be used to continue the program's work of funding the development and enhancement of community resilience centers that provide shelter and resources during climate emergencies, such as extreme heat and poor air quality events. The program also supports year round community services and programming to strengthen community resilience. And with that, I thank you for your time and I'm happy to answer any questions the Committee may have.

Senator Niello. Okay. On the overview, I mean this is all, this is all. I mean I've worked a lot, I worked a lot with OPR. This is all new to me. I was just covering the overview right now, not the, not the first item. Are you, Rachel, did you have something on the overview you wanted to present before?

Just on the... We have comments on the proposal, but...

On the climate bond proposal? Okay. But before that, because you're responding to some of our, the questions that I know that Mr. Griffiths had sent you in advance as well. I look forward to sitting down talking with the Director at some point. I'm not clear.

I don't quite understand all the programmatic functions that would typically be in a department or agency structure being subsumed inside this. I mean, GO-Biz is not terribly different in this, in this regard, but it does seem like a different approach to organizing state government that has had larger implications that I'm curious about. And then where are the potentials for synergy? I think on the land use side in particular, as I look at, looking ahead at some of these items, and this is just a broad philosophical question at this point, it'll become something more later.

Is the Strategic Growth Council and your office, to me, have had potential in a fundamental challenge that we face in land use, sustainability, transportation, air, and climate, which is that the state doesn't have the capacity or mechanism by which it can reconcile competing siloed regulatory functions.

So Senator Niello and I both come from local government where each thing that we do ultimately has to roll up to a place based evaluation. Okay. We have a water quality objective. We're trying to meet an air quality objective, a social justice objective, access to parks standard.

In our General Plan, there's 5,000 different rules that determine what our decisions are supposed to be. And, but in the end, to the maximum extent permitted by law, the Board of Supervisors, City Council can say, okay. But in here is like there's, this is the benefit here and this in this silo is up here.

And the negative impacts in these other adjacent silos are negligible, but they exist on paper. And so we have to make a decision one way or the other because the trash has to get picked up on Thursday or when or kids are going to show up at the basketball courts on Monday. So we will make a decision and we're able to reconcile those differing, those differing things. And CEQA provides for that through its statement overriding considerations as well. At the state level, there's no such mechanism.

So when I served on the Regional Water Quality Control Board, we're like, okay, no, you cannot take that creek up by a half a degree. It could be that you are building 10 million units of affordable housing with no tax credit subsidy at all. We would never, we couldn't, nobody could care. And there is no, no.

And maybe this is also going to advance, you know, solar and wind energy that will meet all of our needs forever. If that were to happen, there's no way for, for the state government to say, you know what, maybe let's look, let's take a look at that half degree. Let's put our green eye shades on again and determine is that, is that should, is that the, should that trump everything else?

And so I think that part of the promise when Strategic Growth Council was created, and it's always been, you know, one of the hopes is OPR has evolved and evolved and evolved and evolved, is that the state would be able to take a more holistic approach to being able to assess cost, benefits, and other things in a way that more resembles what other levels of government in California can do.

So that's not a question. I'm just flagging this because this is an area I'm hoping to be very active in and trying to figure out a path forward on how to do that. And we're seeing that as a challenge to many, many projects, but also ideas and projects that don't ever emerge because you just know you can't possibly get through them. And I don't think up to this point Strategic Growth or your office has been able to achieve that, even though I know you're trying to through grant program alignment and other things.

There are definitely steps forward, but very interested in how we might use your more robust office as a way to, to, to make the state more, more capable, more potent at advancing our own objectives. So with that, let's move then to our item, which is item seven, the climate bond. And so let's turn to Legislative Analyst Office.

Thank you. Good afternoon. Rachel Ehlers with the Legislative Analyst's Office. So we've been talking with your colleagues in Sub 2 on Proposition 4 for the past several weeks. You have just one small slice of it here. In contrast to many of the other categories that we've been discussing there that are kind of more broad and have a lot of policy questions and there's some funding with a lot of decisions before the Legislature of how to allocate it.

In this particular slice, you've got three existing programs that the bond is very explicit to allocate funding to. All three of these programs, as shown on page 14 of your agenda, have gotten General Fund in recent years. So the decisions before you are a little bit more straightforward here.

It's really about the timing of when you want to allocate the funding for these bond specific activities. As you can see, the proposal from the Administration is a pretty modest amount of funding in the budget year, with more funding in the out years. We've reviewed their rationale and that seems reasonable to us.

