Assembly Budget Subcommittee No. 5 on State Administration

Good afternoon and welcome to Budget Subcommitee 5 on State Administration Hearing Today. Today our hearing will focus on labor issues. We will discuss subsequent Injury Benefits Trust Fund or CBTIF Reform EDD next and get updates on the status of the Displaced Oil and Gas Worker Fund and the California Worker Outreach Program cwop.

This is an in person hearing with all panelists testifying in person. We will take questions from Members of this Subcommitee after each panel and public comment will be taken at the end of each panel and be limited to 30 seconds per individual.

If you're unable to attend this hearing in person, you may submit your comments via email to ASMBudget. Also, just to note as far as our agenda today, a small change to the schedule. We are going to take the agenda out of order of the current agenda and we will be starting with the Department of Industrial Relations first.

With that we are going to go ahead and call up the new Director for DIR Jennifer Osborn. Welcome.

Of the Department of Industrial Relations. In July of 2025 I was asked to make a quick introduction to you all since I was not in this role last year.

I began my state career in 1998 as a budget Analyst at the Department of Finance, where I was over a variety of different program areas, many of which fall under this subcommittee's jurisdiction.

After 14 years at the Department of Finance, I moved to the Government Operations Agency where I served as the Deputy Secretary for Fiscal Policy and Administration. In 2018, I was appointed to be the Director of Administration at CDCR, and in late 2020 I was appointed to be the Chief Deputy Director at the Department of General Services.

I'm excited to be leading DIR at this moment in time. This Department has many challenges, but it is populated with capable staff and managers who work tirelessly each day to ensure that workers in California know their rights, are protected from health and safety hazards in the workplace, receive timely and appropriate treatment and compensation for injuries, and have access to meaningful apprenticeship programs that lead to sustainable employment opportunities.

The 2026-27 Governor's Budget proposes expenditures of over $1.5 billion for DIR supported by over 3,800 positions. I will leave it to the experts on my team to dive into the details on the budget items before you, but want to thank you for the opportunity to present and for the support you provide to DIR every year. Thank you.

Thank you for being here and congratulations on your new adventure. And with that we are going to go ahead and ask our panelists to join us it.

And as we begin this, please make sure you introduce yourself because we have lots of individuals that move positions and we know maybe you from one Department and then maybe you have changed to a different Department and let's go ahead and begin. Please introduce yourself.

Good afternoon. Josh Iverson, Chief Financial Officer for the Department of Industrial Relations.

Jassy Grewal, Deputy Secretary of Legislation for the Labor and Workforce Development Agency.

Ken Lau, Chief Counsel, Department of Industrial Relations.

Grace Henry, Department of Finance

Allison Hewitt, Department of Finance

Analyst Office.

Those mics feel like they were working on this side. Those mics. Can we check the mics on that side that you want to do it again?

Chas Alamo with the Legislative Analyst Office.

All right, there you go. Thank you. All right, let's go ahead and begin.

Good afternoon, Chair and Committee Members. I'm here to present on item 5, the subsequent injury Benefits Trust Fund Trailer Bill language.

In my presentation today, I will provide a brief background on the program, its challenges, the impact of these challenges on workers, state and public assessments and workload for the Department of Industrial Relations and the Division of Workers Compensation and lastly provide an overview of the trailer Bill Language that seeks to address the unfettered growth in the program and return the program back to its intended purpose to support our most severely disabled workers.

Through comprehensive reform, we will ensure the long term viability and ongoing stability of of this important benefit to injured workers. SIBTF was established in 1945 to promote the hiring of veterans returning from World War II with missing limbs.

Employers at the time did not want to hire veterans due to workers compensation costs if they sustained an additional injury at work. Under this program, the employer is responsible only for the disability that results from the subsequent workplace injury. This program is supported by an assessment on all employers, public and private.

Since the passage of this program, protections offered under SIBTF are now provided by other policies and programs that did not exist when subsequent injury funds were first established.

The California Fair Employment Housing Act, established in 1959 and the Americans with Disabilities Act, established in 1990, both prohibit discrimination disability discrimination in employment and the Social Security Disability insurance established in 1956 provides compensation for non work related disabilities.

18 states and the District of Columbia have repealed their SIBTF programs because of the enactment of the ADA and growing financial liabilities of the program.

However, the Administration understands the importance of this program to our most severely injured workers without disability pensions and has put forward a proposal to comprehensively reform the program to ensure its long term viability and availability.

The exponential growth in SIBTF claims and liabilities are not due to choices or actions or or deliberative steps taken by the Legislature to broaden the program. However, over the last several years, there has been an exponential and unsustainable growth in the SIBTF program's applications, backlog and liabilities that has led the program to become unmanageable.

This unsustained growth is causing long delays for workers and severe staffing challenges for the Department. The largest driver of unsustainable growth in the program is the 2020 Todd v. SIBTF decision by the Workers Compensation Appeals Board.

The WCAB ruled that multiple injuries and SIBTF claims are to be added together instead of combined like in the regular workers compensation system. This decision dramatically lowered the medical threshold for workers with SIBTF claims to receive a 100% permanent disability rating, which is rare in the regular workers compensation system.

When an applicant has a 100% rating, the amount of benefits to which they're entitled to increases dramatically. Between 2020 and 2022, 82% of cases were determined to be at 100% disability and since then the percentage of 100% cases has grown even higher. Additionally, the lack of guardrails in SIBTF has led to unfettered growth in the program.

These guardrails are found in the regular workers compensation system to contain cost and prevent misuse and fraud. These guardrails include or lack of these guardrails include under sibtf, the pre existing condition does not have to be work related. The scope of SIBTF claims has expanded beyond providing supplemental benefits to injured workers with severe disabilities.

