Senate Standing Committee on Budget and Fiscal Review

The Committee on Budget and Fiscal Review will come to order. And no, I am not Chair Wiener. I am now Chair Niello. I'm in charge here. We're holding our Committee hearing here at 1021 O Street, room 1200. I ask all Members of the Committee to be present here in room 1200. We would like to establish a quorum.

We need about five more at least. So if you hear my voice and you're on this Committee, please come on down. Public comment will be heard after all discussion items have been presented. Before we begin, it says, I'm supposed to say, let's establish a quorum. Well, I just said we can't.

But at any rate, today we will hear AB 104, budget bill junior for the budget act of 2025, AB 119, a human services trailer bill, and AB 138, a bill that codifies and ratifies Memorandums of Understanding. Those would be agreements with collective bargaining employees of the state. After hearing the bills, we'll have a public comment period prior to voting.

Before we begin, I'm reading this too literally because it says Vice Chair Niello. Do you have comments? Of course I do. So now we will begin with Rosanna Nguyen, the program Budget manager with Department of Finance.

Good afternoon, Vice Chair Niello and Members of the Committee. My name is Rosanna Nguyen from the Department of Finance, here to present on the three items on the agenda today.

The first item is Assembly Bill 104, a trailer bill that makes various corrections and technical changes to the 2025 Budget act as reflected in Senate Bill 101 and Assembly Bill 102. This Bill includes the reappropriation of working Drawings Authority for the California School for the Deaf, Riverside to allow its athletic complex project to continue without delay.

This project will modernize and replace the original 1950s sports fields, including the construction of new bleachers and associated infrastructure improvements, and will be funded with lease revenue bonds.

The bill also reappropriates $10 million in funds from the 2020 Budget act for grants supporting rehabilitation programs for incarcerated individuals, including 5 million General Fund and 5 million from the inmate Welfare Fund.

This bill extends the encumbrance and expenditure period through 2025-26 to continue the California Reentry and Enrichment Victim Impact and innovative programming grants as envisioned in the 2024 Budget Act. The next item is AB 119, and this bill implements the following significant human services proposals.

It makes various changes to streamline the CalWORKS program, makes various technical and clarifying changes related to the new foster care tiered rate structure and makes implementation of the new rates subject to an appropriation.

It requires the Department of Social Services to develop a standardized curriculum for mandate reporters and requires employers to strongly encourage their staff who are mandated reporters to complete the training.

It requires the Department of Social Services to develop a strategic plan for how the department's methodology and outreach strategies may be implemented and executed to maximize benefits to Those eligible for CalFresh. And lastly, it eliminates the dollar for dollar county match requirement for the Home Safe Program and Bringing Families Home program.

The last item is Assembly Bill 138, a state bargaining trailer Bill that makes necessary statutory changes to codify and ratify memoranda of understanding and side letters reached between the state and several bargaining units.

This Bill approves a side letter for the California Association of Professional Sciences, BU10, and the total tentative agreement reached between the state and the Union of American physicians and dentists, BU16.

The Bill also codifies the agreements and our side letters reached between the state and the 16 bargaining units between June 21 and June 30 of 2025 and that were automatically ratified pursuant to Section 11 of Senate Bill 139. And with that, we're happy to take any questions.

Thank you very much. And I see Gabe Tech, our pledge analyst, is in the audience. He's here not to present, but to answer any questions that we might have. Senator Wahab, thank you.

I just kind of wanted to go. Over AB 104 and specifically item number four in it, the School of the Deaf piece of it. Could you provide a little bit more clarity on this?

Yes. I have one of my colleagues here.

Good afternoon. Mike McGinnis with the Department of Finance. So this request would extend the availability of authority for the working drawings phase of the project, which is the. The final part of design for the project.

Okay. Can we talk about numbers? Can we talk about all of that?

Sure. So the total project cost is $60.6 million. And the construction phase will consist of. 55.3 million of that total.

Okay. And I have no commentary on this particular item in the sense of it being done. My concern is that I also have a school of the deaf in my district. There are two schools of the deaf. I also have the School of the Blind.

These are two state schools that obviously cater to the individuals that need a special community largely. I am deeply disappointed. And I have stated this multiple times, let alone carried a bill last year. The faculty and teachers and staff in these schools are paid less than their counterparts that are teachers and faculty and so forth.