In large part it's because there is previous General Fund that the Department is still in the process of administering and the field is still in the process of absorbing. So it doesn't make sense to flood the field with more funding than they're ready to use on effective projects and programs at this point. We will note that the proposal here, the structure of it is a little bit different than budget proposals you're probably used to in that the Administration is asking for a first year funding but also a sign off on a multi-year plan.

They will come back before the Legislature in future years for approval of the appropriations in the out years, but without a narrative BCP really the proposal would be kind of a big spreadsheet of all of the Proposition 4 out year, multi-year amounts and any changes there.

That is an approach the state has used for bonds in recent years, so it doesn't raise concerns for us for these types of existing programs. It does raise concerns for kind of brand new efforts, which again is not what's before you right now. So that seems reasonable to us.

So you'll get that check in kind of whether the timing continues. I think the other thing we would highlight for you about these particular proposals is that extreme heat is a pretty new climate challenge for the state as compared to floods or wildfires where we have some established efforts.

While these have gotten General Fund in recent years, they're still pretty new where they're still getting up and running. And as is the academic research really around how to respond effectively to both acute episodes of very high temperatures, but also just prolonged higher temperatures and the public health implications.

The workforce efficiency implications, the natural resource implications of this changing climate. So this could be an area where you want to really make sure that you're collecting information about these new types of activities and these new types of expenditures to see how effective they are in order to inform the state's future responses.

That could be through budget bill language to require additional reporting from the Administration. It could also be, even if, depending on how interested you are in delving into this, perhaps funding external evaluations. This is an opportunity to test some things out and learn from it. And again, given the public health implications of higher temperatures on vulnerable Californians in particular, this is an area where we want to make sure that we're learning in order to respond as the years come. Thank you.

Courtney Massengale, Department of Finance. No comments, but we're available for questions.

Thank you. Senator Niello, questions or comments? So Sub 2, with respect to the timing question, have they, do they have a framework or rubric that they're applying? And I appreciate that this is our, this particular slice isn't our Subcommittee, but it doesn't make much sense for us to have a completely different frame or philosophy about timing than the main Subcommittee on the topic.

Yeah, I think it's all still under discussion. Our recommendation has been that the Legislature doesn't need to do all or nothing, but really maybe kind of sign off on the multi-year plan for those programs that it's comfortable with and feel more established but really only approve, be explicit about only approving the first year of funding and requiring the Administration to come back for other areas where it's, where it's more new and there are bigger, broader policy questions.

Including the extreme heat? Is that...

I mean, again, with the way the bond was structured for these particular programs, they are established programs. This is in contrast to, you know, other areas where they may say we want to do something about defensible space without an established program.

So I think, I think, as your advisors, we would have more comfort with a multi-year plan for these types of these, these particular programs because they are established, at least in terms of a flow of money. But these are areas where you may want to think about, again, more information coming back to you about outcomes.

Okay. All right. If there's no other questions on this one, then we'll move. Thank you. Good to see you, Rachel. Move on to item eight, which is expansion and... Oh wait, is that our last one on... We're going to take public comment now on now that he's not at the table to rebut me on GO-LUCI. No, that's okay. Yeah. For Democrats, just GO-LUCI. Mr. Niello is asking that they be referred to as GO-LUCI. Just one more time, is there any public comment on the GO-LUCI What item?

Item seven?

Yes.

Yes. Yes. Chair, Members, Noé Páramo with California Rural Legal Assistance Foundation. Climate resiliency is very important to our Central Valley farm worker communities. We look forward to prioritizing policies that address our frontline workers and resident families. So thank you very much, and we're in support of this funding. Thank you.

Thank you. All right, to item eight, which is the Governor's Office of Service and Community Engagement. The first item is expansion and definite continuation of the College Corps. Welcome.

Thank you, Chair and Members of the Committee. My name is Anthony Chavez. I am the Chief Deputy Director of the Governor's Office of Service and Community Engagement. Our office was established in 2024 by the Legislature to elevate paid service and volunteerism in the state, promote youth and community engagement, and advance public awareness and outreach campaigns to tackle the state's most pressing challenges. GO-Serve consists of the Office of Community Partnerships and Strategic Communications, California Volunteers, and the Youth Empowerment Commission.

Before you today are two budget proposals. They aim to create economic opportunity and career pathways, develop future leaders, and foster social connection. The first item proposes 83.6 million ongoing General Fund beginning in 26-27 to continue and expand the College Corps program, currently funded only through 2026.