Nearly 70% of claims include one or more chronic condition as a pre existing disability. 35% of claims include two or more chronic conditions. These conditions include hypertension, sleep apnea, diabetes, headaches, acid reflux, allergies, and sexual dysfunction. Second, under SIBTF, pre existing conditions do not have to be work limiting.

SIBTF currently covers asymptomatic pre existing conditions or pre existing conditions that do not affect a worker's job. Third, under SIBTF, pre existing conditions are not subject to the qualified medical evaluator or QME process. Under the regular workers compensation system, all parties operate under the QME process. This requirement does not apply to SIBTF claims.

The significant resource need at DIR is showcased by the exponentially growing volume of annual applications in the program and the backlog. Between fiscal year 2010 to 2014, around 850 new SIBTF applications were filed per year. Last fiscal year, DIR received 5379 applications, a six fold increase in applications.

This year we're on pace to be the highest year of applications received with DIR receiving 4,818 applications from July 1, 2025 to just yesterday, an increase of 1,160 applications from January alone. In fiscal year 2023, there were over 15,000 pending cases in the backlog. In fiscal year 2025, this number grew to over 25,000 cases.

As of last week, we have exceeded 30,000 pending cases in the backlog, doubling in the past five years alone. Without comprehensive reform, the anticipated increase in claims in future years will lead to significant delays for workers, unmanageable staffing challenges for the Department and the Division, and a significant increase in public and private sector employer assessments.

It is simply not possible to increase staffing alone to timely process claims given the exponential growth in case volume. Comprehensive reform is needed to address the underlying challenges with the program. We need a sustainable program for injured workers without amendments to the SIBTF statutes to slow the growth of cases and reduce SIBTF liabilities.

DIR estimates total liabilities will increase to approximately $30 billion by fiscal year 29-30. This is a $7 billion increase from last year's estimate alone. Since the RAND study concluded in 2022, we have seen liability projections grow by over 280%.

The impact on the employer assessment is expected to grow from 14 million in fiscal year 2015 to 1.5 billion in fiscal year 29-30. Public self insured employer share has grown from 19 million to 251 million and the state share is expected to grow from 3 million to 44 million in this time period alone.

The Administration proposes to address the significant challenges with the program through comprehensive reform. All the proposed reforms are found in the agenda, but I'm just going to highlight some of the critical reforms with you all right now. Aligning the SIBTF process with the QME process utilized as a guardrail in the regular workers compensation system.

Clarify the use of the Combined Values Chart, the CBC chart for an SIBTF claimant's pre existing disability and subsequent industrial injury elimination of the 1.4 future earnings capacity adjustment to align with the original intent of the law.

Clarify pre existing disabilities must be documented in evidence that existed before the occurrence of the subsequent industrial injury and clarify that pre existing disabilities must be labor disabling at the time of the subsequent injury to eliminate applications based on asymptomatic conditions or treatable conditions that do not have an impact on the employee's ability to work.

Establish that provisions in the Trailer Bill will apply to all open SIBTF cases that have not yet become final either through settlement or court decision.

With these changes, the Administration estimates that growth of the program will return to manageable levels, ensure claims are timely processed for our most severely injured workers, and avoid increasing costs to public and private sector employers by billions of dollars over the long term.

Additionally, with the proposed budget change proposal, the Department and division will be able to resolve the existing backlog of pending applications, minimize impacts on the uninsured employer's benefit trust fund, and manage the program with fewer resources than would be needed absent reforms.

With these comprehensive reforms, California, unlike other states, will be able to ensure the ongoing viability and long term availability of this important benefit.

Given the complexity of this program with me today, I have three technical experts, Ken Lau, Chief Counsel at the Department of Industrial Relations Nicole Richardson, Acting Administrative Director and Chief Counsel at the Division of Workers Compensation, and Judge Paige Levy, Chief Judge, Division of Workers Compensation.

Thank you all and happy to answer any questions at the appropriate time.

Thank you. Appreciate that. And now we'll go to LAO.

Chas Alamo with the Legislative Analyst Office. As you may recall, this issue came before the Subcommitee last year and our office wrote a report assessing the SIBTF program. That report essentially outlined how the program had changed from its original intention to what it is today, with more relaxed eligibility standards, more claims commonly carrying asymptomatic chronic conditions like hypertension.

We put forth sort of broad recommendations in that report for the Legislature to consider, and our assessment of the proposed trailer Bill Language from the Administration this year is that it's largely aligned with the recommendations we made last year.

I won't go into the specifics as have been outlined already, but I can say that the TBL at this point appears to be a meaningful step toward returning the SIBTF program to its original intent, which would also preserve the program for injured workers or disabled workers who are who suffer a subsequent work injury.

And it would also help minimize some of the increasing public and private employer costs associated with the program.

I think one of the interesting or important issues of context for the Subcommitee to keep in mind is that many of the programs under its purview unemployment insurance, paid family leave, some of the health and safety requirements that DIR oversees, these programs entail direct and indirect costs for employers and for workers.

And when we think of the SIBTF program and its costs, we have to determine how best to weigh these additional costs for these benefits relative to the sort of broad scope of the other programmatic costs that this Subcommitee oversees.

So just a flag for keeping this in context, but to summarize our assessment is that the TBL is largely consistent with our recommendations would be a path forward. Thank you.

Thank you. Appreciate that. Any other comments before we move to Members? Members, before we go ahead and start this, I'll just make a few comments. We did hear this item last year is quite complex and I've appreciated learning more about it since then and go ahead and open it up to Members for either questions or comments.