In their respective cities. So, for example, a Fremont Unified School District is paid more than the School of the Deaf and their team in the same city. Cost of living is extremely high in this area, especially in the Bay Area. Some of them are experiencing homelessness.

We have asked multiple times for the course of this past year that Calhr, because CALHR dictates the pay of these individuals to at least meet the needs of these particular Members to be equal to those of the city that they're based in, both for Riverside as well as Fremont.

And I do also include the School of the Blind, two separate schools, of course, but. And we have not seen that yet, we're seeing $60 million being pushed into football and so forth. So I do have concerns on when people can't even maintain quality of life, let alone less than. And we're spending this type of money. Granted.

Again, I'm not opposed to the construction of this type of facility. However, priority wise, I'd still like to see this done. I will say that we've also had multiple conversations with Calhr, the Superintendent, much more, because nobody else seems to be advocating for this particular community.

So I want to put that on record that that is deeply disturbing to me. Thank you.

Thank you very much. And I don't have an issue with some of the comments being made in regards to fairness and making sure that all the schools are taken care of. The campus in Riverside is for the deaf is in dire need of upgrading.

Senator Seyarto.

And while other successful programs and even non successful programs are playing on superior fields and have great buildings and all that stuff, these poor kids are playing in dirt. And they are championship caliber. They won a championship last year and I believe they were in contention this year for the same.

It is a great program and it's not about football. It's about building yourself up. And so I wholeheartedly support making sure that their funding continues to be able to do that. But also we need to look and ensure that other needs are being fulfilled as well. As is mentioned by my colleague. We'Re.

Going over all the bills now. Okay. I wanted to talk a little bit about, I think it is state employment bargaining and I want to talk about PERS especially. So do we have a PERS person that comes up and does that? Good afternoon. Han Jiaming from Department of Finance. All right, thank you.

And I'm going to be like really superficial on it and then you can explain a little bit more in detail what's going on. So we're going to defer what California pays into PERS for a year and a half, basically. Is that correct?

No. So currently we still have 584 million set aside for from Prop 2 to PERS.

Then what is the Bill? What does it say in the Bill? I'll bring it up. It says they're going to defer paying. Sorry, I just got in here so I couldn't bring it up. What's the part where they're deferring the cost?

So we are suspending OPAP contribution for both the employee and the employer portion.

Right? That's what I'm talking about. So if you're going to suspend that, what happens in a year and a half? Because the unfunded liability that is currently being experienced by the Fund is still going to exist.

But it's going to exist with a year and a half hole from the state contributions to those two parts of it, correct? That is correct.

So the OPEB liability is depending on the actuary determined actuarials. Here we go. So suspending the contribution to that Fund will definitely delay perhaps a few years of the payoff. But then I think the goal is to minimize the impact on the employee paycheck while still achieve the employee compensation related Fund savings.

Okay, so in a year and a half when they redo the actuarials because PERS, they redo the whole actuarial. Correct. Or are they going to keep the state part that got shorted for the last year and a half separate from all of the other cities that also contribute and other agencies that contribute into CalPERS?

Is everybody going to get to pay this back? Because the actuarials are going to be indicating that they need to make more of a contribution in order to keep up with or to attain that funded liability that we're trying to. We're trying to get rid of the unfunded liability. And yet this is taking a step backwards.

Is everybody else going to have to participate? Because the state is deferring those contributions.

So the state controller is doing the opap. They hire contractors to do the OPAP evaluation on an annual basis. I have to get back to you in terms of whether other non state agencies are included in that evaluation.

But then once the OPAP contribution restores after the suspension, the actuarial evaluation will be reestablished and the risk will be reestablished.

They will be re established using the new actuarial that they do. That's correct, yes.

So when you get back to me, what I want to know is, are all of the cities going to be on the hook too for the new actuarial that comes out that shows PERS a little bit Shorter than they thought they were going to be.

We'll get back to it on that. Okay, If I may, Nick Schroeder with the Legislative Analyst's Office. So the employer and the employee contributions that the state makes goes into a trust Fund that's separate from the employment retirement Fund. So it will not affect CalPERS pension issues or benefit costs?

Well, it's affecting something because there's a lot less money in it than it was when it started a year and a half before.