These resources will expand service opportunities for more than 4,000 undergraduate students annually in partnerships with over 50 universities, including CSU and UC campuses, community colleges, and private universities. College Corps is a unique program started here in California, already impacting thousands of students, hundreds of community based organizations, and communities across the state.

In response to LAO's assertion that College Corps operates with high administrative costs and is more expensive to run than other similar volunteer and financial aid programs, we want to be clear. This is not a financial aid program. It's very much a service and workforce development program to create and experience for a student that helps them launch their career and requires programming costs and support to do so.

A lot of the administrative costs identified by the LAO are associated with program design, evaluation of the program, education, outreach, several categories that are categorized as administrative costs but are actually program delivery costs. Students receive up to $10,000 for completing 450 hours of service during an academic year. The $10,000 number was not arbitrary.

We received that direction from the UC system and higher education leaders. That is the amount a Pell Grant student in the UC system has to come up with either by taking out student loans or working. Now with College Corps, they have the chance to experience what so many other wealthier students have had, which is to get real job experience, to do meaningful and purposeful work in their communities, and to start their careers.

The way the program is structured is to make college more affordable to those who need it most while also giving them brand new experiences that are going to help them the rest of their lives. We have created efficiencies and the cost per student has been reduced since year one. This successful model has now spread to other states including New York and Minnesota. With College Corps we are creating debt free pathways for low income students who now have opportunities often only afforded to wealthy students.

The chance to help your community, the chance to gain real job skills, the chance to build social networks and social capital, all while being able to stay focused on finishing school on time. So far, College Corps has proven to be a win win win. It's a win for over the 10,000 students who have already participated and received up to $10,000 for having this service experience.

It's a win for our communities where College Corps members have already served over 2.5 million hours in our classrooms, tutoring, mentoring low income students, in our food banks serving families in need, and in our parks and communities taking climate action.

It's a win for our broader society when we graduate a new generation of leaders in California who learn to work with people of different backgrounds and perspectives to solve problems. And we have seen the real impact of our College Corps members as recently as the LA fires, where many deployed to stand up disaster resource centers, supply distribution centers, and food banks.

College Corps is also a win for the State of California, as it prepares and recruits the future workforce including teachers, nurses, green workforce, and community leaders. The success of the program is also demonstrated by the clear demand. Last year for the 3,500 positions in College Corps, we received applications from nearly 11,000 students and several public universities wanting to participate in this program.

This funding proposal will allow College Corps to continue to make an impact throughout our state and meet the demand of of this popular program. Again, because this program is unique, we feel the program is expanded, the students most affected would be low to middle income students who normally don't have access to service programs as well as AB 540 Dream Act students who historically have not been eligible for national service programs. I look forward to answering any questions you may have.

Finance. Thank you.

Good afternoon. Henry Ng, Department of Finance. Just want to reiterate that these these resources will allow for the continuation of an existing program whose funding would otherwise end in July of 2026. These resources will also allow for the program to extend partnerships to over 50 campuses and to provide 4,000 students with service opportunities. Thank you.

Could you tell us what are the, it would add 10 campuses to the program? Do you know what they, what they are?

10 campuses. It's estimated that we would grow the UCs by two, four to the CSU, probably four to community colleges, and maybe one to private.

Okay, so it's not. We don't know yet what the list is.

We don't know. It has to be, it's through a competitive process.

Senator Niello, did you have a question at this point? Okay. LAO.

Hi. Good afternoon.

Wait, what are you doing here? Is this a resources, environment? Okay. Welcome.

Hi. Thank you. Good afternoon, Mr. Chair and Senator. Natalie Gonzalez with the Legislative Analyst Office. So I wanted to start by saying College Corps has three main objectives. To help students graduate college with less debt, create community service opportunities for students, and support students' career development.

California Volunteers has shared information with us indicating that the program is generally furthering these objectives. Yet we have some concerns with the proposal. First, campuses already provide community service and career development opportunities for students. Also, campus financial aid offices package multiple different types of financial aid awards for students.

The state even has another financial aid program with a service component. Given College Corps operates outside of these established systems, it as a standalone program, it requires additional staffing and funding. And this leads to our second concern regarding the program's high administrative costs.