Thank you, Madam Chair. Thank you all for being here. As was mentioned, we did talk about this very complex program last year where we discussed the needed changes. And thanks to the Administration for the conversations we've had since then.

My office, as you know, has a Bill related to the changes, had a Bill last year, and has another Bill this year.

So I will start with the first question, which is, I think at the core of what we do as a Legislature when it comes to balancing the budget and having policy discussions and bills, why is the intent to make such major changes to this program through a trailer Bill language rather than the legislature's policy process?

Yeah, I'm happy to take that question. This proposal is included in the budget as requested by the Administration and the veto of AB 1329 for a program that's facing significant workload challenges and exponentially growing liabilities.

The budget process allows for the evaluation of the proposed reforms, the exponentially growing liabilities, the public and private sector employer assessment, and current and future resource needs for the Department.

Additionally, the budget process allows for the ability to assess the impact of proposed reforms on the growing backlog delays for injured workers and other programs such as the Unemployed Insurers Benefit Trust Fund that a standard policy Bill would not have allowed for.

Ultimately, we cannot discuss the proposed reforms without additionally discussing the solvency of the fund and the proposed BCP, which we'll hear about shortly.

The BCP is proposed and based on the reforms being adopted in their entirety, and if that does not occur, we will need to discuss what the BCP and future resources to the Department look like and the impact overall on the program, the impact on public employer assessments, overall Fund liabilities, and the delay in terms of the backlog.

So that is why we believe the budget process is the appropriate path and the BCP really building off of the trailer Bill Language and the comprehensive reforms that are included there.

I would argue that what you just stated actually makes it a makes it for the argument to actually have these policy conversations rather than just one hearing on the budget and instead being able to have these lengthy conversations with my colleagues, being able to weigh in on such a big program that impacts many, many people across the state.

And so to just put it into one trailer Bill Language where we have very minimal participation, which you just laid out. It's very complex.

And I continue, and I think many of my colleagues continue to support the idea of having such major changes done through the policy legislative process rather than continue to have to come to these budget hearings and listening to the Administration wanting to do such things through this budget process.

On that note, what savings will result from the governor's. From your proposal?

Sorry, can you repeat that? I didn't hear that. I'm sorry.

What savings will result from this proposal?

We estimate savings, well there'll be a cost avoidance in the billions of dollars in terms of assessments for public and private sector employers, as well as the workload needed at the Department and division to be able to staff a proposal or to staff a program.

And that all really varies depending on is it the comprehensive reforms adopted, is it limited reforms or no reforms? And so we estimate that with the reforms we have that it will be a cost avoidance in the billions of dollars.

Cost avoidance in the billions of dollars. But you don't have a number.

I'm happy to share if it's helpful, specific numbers related to just what we're projecting out for the assessment. So as I had stated in my testimony, the cost to self insure or, sorry, the overall liabilities to employers was 14 million in fiscal year 2015 and that's projected to be 1.5 billion in fiscal year 29-30.

The cost to public self insured employers, so those are our public sector employers, was 19 million and is projected to be 251 million. And the state share was 3 million and is now projected to be 44 million by fiscal year 29-30.

Okay.

And that doesn't include the workload costs at the Department and division.

Now your proposal also. Okay, let me, let me reframe this. So is there legal precedence for changing the rules of a state benefit program while people are waiting for their cases to be decided?

Yes, there is long standing precedent which supports the legislature's authority to implement workers compensation changes applicable to to existing applications and open cases.

I'm happy to cite a case in Rio Linda Union School District versus Worker Comp Appeal Board from 2005 held at SB 899, which is a workers comp Bill from that time which changed the rules respective to apportionment, could apply to pending cases given the legislature's express intent in the statute.

The court ruled that even a case that had been submitted prior to the effective date of SB899, but where the workers comp judge did not issue a finding and award until four days after the effective date had to be annulled and reissued consistent with SB899.

Happy to cite additional court cases or share that with the Committee if that is helpful.

How many disabled workers are currently in the queue?

I'm happy to pass that along to Ken.

How many disabled workers are?

Currently in the queue who would be impacted by the changes? Because not only are you talking about future cases, but people who are currently in the queue who would now be basically not able to access it.

So my understanding is that there's 30,000 or over 30,000 cases in the backlog, and if those cases are not resolved before the effective date of the Bill, then the new rules would apply.

So we're talking about over 30,000 disabled veterans who were injured, who are injured, who are essentially are being completely eliminated from the program despite no fault of their own. They're in the queue currently.

So I think it might be helpful because of how the complexity of the case, to kind of walk you through the process of an SIBTF claim.

And I just want to know, because you're proposing to make changes that include the current people who are in the queue, is that not accurate?

So there are folks that have applications and open cases in the process of an SIBTF claim. There are many different steps. The first step is submitting an application, opening a case, and then gathering evidence. A case examiner will then take the evidence that they currently have.

But that also means that there might be a need for additional evidence. And so a lot of the first parts of the case are actually, does the applicant actually have the necessary evidence and information to qualify for the program?

Once that process goes through, then there is the next step, which is if there is all the necessary documentation and medical findings are gathered, then a settlement negotiation begins.

And then the final two steps in the process, which are the settlement steps, is a hearing is set to present the case with an award before the workers comp judge. And after the award is signed and approved by the workers comp judge, then the awards start paying out.

And so through that process, there could be a number of different types of applicants. It can be a professional athlete that has a severe list of chronic conditions. It could be a severely injured worker who is missing a limb. It could be and suffered a subsequent injury.

But we don't know who's in that queue until that case gets opened and we see who that is. And the breadth of the program is beyond just veterans. It includes all types of workers who have a preexisting disability and then suffer a subsequent work injury. And so that process allows us to see who's in that queue.