So where the shortage is coming from. So having fewer contributions coming into the state's trust fund would mean that there's less opportunity for compounding interest on those assets. So the long term, it will have an effect on the liabilities, but it's on the state's liabilities, not others.

Yeah. When the state is short, then the employers get to make that up in their contribution rate. In other words, they don't, you know, if they were paying 9% and then they wind up having to pay 20% for each employee.

So this trust Fund pays for the retired state employees health benefits. And so what it will mean is that in the future, decades from now, when we do start to draw down funds from the trust fund, the state's costs will be higher than they otherwise would have been. Right.

And when the state's costs are higher? The state's cost or everybody's cost? The state's cost. Just the state only. Correct.

All right, thank you. Before we move on, I believe we have a quorum, so let's establish it.

Senator Wiener?

Present.

Niello.

Here.

Allen. Blakespear. Cabaldon. Choi. Here. Durazo. Here. Grove, Laird. Here. McNerney. Menjivar. Ochoa-Bogh. Here. Press. Here. Richardson, Seyarto. Here. Smallwood-Cuevas. Wahab. Weber-Pierson.

We have a quorum. Thank you colleagues. Okay. I believe Senator Laird is next. Was there someone else in the room? Okay. Senator Laird. Oh, you're good. Okay, colleagues, any other comments, questions? All good.

Senator Durazo, just clarify, are we talking commenting on all of them?

Yeah, all of those. Not just one? Yes, all three.

I, I just want to just very quickly, short just compliment on the reimagine CalWORKS campaign and you know, to make sure that our, our families, especially our poorest families for getting the assistance that they need.

As I understand, CalWORKS is now serving almost 700,000 of our poorest children and families and that a family of benefits, a family of three, that makes below 50% of the federal poverty level. Toxic poverty. I had not heard that term before, but to live in toxic poverty is just pretty amazing to me in this day and age.

But anyway, I know the reforms are focused where they need to be, which is on opportunities. And so I'm very glad and grateful to support AB 119 today.

Thank you, Senator, colleagues, any other questions or comments? Sorry, Mr. Vice Chair, as you indicated to me in one ear, out the other.

Thank you very much, Mr. Chair. Just two brief comments that are. Continuing. My ongoing theme, the AB 104, the budget bill junior went into print this morning at 9:00am that makes it awfully tough for our staff to digest it and brief us. In fact, our briefing meeting started about 10 minutes late at 9:40.

So that just makes it very difficult on us. Our staff does a great job, but they are not a superhuman. The other thing is I'd like to point out that where we are deferring things, as an example the retirement benefit payments, we're deferring them into years that will have worse deficits than this year.

I don't know why we're doing that unless I guess maybe we're still praying for a miracle in revenues. I know revenues are a little stronger, have been in the last month or two than budget, but not quite to the point of a miracle.

So we will probably continue to open up this budget and add things, change things as we move into the fall. But I'd just like to caution again, if we're going to be deferring things, we're deferring them into years that have larger deficits than we have this year, at least according to current forecasts. Thank you, Mr. Chair.

Thank you. Any other comments or questions?

Senator Press just wanted to make two comments very briefly, one on AB 104 and one of the small items that was mentioned in there, which is funds for the San Gabriel Mountains Conservancy, something that's really important.

The San Gabriel Mountains have taken a huge hit as a result of the wildfires that so many of us saw back in January. Particularly the Eaton fire was right in the San Gabriel Mountains and so many, so much of that mountain area and those trails have been impacted.

Those are actually areas that I used to hike all the time and been pretty significantly damaged. And that entire area has been at risk for mudslides. They're very steep mountains, which particularly makes them very dangerous for the communities that are located below them.

So really happy to see dollars be allocated there because I know that they will absolutely be put to good use. They need some extra TLC right now, this moment after being hit so hard by the fires. And also just want to say I'm really happy that we're moving forward. These agreements with our state employees.

I know I see SEIU and several of the other unions listed in here. I know there were some concerns about delays with with agreements that they had signed previously. So hoping that this addresses those concerns.

Know that that was something that was raised to my office as well as by several other stakeholders and want to make sure that we're taking care of our workers that are doing the important work to serve our constituents across the state. Thank you.

Okay. Any other questions or comments? Seeing none. We'll now move to public comment. And this will be on items 12 and 3. Is there any public comment?