Of the 84 million ongoing proposed for the program, about 45 million would be for administrative costs. So this means less than half of the funding would go directly to students to support graduating college with less debt. California Volunteers would also receive 48 permanent positions to administer this program.

To put this into perspective, that's about one third the positions that the California Student Aid Commission has, but College Corps equates to about 3% of the financial aid funding that the Student Aid Commission administers. We understand the value that College Corps brings to students and communities.

But given the state's projected budget deficit, the high administrative cost to run the program, and that the state is taking proposed reductions in higher education in 25-26, both at the University of California and the California State University systems, as well as a reduction to the state's Middle Class Scholarship financial aid program, we recommend the Legislature reject the Governor's College Corps expansion proposals. Without the new funding, the program would still have the $63 million in one time funding to support a new cohort of fellows in 25-26. Thank you and happy to take any questions.

All right, thank you, Senator Niello.

Questions now. So first of all, the administrative proportion is striking. One might think that this is an employment program for the administrators and rather than perspective for participants. I apologize if that seems a little sarcastic, but that's a huge proportion. It's over 50% of the total. But what measurable, demonstrable outcomes do we have from these programs versus what could alternatively be done with existing programs and campuses that have been articulated?

The programs that LAO is probably referring to are financial aid programs. Most of them, obviously they're not doing work to earn the financial aid component. Whereas this program here, there's, you know, they're hosted in community organizations that are off site where that does have, you know, some supervision costs as well. Right.

So there's the supervision of the members and it is a, it is a professional development workforce program. So there's a lot that's built into the delivery of that and those are costs. You know, it's staff time to support those members, but it's making a meaningful impact on the student's life as well. Right. And so it's not just the financial benefit they are getting as they're earning the money to go to college, but it's also the professional development and skill set and network that they're getting gaining through that experience. Much broader.

It is, there's a cohort that's involved in this, there's a regional collaborative that's involved with engaging with community colleges and UCs or community colleges and state colleges, bringing, you know, students together that normally wouldn't be together. So there's some experiences there that are valuable that we feel. But do understand your concerns with regards to budget.

Relative to the work experience opportunities, do none of these institutions offer such services to students? Part time jobs that... I mean, when I was in college, literally over a half a century ago, but the school had resources for students to get part time jobs, and in my case, it was in the field that I was studying. Does that not exist anymore?

Well, there is jobs in, you know, campuses. What I will say on the College Corps program is there's high demand for our program, and so people are valuing the jobs that they're getting through College Corps. And this program here is one in that there's a meaningful experience with those jobs that they're actually learning things that is going to help them develop throughout their careers versus potentially, you know, working in a parking lot or some other job potentially they might have campus Related.

In my case, I was studying accounting and one job that I did get was directly working for an accountant, a tax preparer. I found the work extremely boring and knew I wanted to go into another area of accounting, but nonetheless it was directly related. That doesn't exist anymore?

Yeah, I cannot speak to the campus in terms of the number of opportunities that they have available per campus, but what I can speak to is the demand for this program in terms of the opportunities that college students today are seeking.

LAO, is there anything you'd add to my question?

Yeah, I have a few points I'd like to add. So I think in our analysis, what we looked at is the fact that campuses do have community service opportunities that students can participate in. We looked at a lot of the options available at the CSUs and the UCs. For example, students can take a course that might have a volunteer community service involvement. There is part time employment opportunities.

There is a federal financial aid program, the work study program, where students can work and receive financial aid as well. As the state has a another financial aid program known as the California DREAM Act Service Incentive Grant Program, and that is available to students who are completing the California DREAM Act application.

So those students who are not eligible for the federal financial aid application. And through that program, it's similar to College Corps where they complete service hours and receive financial aid. And then as well, there are other financial aid programs that do not have a service component. So we kind of looked at the fact that there are some community service components without financial aid and then also some financial aid without community service and are meeting similar objectives, just not together.

And do you have any measurable outcomes of your program, specifically with regard to the ultimate objective of getting a permanent job after graduation?

Yeah, we have plenty of examples of our college students that have received jobs. You know, this is the, we're into our third year, right. So. And we could share with your office. But for the most part, our Corps to Career Program helps support with regards to networking and getting jobs post-college as part of the program.

Okay.

So I'll say first, I think the service element here is the key, has always been the key, the core of what, no pun intended, the core of what this program is about. And I think I understand why we're framing this up as a financial aid and a workforce prep and career program, but I wish we wouldn't because almost every other way that we do financial aid is better than this for financial aid purposes.