And with the current backlog we face and the length of time it's going to take for us to get through that backlog, there are severely injured workers who are waiting in that very lengthy queue with applicants who do have cases that are based solely on chronic conditions.

And so in order to get through the backlog and apply the comprehensive reforms, we will reduce that waiting period for those workers who seriously need these benefits in a quick and timely fashion.

So again, the proposal in front of us is to dismiss thousands of cases that are in the queue.

The cases would not be dismissed. The proposed reforms would be what the cases are looked through in terms of that lens. And the proposed reforms realign the program back to its original intent, which is serving severely injured workers. So it's not just an automatic dismissal of cases. The cases will still be looked at and processed.

But with the reforms that are currently being proposed in the trailer Bill.

Okay, I have earlier we mentioned the RAND report. The LAO also did a report. How much did we pay for the RAND report?

I do not have that information in front of me.

I don't have that information in front of me either. But happy to get that back to you as soon as possible.

Yeah, I mean, I would like to have. We taxpayers should know how much we paid for this report, especially when we have labor centers across the state who we budgeted money for and were not used. So, yes, I would like to know how much we spent on this report.

Yes. Happy to provide you with that number.

So if it's okay through the Chair.

Yeah, if you want to finish, then.

Sorry, I don't mean to be taken up all the time. I've spent a lot of time on this. As you know, I care very much about the workers and making sure that, you know, we take care of this program. So how many vacancies currently exist within the DIR?

I do not have that number in front of me, but happy to.

A report that was provided. Sorry. Allison Hewitt, Department of Finance. A report. This isn't the most recent data, which the Department may have to p, but for 24-25 the overall Department vacancy rate was 16.5% based on a report that was transmitted to the Joint Legislative Budget Committee Under Control, Section 4.11.

Can you repeat that number one more time?

16.5%. 16.5

For the DIR?

Yes.

I have a 28%.

Are you asking about specifically the division of workers compensation or the overall?

The overall.

That is the point in time data that we provided that we have available. But we can follow up with more current data.

So can you keep talking about the backlog of cases and the vacancy rate that your office has? So can you please explain to me why we would want to give you $100 million to address the backlog when that hasn't been done for years.

And I know the next item is the budget change proposal, but I'm happy to pass it along to my colleague Josh related to this to clarify what is in the BCP and how many positions are requested in the phase in to ensure that we can actually appropriately staff in over a five year phase in period to address the backlog.

Hi. The budget change proposal that was included in the Governor's proposed budget includes a five year phase in of 177 positions and $36.5 million.

Can you repeat that one more time? I couldn't hear the last number.

The budget change proposal that was included in the Governor's proposed budget specific to this SIBTF program included a five-year phase-in of 177 positions totaling $36.5 million.

Okay, thank you.

Thank you. Let's go to Assemblymember Ward.

Thank you Madam Chair and thank you for the presentation today as we're revisiting this issue and getting our minds around pretty significant dollar value and workload here. I understand how we got here today and the case that you know, sort of kick this all off that is requiring us to relook at this.

But I'm wondering whether or not today this decision or what would become of the decision through the budget is our only option. Is it? If I'm oversimplifying it here, it feels like are we exhausting this fund essentially as of this fiscal year, which always had a balance to date, but now we're basically going to deplete it. And what does that mean for future years?

If I, sorry Assembly Member, it was a little hard to hear you, but if I understand your question correctly, is are we exhausting all the funds that are currently in the program? The program is funded by employer liability or employer assessments.

Right.

And so as liabilities continue to grow and workload continues to grow, the assessments are what also will continue to grow. And so that is the assessments are what pay for the program. But I am happy to pass it along to colleagues to fill that in.

I'm wondering about the out years.

Well, the, the SIBTF program is a fund that pays those benefits. The employees of the Department are paid from a separate fund, the Workers Compensation Administration Revolving Fund. But both of those funds are included in the annual Labor Code 62.5 Employer Assessment.

So as these cases continue to grow exponentially, as the liabilities continue to grow exponentially, so will the annual assessment on all employers in the state. There's about 1.7 million employers in the state. They all pay into this regardless of whether they're public or private, regardless of whether they purchase workers' compensation insurance or are self-insured.

So all of these costs are passed on to all employers in the state.

To what degree can you give me a sense of magnitude if I'm a small business owner like, you know what, what kind of changes are they going to see?

I can provide numbers broadly on the employer assessment and where the trajectory is going and then we can see if we are able to provide more specific to the SIBTF assessment. There's a workers comp assessment that is assessed on employers and SIBTF is a separate assessment that is added on for the program.

And so just for some context, in 25th, sorry, in fiscal year 2015, the assessment was $14 million for employers. That is going to rise to 1.5 billion by fiscal year 29-30. And that is a conservative estimate. Not knowing what the increase in applications or the backlog will be by 29-30.

So far, all of our projections, they've been, they've been met far before that. We projected, we projected a 30,000 pending backlog by July of this year. And we hit that number last week.

And so just knowing that that is a conservative employer assessment on the public self insured side, it was $19 million and it is now going to be projected to $251 million. And for the state, that's $3 million projected out to $44 million. So as you can see, it's exponentially rising.

Beyond exponentially, it's astronomical. Yeah. What. When you were analyzing sort of what our needs or options might be for this year, did you have any kind of actual actuarial analysis to maybe help give us options?

So the RAND study that was conducted utilized actuarial analysis and had a full team of researchers. And so I'm happy to pass it off to Josh. That was before my time of joining the agency to explain more about what RAND conducted in their specific study.