Luanne Nguyen with the Coalition of California Welfare Rights Organization. We are here on the public social services bill. It's been a very tough budget year and yet despite the tough year that it's been, we've been able to obtain this win with CalWORKS reimagined. And this has taken a lot of work.

And we want to thank you to all of you for supporting this, especially to Senator Durazzo, to the staff who've worked so hard with us on this.

When the pilot was taken away from us by the Federal Administration, the Administration, the Department of Finance, the Department of Social Services didn't give up on us with this vision of making the CalWORKS program a better program. And we are so appreciative of that.

And I also want to point out that 11 of the things that we continue to live with here in the CalWORKS program is work requirements. These are the very same things that are coming down in the Medicaid program. These are the things that are being made harsher in the CalFresh program.

And we in the public benefits community are very scared with respect to reconciliation. It is one of the scariest bill that has come through for us in terms of the impact that it's going to have in our community.

And when we look at other things in this budget item like the making the funding of child welfare tier contingency on revenue and the Legislature and other aspects of this program, we ask that you consider the solutions very early on that you think about revenue for the things that we said that we want to do in the state, including providing childcare providers the adequate amount of money that they need, like all of these people in the community.

But we also need a ramp up. We also need a ramp up for the things that are going to come to our community and that it's going to destroy and kill people. And so this work needs to be done.

And we ask that you have informational hearings that you bring the public with you as you try to solve these solutions that are coming down the pipeline. Thank you.

Good afternoon, Mr. Chair, Members. Connie Delgado, on behalf of the District Hospital leadership forum regarding AB 104 and. And the bridge loans, appreciate all the effort. Thank you.

Good afternoon, Chairmembers. Mark Farouk, on behalf of the California Hospital Association, echoing the comments of my colleague, thankful to everyone and supportive of the loan provisions, hospital loan provisions related to AB 104, thank you.

Any additional public comment? Okay. Seeing none, we'll bring it back to the Committee. Mr. Chair. Yes, Senator. Can one motion cover all three? I think we need three motions. Am I right about that? Yes. Then I would move. Item number one, AB 104. Okay.

If there's no additional comment, we have a motion by Senator Laird on item one, AB 104. Please call the roll.

AB 104. The motion is due pass. Senators Wiener.

Wiener, aye. Niello, no. Niello. No. Allen. Blakespear. Cabaldon. Choi. Durazo, Durazo, aye. Grove, Laird. Laird. aye. McNerney, Manjivar, Ochoa-Bogh. Ochoa-Bogh, aye. Perez, aye. Perez, aye. Richardson, Seyarto. Smallwood-Cuevas. Smallwood-Cuevas aye. Wahab. Wahab aye. Weber-Pierson. Weber-Pierson. Aye.

Aye.

We will put that on call for absent Members. We'll now go to item two, AB 119. May I have a motion? I would so move. Senator Laird moves. Please call the roll.

AB 119. The motion is due pass. Senators Wiener.

Aye.

Wiener, Aye. Niello, no. Niello, no. Allen. Blakespear. Cabaldon. Choi. No. Choi, no. Durazo. Durazo, Aye. Grove, Laird. Aye. Laird, aye. McNerney, Manjivar, Ochoa-Bogh. Ochoa-Bogh. No. Perez. Aye. Perez, Aye. Richardson, Seyarto. Seyarto No. Smallwood-Cuevas. Smallwood-Cuevas. Aye. Wahab. Wahab. Aye. Weber-Pierson. Weber-Pierson. Aye.

Okay, we'll put that on call. And before we get to the last one, for Members who are not here, if you could make your way down and if staff could help get their Members here, that would be great. We'll now go to item three, AB 138, moved by Senator Zeraso. Please call the roll.

AB 138 The motion is due pass. Senators Wiener.

Aye.

Wiener, aye. Niello, no. Niello. No. Allen. Blakespear. Cabaldon. Choi. Choi. No. Durazo. Aye. Durazo. Aye. Grove, Laird. Aye. Laird, aye. McNerney. Manjivar. Ochoa-Bogh. No. Ochoa-Bogh. No. Perez. Aye. Perez. Aye. Richardson, Seyarto. Seyarto. No. Smallwood-Cuevas. Smallwood-Cuevas. Aye. Wahab. Wahab. Aye. Weber-Pierson. Weber-Pierson. Aye.