And other programs that we do for career prep and workforce development are better for this than this program is. On the other hand, I don't know that, I'm not so confident in the service opportunities exist on the campuses. They are often disconnected.

Things like the work study program long ago were captured by the colleges themselves as a way to, you know, subsidize their personnel budgets and say, here's your great work study opportunity is working and they cafeteria or the library working for us as an institution. That's valuable, but it's not the same as the experience that you were able to achieve.

So without a service ethic, without the point of this program, which was to instill a sense of the power of service and collective action and respect for democracy and for sort of other facing a citizenship that is a value in and of itself. And so to me, this program should be delivering on that.

And it does mean something. There is something about having the Governor or the chief service officer of California rallying you as a, as a group of college students to come to, you know, to help out in the face of a major, you know, one of the worst disasters that's ever hit the country. That's different from when I was, you know, student body vice president, rallying people to come and do a service project at People's Park in Berkeley. Right. It isn't the same.

And the design of effective service opportunities and the contextualization of those opportunities is very difficult for an individual, for Crafton Hills College to do on its own for American River College or Solano Community College or so that. So I, I absolutely understand the purpose here and I think the, the Governor's done a good job in this, in that space.

For me, the challenge is just the General Fund. It would be hard for me to, to say we should do this and we should make a permanent appropriation of this amount of money, which is a more than a 25% of the cut that we, that the Governor's proposed to UC and to CSU.

So I don't, I don't want to do a cruel hoax of here's, here's some money to go to an institution that we're hollowing out in the first place or to send folks out to work on service projects to, that are going to support the housing of homeless of unhoused folks in California while we're proposing zero money for affordable housing or for homelessness. Right. That's the, that's the challenge of this proposal to me is that the issues that LAO have raised, I think are generally correct, although I think the service piece is a different animal than has been described.

But even that said, the General Fund, the competition in the General Fund and the way that the Governor has laid out his priorities for me just is problematic to approve these two requests, given what's being proposed at the same time for higher education, for housing and homelessness, and obviously other key areas of the budget and the headwinds that we're facing. But we're going to hold this one open and then proceed to our next item, which is the creation of the Belonging Campaign.

All right, so yeah, so we're at item nine of creation of the belonging campaign. And Mr. Chavez, are you lead on this as well? Welcome.

This budget item proposes $51,000,001 time General Fund for the Office of Community Partnerships and Strategic Communications to launch a Belonging initiative. This initiative will work to build social connection and engagement in neighborhoods and communities throughout California. Research Research tells us our society has in many ways become disconnected, isolated and divided.

The immediate past Surgeon General of the United States declared a public health crisis an epidemic of loneliness. According to the Surgeon General, the harmful consequences of a society that lacks social connection can be felt in our schools, workplaces and civic organizations where performance, productivity and engagement are diminished.

Additionally, the National Academy of Sciences, Engineering and Medicine published a recent report describing and warning the risk of social disconnection to public health. We also know from research in a major disaster situations, you are significantly more likely to be helped, aided or rescued by a neighbor first than anyone from government.

With this initiative, we seek to create social connections, improve mental, physical and public health, and build more resilient communities by bridging the gap between government programs and community. To accomplish this, we will raise awareness around ways people can connect in their communities and support CBOs to engage neighborhoods and improve people's access to resources and networks.

We will also uplift existing state programs to better connect community to services. This Belonging initiative will include data driven research to better understand how to reach communities and identify and prioritize higher need areas. Outreach and education to raise public awareness around resources, program and opportunities to strengthen social connection and grants to support local engagement efforts.

With this initiative, we have the opportunity to support the social, emotional and physical health of Californians, better connect the community to services and resources as well as to each other and start to create a less isolated, lonely and disconnected society.

I'm joined here with Devin Keiller, our Assistant Executive Director for ocpsc and we're happy to answer any questions you have.

Finance. Henry, Department of Finance. We would just like to note that this is a Administration priority and that these one time resources will allow for the office to initiate research projects and to lead a campaign to better address social disconnection and to promote community engagement. Thank you.

LAO.

Yeah. Again, Rachel Ehlers with the LAO. We do recommend that you reject this proposal. Given the General Fund condition. We think there's a very high bar for spending new General Fund resources on new activities.

But even were the General Fund in a better condition, I think we have some fundamental concerns about the proposal and the lack of clarity over how we are defining and measuring A sense of belonging, and therefore how the proposed activities would address that or measure any success and progress toward that end.