Yeah. It was an economic and actuarial evaluation of cases from 2010 through 2022. But my colleague mentioned the Todd versus WCAB decision. That was in 2020. So really looking at cases prior to 2020, it's not representative of cases after 2020, after the Todd decision.

So we saw the estimated liabilities of the SIBTF program from the RAND report was around $7.9 billion for that period of time in which they looked. And we're estimating that has grown to be $30 billion if we project out to year 29-30.

What are our options to date though, to go back and revisit maybe some of the or you know, sort of challenge some of the criteria that are going into this because that kind of a fiscal change, right.

Is any tied right to how we are reclassifying some of these disability levels and the associated levels of payout that is going to come with that. I'm just deeply concerned about the magnitude of growth here.

And if, I mean, yes, there's a court decision, but what are our options to go back and look at some of the criteria that are going into this that might change some of that actuarial analysis, if any.

Assemblymember Ward, Chas Alamo with the Leg Analyst Office I think maybe the first clarifying point to make is that the Todd decision was made by the Work Comp Appeals Board, which is a group of sort of quasi judicial Members appointed by the Legislature and the Governor.

The second bit of context to help home in on costs is that to sort of really synthesize the RAND study and to oversimplify, but I think it's a helpful metric. They expect that the average SIBTF claim for 100% permanent disability that's approved through the process carries a lifetime cost for employers of about a million dollars.

So we have 30,000 outstanding claims in the backlog. The Administration anticipates that that carries a lifetime fiscal cost to the employer community, both public and private, of $30 billion. That's about a million dollars apiece. And that is because of the structure of the state's disability payment system.

When a worker receives 100% permanent disability, they're entitled to a lifetime benefit of up to $1,700 a week. That's dramatically larger than the lifetime benefit they would receive if their disability rating was 99%. So there's this cliff effect. The Todd decision lowered the sort of injury or disability threshold for that 100% rating.

So just a larger share of the workers going through the process for SIBTF are receiving that 100% disability rating, which is what's putting pressure on the fiscal. It's not a fund per se because employers are paying the assessment each year. But that's what's amplifying the fiscal pressure.

Our office put forth options to narrow the eligibility such that workers with the most substantial pre-existing conditions and pre-existing disabilities could access that 100% disability. Workers with chronic conditions that are common age-related chronic conditions who maybe were asymptomatic, those conditions weren't documented at the time.

They were only documented after the subsequent work related injury workers, who in some cases might be able to continue working. Those workers under the reforms that our office suggested and the Administration has put forth, would be less likely to be eligible for 100% lifetime disability benefit. They may still be eligible for a lower benefit amount.

But that narrowing of the eligibility criteria means that the SIBTF program under the TBL would look more like it did when it was originally designed to support workers with substantial serious pre existing conditions and to provide a lesser benefit amount to workers with less substantial pre existing conditions. That's a question for the Legislature to make.

What kind of program does it want to see? Our guidance when we evaluated SIBTF was to look to its original intent. And so that's what our recommendations put forth and it's pretty consistent with what the Administration has put forth here.

I like this, which is why I have concern and I'll think about this more in the time that we have through some Subcommitee work, that we might want to have a more broad and comprehensive policy discussion about that kind of a reform and look at all those options because would it be accurate to say if we approve this in the budget, this jump in support.

Right. Is something is sort of the new the new level of support that we're going to have ongoing for every year to come.

I see my Department of Finance colleagues ready to answer that question. One, one element about the workload that I want to stress is that changes to workers compensation law are complex. They carry unintended consequences. We saw that in 2004. We saw that in 2011.

It's going to take some follow up by the Administration and the Legislature to follow how these proposed changes, if they were to be enacted, affect the caseload. It might be the case that the Department genuinely needs additional resources to work through the 30,000 complex cases and move them forward under the new regimental.

It might be the case in the future that workload could come down because something more like 500 or 600 cases are coming in a year instead of 5 or 6,000 cases a year. I think it's too early to tell what the workload requirements will be for the Department under the proposed well, the

workload over the next five years you're already basically asking for and this might be the next item, but you're asking for like, you know, substantial 177 additional positions. That's not insignificant.

But what I'm wondering if you can see, you know, this figure here, though it's not numbered in our in our background, just this jump here to where we would be at and whether or not that's going to be the new normal kind of going forward.

Under the scope of our office's recommendations and the administration's trailer Bill, those costs would likely come down substantially.

Okay.

Because the number of workers with the most severe disabilities who would be able to meet the eligibility thresholds for the 100% disability rating benefits, those most costly benefits. Yeah, that number is likely to come down substantially under the proposed changes as well as our recommendations.

So the fiscal pressure to employers, public and private in the future is likely to come down with that count of fewer workers able to meet the eligibility standards for that 100% disability benefit.

And if I could just add on behalf of agency the projections that we share out or if we do pursue no reforms this year or even limited reform.

The proposal in front of you today with comprehensive reform is a thoughtful approach and stacking a number of different necessary reforms to this decades old statute that is vague and unclear. And so it provides a clarity that we need.

But it adds a significant guardrails that are present in the regulatory worker comp system that are not present here.

And so by adopting those guardrails and aligning to the regular workers compensation system, we expect the liabilities to come down, the assessments to come down and there is a short term infusion of a five year phase in of staff and resources at the Department and division. But that's because of how big the backlog has become.

And so we need those resources to be able to move through the backlog in a timely fashion. But after that five year phase in, we expect to revisit the workload and see what resources might be needed.

Okay, well, something I want to continue studying. I strongly encourage our Administration partners to work with our labor chair woman as well as we try to figure out how to I mean this is comprehensive policy conversation that we would otherwise be doing through a trailer Bill. Not always a preferred way.