We'll put that on call. Okay, so thank you, Members, for being here. We are waiting for about seven Members to come down and vote. Senators Allen, Blake, spear, Cabaldon, Grove, McNerney, Menjivar and Richardson. So it'll be great to see your smiling faces. Thank you. Or cranky faces. We're going to take a brief recession.

Okay. We will open the roll on item one. AB 104. Please call the absent Members.

AB 104. Motion. Senators Allen, Blakespear.

Here.

No, just voting. Blakespear, Aye.

Cabaldon. Cabaldon, aye. Grove, McNerney, Menjivar, Richardson, Seyarto.

Put it back on call. Item two. AB 119. Can you just call Senators Blakespear and Cabaldon, please?

AB 119, motion is due pass. Senators Blakespear. Aye. Blakespear, aye. Cabaldon. Aye. Cabaldon, Aye.

Okay, we'll put it back on call. Item three. AB138. Please call Senators Blakespear and Cabaldon.

AB 130. Motion is due. Pass. Blakes, Spear. Aye. Blakespear, aye. Cabaldin. Cabaldon, aye.

Okay, I put it back on call and we'll go back into a short recess. Item number one.

AB 104. Please call Senator Grove.

AB 104. Motion is due pass. Senator Grove. Aye. Senator Grove. Aye.

Item two. I'll put it back on call. Item two. AB 119. Please call Senator Grove.

AB 119. Motion is due pass. Senator Grove. No. Senator Grove. No.

Put that back on call. Item three. AB 138. Please call Senator Grove.

AB 138. The motion is due pass, Senator Grove. Too late for questions.

Oh, wait. Hold on one second. You want to have a question? Yeah.

No.

Zero, all right, then. No.

Yeah.

AB138, motion is due. Pass in order. Grove. No. Senator Grove. No.

Why is the CHP included in there?

We'll go back on recess. Can you please...

Item one. AB 104. Please call Senator Menjivar.

AB 104. Motion as you pass. Senator Menjivar. Aye. Menjivar, Aye.

Put that back on call. Item two. AB119. Please call Senator Menjivar.

AB119. Motion is due. Pass. Senator Menjibar. Aye. Senator Menjivar. Aye.

We'll put it back on call. And item three. AB 138. Please call Senator Menjevar.

AB 138. Motion is to pass. Senator Menjivar aye. Senator Manai.

I put it back on call. Thank you, Senator.

Ms. Had questions.

Okay.

And we'll go back in the recess.

S.A.

Item one AB 104. Please call Senator McNerney.

AB 104. Motion is due pass. Senator McNerney.

Aye.

Senator McNerney aye.

Put it back on call item two AB 119. Please call Senator McNerney.

AB 119. Motion is due. Pass. Senator McNerney. Senator McNerney. Aye.

Put it back on call. And then finally, item three AB 138. Please call Senator McNerney.

AB130. Motion is due pass. Senator McNerney. Aye. Senator McNerney. Aye.

Put it back on call. Thank you, Senator.

Okay. Okay. Item one.

AB 104. Please call Senator Richardson.

AB 104. Senator Richardson. Aye. Senator Richardson. Aye.

Put that back on call item two AB 119. Please call Senator Richardson.

AB 119. Motion is due pass. Senator Richardson. Senator Richardson. Aye.

Put it back on call. And finally, item three AB 138. Please call Senator Richardson.

AB 130. A motion is due pass. Senator Richardson. Aye. Senator Richardson. Aye.

Thank you. And we'll go back in recess-recess.

Put it back on call.

Item number one AB 104. Please call the absent Members.

AB 104. Motion is due pass. Senator Allen. Senator Allen. Aye.

What's the vote? 15 to one. All right. That is the last one, right. 15. Okay. So the vote is 15 to one and that the bill is out. Item two. AB 119. Please call the absent Members.

AB 119. Motion is due pass. Senator Allen. Allen. Aye. What?

13, five.

The vote is 13 to five. The bill is out. Item three. AB 138. Please call the opposite Members.

AB 138. The motion is due pass. Senator Allen. Aye. Alan. Aye.

Vote is 13 to 5. That bill is out. That completes the business of the Committee. And we are adjourned. Thank you.

Sam.