The activities that the Administration has proposed are largely around public awareness of existing state programs, including those run by the Go Serve office. We haven't seen evidence that those programs are lacking in outreach or lacking in participation, nor the connection there with the social connectedness or specifically how the funds would be used.

So given those concerns and the overall budget condition, again, we do recommend rejection.

Senator Niello. First of all, establishing new programs in the face of a significantly challenged budget would seem to be somewhat oxymoronic given prudent budgeting procedures. But this identifies pathways to social connectedness and engagement. You use those terms, but what exactly does that mean?

What would participants do specifically relative to those things, and what would the actual outcome be?

Thank you. I appreciate the question. So it's not to create new programs to address that. It's to uplift programs. The state's already invested in that address that. And so they programs exist across the state landscape that already address loneliness and address, you know, opportunities for social connectedness.

But it's that communities don't always know they exist or that there are programs within various state entities that they just may not realize are there or that they're connected.

And so it's trying to better present the landscape of state programs that the state's already invested in in a way that community can really take full advantage of them and utilize them to the most of their potential.

Again, when we talk about pathways to social connectedness and engagement, what exactly does that mean, and what would the participants do to achieve that or demonstrate that, and what would the measurable outcomes be?

So, one, I do think research is super critical here. And, you know, we recognize that there's a loneliness epidemic, and from OCPSC's work with the community, recognize that they don't always recognize the state programs that exist. And so I think research is really critical here to better define how loneliness epidemic is impacting our communities.

So I think that's part of the social connectedness piece, is we need to have a better definition of what that means for California communities. But the measurable outcomes would be how much more are community Members using state programs and utilizing state programs and accessing them? And so that would be one of our key measurable outcomes.

So the outcomes would be people utilizing the program.

Correct.

That's not an outcome. An outcome is actually accomplishing something. And utilizing the program would accomplish something. Well, I'm asking, what is that? What does that look like?

Our goal would be that using those programs would mean that they felt better connected to their community and better connected to the state and that they felt as though they were moving beyond the loneliness epidemic.

And how do you measure that?

Through research as well, Ongoing research.

And you say that there are other state programs that try to get at this, but people don't know about them. What. What programs are those?

Well, and I wouldn't necessarily say that people don't know about the programs or they wouldn't necessarily know that programs exist within. I guess no, I guess I would say they don't know about the full landscape of programs. But for example, youth behavioral health apps like Saluna and Bright Life are really critical to addressing loneliness within youth.

And there's resources there, but community doesn't always know that they exist. And so it's making sure that especially vulnerable communities, which are where OCPSC really engages, are aware of those programs.

I guess I'm confused as to what actual outcomes are. You're saying that we're going to conduct research and that will, I guess, lead us to defining the actual problem which you state in terms of a loneliness epidemic. I'd never heard that term before.

I know we've experienced increase in mental health issues with regard to kids in the last decade or so. Many people think that it's largely due to the ubiquitous use of social media, which obviously can be part of it. But I'm still struggling to understand exactly what the belonging campaign is going to accomplish.

What you're basically telling me is we're going to do a bunch of research to actually define what needs to be done and then we'll define what the outcomes are. It just seems so ephemeral.

I think we recognize your concerns, but we do also recognize that this is something. This disconnection within community is a crisis within California as it is, I think, throughout the country, as the prior Surgeon General identified. And so it is something that we felt is. Feel is critical to address.

And we do recognize your concerns with the ambiguousness of that.

Thank you. All right. Welcome. Senator Smallwood-Cuevas. I'll just say on this item, I mean, we've heard a lot of items that we that are making a compelling case, but we don't know about the General Fund condition. For me, this isn't one of them.

The promotional campaign, all of that and the research in light of us not providing any funding for housing, homelessness and cuts to UC and CSU just as examples, that the. One of the biggest effects of feeling you don't belong is that you're still number 482 on the waiting list for the affordable housing project in your neighborhood.

Because we're not, we're not, we haven't. We're not providing any funding for a multifamily housing program or anything else to build that housing. The most important part of belonging is being a part of a community that is stable and has the services that it needs, and we're not doing that in this budget.

Or you're at Sonoma State and your entire program has been canceled and the women's soccer team, that is your life, is canceled from $370 million worth of budget cuts while we're funding this very, very ambiguous, not very well defined proposal. Just to me, that's not. We, we can't. There's nothing more to wait for, for May, for me.