But we have some time, I think, you know, this year to try to make sure that we get this right. Thank you.

Thank you, Assembly Member Caloza.

Thank you so much Chair and to my colleagues for really robust discussion on a program that maybe a lot of folks may not have thought about when they think of workers comp in the state. Thanks to DIR Finance LAO for your analysis on this really complicated issue.

Just to follow up on some of the things that my colleagues have already raised. Obviously there's, there's lots of proposals, proposals in front of us including ask for additional resources to dir, can you talk a little bit about how many staff are currently working on SIBTF. And you know what that caseload looks like for staff?

Yeah, I'm happy to pass it along to one of my colleagues. In terms of the current staffing at the Department and division related to SIBTF and in terms of the caseload numbers that staff currently have, staff are current. So staff are shared amongst not just SIBTF but the unemployed Insurers Benefit Trust Fund.

And so there is a cross sharing of staff there. They handle on average 1,100 cases per individual per year. So it's a very high caseload. And what the BCP proposes in the as a part of it is to come down to the industry average, which is 475 to 500 cases per individual per year.

SIBTF cases are more complex than the regular workers compensation system. So just to provide some background, a regular workers compensation case is what we see as a snapshot of a single event. While an SIBTF case is a feature length documentary of a person's entire medical and professional life.

So in a regular workers compensation case it focuses on what happened at one job at one specific day. But in an SIBTF case there are two different cases that are being litigated at the same time, the current work injury and every significant medical issue or injury that the person had before that job.

So in a regular worker's compensation case we might see one to two medical reports from the qme, the qualified medical evaluator. But in an SIBTF case, because the QME process does not apply, which we're proposing through the reforms, there are multiple experts commenting on the condition.

So this results in three to five different physicians writing reports, thousands of pages of medical records dating back decades. So examiners are responsible for reviewing all those materials.

And so staffing addresses the processing of the papers, but it doesn't address the volume or the complexity of the evidence being generated, which is what the trailer Bill reforms proposed to do. So right now it takes staff about three to five years on average to finalize an SIBTF case.

Under the current proposed reforms and the subsequent budget change proposal as proposed, we expect that processing time to come down to one to two years.

And as noted, there are multiple teams that work on the SIBTF cases. The SIBTF unit specifically has 47 authorized positions as of 25-26 and prior to the Todd decision there were 15 authorized positions. There are also individuals in the OD legal office that work on these cases, but also open to eir, if there's anything else to add.

I was just going to mention what my colleague said. The SIBTF cases are worked in the Division of Workers Compensation as well as in the Office of the Director Legal Unit. It wasn't that long ago when DWC had five claims examiners and now they're up to 47. Is that what you said?

47 total for everyone, including support staff.

And within OD Legal, they currently have about 50 attorneys. But those 50 attorneys are handling not only SIBTF cases but SIBTF cases. In 2425, these attorneys made over 9,000 courts court appearances statewide, which equates to about 100 and eighty appearances per attorney, which is a very high caseload.

And within dwc, the claims examiners have over a thousand cases each when typical normal caseload is at 475 to 500 per.

Go ahead. I might add, forgive me, Assemblymember. In 2019, during the early years of the Newsom Administration, similar trailer Bill Language was proposed as to what we're seeing here today. And it was also paired with a staff increase for claims examiners for subsequent injury benefit trust fund claims.

The trailer Bill was rescinded by the Administration at the time and the BCP for the staff increase went forward. The hope at the time was that those two would work together much as being proposed today.

Obviously the staff that was provided as part of the 1920 budget agreement was not sufficient because the workload increased faster than staffing could handle it. And that's why we're here today with the sort of limited examiners, high workload, complex cases and a growing backlog.

Thank you. Assembly Member Caloza.

Yeah, no, thank you for that. You know, as I continue to really dive deeper into this fund, you know, I do echo, you know, the concerns that Assemblymember Ortega raised about the process of this. Right. With how long it takes to get even a case resolved. And look at you said it takes one to two years.

So you know that the applicant, the injured worker who's going through this process, you know, we've been putting them through bureaucracy for one to two years.

And then to make major changes like this without going through a process that involves the Legislature, with the exception of the budget process, I think is really the biggest concern that I have right now.

There's obviously other, you know, policy discussions that I would want to have given the reforms that the Administration is proposing, which, you know, some of them I agree with. I think there needs to be reforms to these programs.

But how do we do it in the way that takes into account that we have people in our districts who have applied for this program that are going to be impacted.

And I think that the last question that I would ask for you, if you can just speak to kind of the retroactive application that's being proposed, can you speak to us about that a little bit and what that means, what the impact is?

Yes. Happy to speak about the application of the proposed reforms to open applications or applications in open cases. So the amendments proposed In Labor Code 4,757 apply the reforms to applications and open SIBTF cases that have not yet become final, either through settlement or court decision.

So I want to clarify that if a worker is currently receiving SIBTF benefits in a final or closed case, these reforms will not impact that worker's benefits. These reforms only apply to applications and open cases that are in that phase.

When I talked about the process of gathering evidence, the evaluations, going to the negotiation and talking about what an award looks like, it has not reached the point of actually issuing a final decision or approval on a decision for an award. And so I think that's an important note there.

The reforms, all but one, which is a statute of limitations, statute of limitations applies prospectively. The other reforms apply to open applications and open cases. So these are not cases that are yet final or have agreed, been agreed upon by the applicant or the judge for a final decision.

And I did just want to clarify in terms of the backlog and the time period. So we are currently at three to five years for an SIBTF case. With the proposed reforms and the BCP, we we would get down to one to two years.