So I, I'm, I'm, I'm, I'm, I would, as chair, I would suggest this, this, that we reject the, this proposal today and move on and start to clear our plate so we can focus on the tougher issues that are ahead of us. Any further questions or comments? This.

No, I, I appreciate that and, and, and pulled between meetings today, but I did read about this and I did, was listening into the presentation and I know we are having to bump the Civil Rights Department.

And I want to say if there's any place where we've created belonging, it's in how we protect our classes of folks who define for themselves who they are and, and the communities that they come from.

And they deserve to be protected, every ounce of them, whether it's women against sexual harassment, black communities against racial terror, Spanish speaking folks who face language discrimination, our LGBTQI gender orientation. All of those are groups that we care for and have to protect.

And, and we need to discuss what budgets are needed to do that adequately at a time when just who you are, let alone belonging, just who you are, is under fierce attack from our Federal Government when we talk about diversity and inclusion and equity. So I agree with the chair on this.

I hope we live in a world where we can actually get, get to belonging. We want, we need it, but unfortunately there are so many needs now that we can't get there when folks are in crisis and feel so threatened and insecure on so many levels. So thank you for the presentation and thank you, Mr. Chair.

And I know we're all, we are all deeply committed to the notion of belonging. I think the other dimension of me is just, is we are not in the best position. Californians don't look to state government for their sense of belonging.

They look to us to make sure that they're secure, that they are legal, that they can get their EEOC complaint processed by somebody. They're looking to us to make sure that they actually can physically belong, survive and thrive in the community.

And the Berkeley Belonging Institute, which does great work and many, many others that are working in this, in other parts, parts of our society are doing it is very important. So you're on the right issue.

I just don't, I think, you know, as has been said, we're this isn't ready and we're not, this isn't the, this shouldn't be our top priority and we're not and we don't have a lot to offer here yet.

And as you keep keep thinking about and do research and the budget gets better and we are able to solve some of these other problems which could be in eight years from now. Look forward to come to coming back to this, but we just need to focus on these other life and death priorities.

All right, so next we're going to take public comment on the go serve portion of our agenda which is items 8 and 9. Does anybody wish to address the Subcommitee on either of these two items?

And let me announce also that we are just due to time we are going to put over the remainder of the budget items that we haven't taken up other than the first one which is for vote. So the Civil Rights Department items. So we'll put over the civil rights Department items to a future hearing.

So we're going to take public comment now on go Serve and then we'll also then take public comment following that on our item that is for vote only which is is help me out. zero the Melee office complex rent. Okay so first on go serve. Yes sir.

Welcome Chairman, Committee Members. Noe Paramo with CRLA Foundation in General support of items 8 and 9. So we appreciate the discussion also here on behalf of the Trusted Messenger Coalition. We're 80 community based organizations that have are recipients of the Office of Community Partnerships and Strategic Communications funding and that funding ends may.

So our request is the continuation of investment for OCPSE to provide grants to the CBOs that showed successfully with California communities and working with urban and rural marginalized communities through targeted outreach and education campaigns such as Youth Behavioral health, Extreme heat that was discussed earlier and also 142 CBOs to address some outcomes Measurements have reached 1.35 million residents with 55 languages throughout the state and likely saved lives.

So thank you for your consideration and we submitted a Written proposal. Thank you.

Thank you so much. Anyone else wish to provide any testimony on the go serve budget items? If not, then does anyone wish to provide Testimony on item 1700, Civil Rights Department, which is our first item, the mainly office complex rent? Item one. Yes.

So we're not taking up the other civil rights Department items at this time, but for the office complex rent, does anyone wish to provide testimony? All right, seeing none, then we're going to proceed to our. Our votes. And we have just two items, am I correct? Two items to. To take up, which is items 1 and 9.

Item one, which was for vote only. And then item nine, which we just discussed. Any further discussion? All right, Is there a motion, A motion on item one? Okay. Item one? Item one, huh? That's been moved. Would you please call the roll? And the recommendation was approved as budgeted.

This motion is to approve item one as budgeted. Senator Cabaldon? Aye. Senator Niello. Senator Smallwood-Cuevas.

All right, so that motion carries. And our Next is item 9, where the recommendation is to reject. Is there a motion moved by Senator Niello?

Motion to reject item nine, Senator Cabaldon? Aye. Senator Niello, Senator Smallwood-Cuevas.