And without any reforms pursued this year, we want to without any reforms pursued this year, especially comprehensive reforms, and looking at the reforms in their entirety and seeing how they apply to different parts of the SABTF program, we would not be able to assess what that impact looks like either to the backlog, the time period for workers to have their cases processed, which is why we are pursuing it in the manner we are, is to be able to have the analysis of what do the reforms comprehensively mean, whether to the workload budget or the times that workers are facing in terms of a backlog and getting their case through the process.

But happy to answer any other questions.

Thank you. Sorry. And I'm going to ask one last question, and this is my last one is we kind of like talk broadly about workers, but like can you just give us examples like what you see on the back end, like what types of Workers are applying to this.

Like do you have any like, you know, trends that you're seeing if there's any industries or type of workers specifically that that are currently receiving these monies?

I don't have the RAND report in front of me, but there was some data in the RAND report I'm happy to share with you. In terms of occupations of what they studied from that time period of who was applying for the program.

I'm happy to give some examples of the types of cases, but it really is the whole gamut in terms of the, the types of cases we're seeing, especially under the current status of the program and the vague rules in the decade old statute that we see. So one example we have is a professional athlete.

They received a $1 million, close to a $1 million award, which 15% of that goes to their attorney, $150,000. And that applicant claimed that they had pre existing disabilities based on chronic conditions. They like headaches, swollen veins, chronic health condition, chronic heartache, not heartache, chronic heart condition. And so that was a type of applicant we're seeing.

But we also see applicants who the program was intended for. So this is someone who has a missing limb, was born with a birth defect, might have a severe back injury and they suffered a subsequent injury at work, and now is applying for the SIBTF program. That is who the program was always intended to be for.

But we've seen a significant deviation from the original purpose of the program to these chronic conditions which are also just conditions of aging that occur as we grow older.

And so that is part of the distinction in the reforms is we're seeing a wide breadth of cases, cases that the program was intended for and cases that the program has veered in terms of the original intent.

If I may just. Can you. I'm sorry, I want to go back to the numbers. Can you tell me, because I asked earlier, so how many workers who are in that middle section that you talked about would be impacted by these changes in terms of the process? The process. So I heard you. Someone that's already there, done.

Oh good. They're not going to be impacted. But what is the number of people that we're talking about who will be impacted?

So the pending backlog of applications and open cases is 30,000. Those folks have not yet gone fully through the process and reached a final decision. So that is the current backlog we have right now.

Okay, now I want to make something clear with my colleagues. You know, this is clearly there is concern here. There is reason to look at this program and propose changes, which is why I had a Bill last year and why the Governor acknowledged that it was a step in the right direction.

And so I did look back at the studies at LAO and the conversations we had. And today I have another Bill, AB 1576, that actually takes into consideration the numbers in terms of why so many cases are coming to you and looks to eliminate conditions that appear in 55% of the cases that you are now seeing.

They're leading to this increased cost. So I don't want it to look like we're not acknowledging that there is a problem. There's definitely a problem. But I also think that there are solutions that need to be further discussed through the legislative process and not something that we do through this Committee.

Thank you. I want to thank my colleagues for very robust questions. As we can see, this is a topic that we certainly can and will have future conversations within this budget legislative cycle. I do want to let you know there are some tools at hand.

Number one, we can refer this to the accountability budget to do one hearing that will encompass more attendees. Number two, you certainly have your legislation that's moving forward. And number three, we certainly want to make sure out of the multiple issues that this legislative body hears about that they have time to digest and understand.

I do have some questions related, just to clarify for myself. The original program was focused on veterans. And so those in line in the queue right now, are they all veterans? Are there others that are not veterans?

There are folks across multiple occupations, non veterans included.

So the change by the Dodd decision actually changed that. Or throughout the program there have been others applying. Throughout the program there have been others applying. But the initial program, which is okay because programs change over decades, of course.

Secondly, when I look at some of the data that has been provided to me, if we go to Page, of course I'm not going to find it. Where's the charts? Page 15. We have the charts that were given to us. Just hold this up. I can't find any wine. This is really a dramatic shift.

And last week we're talking about other programs that have seen dramatic upticks. Particularly last week we were talking about in this budget Committee, paid family leave. Obviously something happened. We know there was the decision. But can we attribute any other factors to this huge uptick?

And I guess what I'm asking is, as we have seen in the paid family leave, there have been people out there promoting the program, talking about ways to increase your benefits. Is there any evidence of that or is this just people found out about it on their own and want access.

Our understanding, the LAO in talking with stakeholders, with applicant attorneys themselves, with the Administration and others, is that most workers, when they get injured at work, might pursue a workers compensation claim. Many do. It's what it's there for. Few of those workers know of this relatively obscure, complicated state program that's available.

And so in the course of working there, the workers compensation claim for the subsequent injury, their attorney, who they're working with on that claim, might help them understand that this other program exists. Additionally, the state was aware that there was growing pressure in the program before the Todd decision was made.

So there was clearly something underlying this growth prior to 2020 when the Todd decision was made. Our understanding is that because CPT the program procedures and rules were not included as part of the last major work comp reforms in 2011.

After 2011, a group of attorneys began exploring the use of the subsequent Injury Benefit Trust Fund program to find additional benefits for injured workers. That led to a growing sort of awareness and knowledge of the program and its complex rules.

And, and that has been some of the impetus for the growing workload that the state sees today that predates the Todd decision.

And again, not being negative to those seeking this benefit, I mean certainly if they're entitled, they should be able to receive that. But as we can see on this graph, the sustainability of a program like this, not only for the employers but for the state, is something we have to look at seriously.

So with that, just if you can give me a very quick snapshot of, and I know they're all different, but of just what a typical maybe award would be for workers compensation with serious injuries and then the additional amount this award would add to it.

So if you were to get the full 100% package with SB TIF and

I'll pass that question over to my colleague Ken Lau.

Sure. So if you have a, say a workers comp injury award of 40% or so, I don't know how that translates onto the money chart, but if you get 100% from SIBTF, then you get a lifetime award and it can go up to like a million dollars. Right.

Depending on the life expectancy of the, of the worker and whether they have any disability pensions which SIBTF can take credit for. So there's a major jump because very few cases in the regular workers compensation System gets to 100%.

But because of the, the case Todd, you have disabilities from the, from the workers comp injury and then added to the permanent disability of the pre existing disabilities to reach 100%, whereas in regular workers comp cases you use generally the cvc, the combined values chart.

And just as an example, having a 9, say a 95% permanent disability and a 10% permanent disability, combining them does not get up to 100%. Right. But obviously if you add them, you're over 100%. So by adding the liability for the Fund increases exponentially.

So without too much more, we can say it's quite significant. All right. With that, I will as chair ask our accountability chair if we can hear this. And and then I know you're going to continue to move your legislation.

And I would say the Administration should engage with our chair of labor as frequently and as friendly as possible. I know there's different lenses people look through, but vetting this is extremely important to many, many people. With that, we are going to open it up to public comments 30 seconds or under.

Good afternoon, Madam Chair, Members of the Committee. Alberto Torrico, on behalf of the California Applicant Attorneys Association. On a level set a couple of points, there's been a lot of lot said about the 30,000 case backlog. I will remind this Committee that there is a 47,000 case backlog for waging our cases.

What if we change the statute of limitations, eliminated those cases? Because that's what's being asked in this instance. Cal OSHA has record number of cases that haven't been processed, similar to the Department of Industrial Relations and Worker's Comp. There's something similar to all these agencies that's happened since the new Administration began.

They all have the highest level of vacancies in the state. So, part of the problem here is the failure to fill these positions. Second, we do acknowledge that there is a problem and we should have a discussion. But this is not something for a budget trailer bill.

Neither Schwarzenegger nor Brown, not even Governor Newsom is trying to change worker's comp to a budget trailer bill. This is more aptly placed in a full bill with all the hearings that are required. Thank you.

Thank you, Madam Chair and Members. Megan Stubers, on behalf of the California Professional Firefighters and appreciate the time we've spent with the Administration and also with this Committee. A couple of concerns we want to flag for your consideration as you work through this issue. We do have members that access this fund.

We are extremely concerned about the retroactivity provision in this Bill that would, from our view, require that any of the 30,000 applications that are still pending, if they are even eligible under the new eligibility requirements, have to start back from the beginning.

We frankly try to do retroactive things in the work comp space all the time, and we are told absolutely not, no way. It has to apply to an injury on or after in the future. So, we would ask for your consideration of that.

And secondarily, we've raised some concerns that we are still working through related to the double recovery provisions. If a firefighter has a disability retirement that is commingled with their service-connected retirement, how the fund would be able to reduce double recovery for their whole pension is a concern for us.

So, appreciate your paying attention to that as well. Thank you.

Hello. Good afternoon. My name is Stefan Johnson. I'm a physician. I'm part of the California Coalition for Injured Worker. I perform those SIBTF evaluation. Our coalition is nonprofit and also includes injured workers. And I want to make a few recommendations.

First of all, we, I have never seen a professional athlete as part of my practice in doing SIBTF. The patients that I've seen are at the threshold of poverty or homeless and that's the reality.

And we do not consider that common, age-related conditions is a proper way to discuss what a disability really means, what that might translate to in real life work. And for that reason, we want to have a debate through the legislative process where these issues can be addressed by professionals. And we are interested in a sustainable fund.

We're interested into the guardrails and to the administrative support that the DWC requires. But we want it done with equity, logic, and legal sense. Thank you.

Thank you.

Thank you, Madam Chair and Members. Jason Schmelzer here on behalf of the California Coalition on Workers Compensation. Just want to thank the Administration for bringing forward the trailer bill Language. We're strongly supportive of the proposal.

It's vitally important for employers and the state of California, for the state, not just as a matter of administrative burden which is directly related to the budget and implementing the BCP, but as a pair of the assessment.

The other thing I'd like to say is that a lot of what is in the trailer Bill has been considered by the Legislature last year. Thank you to Assemblymember Ortega's legislation. So, there has been a very thorough discussion.

But this is the only piece of legislation that we have seen that that fully addresses the RAND and LAO recommendations and actually gets the program back on the rails. So, we would urge you to proceed when the time is right. Thank you very much.

Good afternoon, Chair and Members of the Committee. Laura Curtis on behalf of the American Property Casualty Insurance Association. Thank you so much for this committee's time today. We are in strong support of the administration's SIBTF proposal before you all today.

We agree with Jason's comments with regard to the—it's no longer functioning the way that it should have, should be functioning. The intent is no longer the same as it was decades ago. We are seeing it ballooning out of control.

It's not—the workers are no longer getting the benefits in a timely manner, as well as the assessments on employers are just too high. So, thank you so much.

Good afternoon. Faith Borges on behalf of the California Association of Joint Powers Authorities, representing many of the public entity self-insureds that were discussed here today. For all of those reasons that have been stated by the two speakers before me and others, like to speak in support of the Governor's proposal on SIBTF. Thank you.

Good afternoon. My name is Stuart Gerard. I'm here behalf of the California Coalition of Injured Workers. We represent injured workers, attorneys, and doctors. We echo the concerns with the SIBTF trailer bill raised here today by all members.

Specifically, I'd like to restate that the retroactive component of the trailer bill will dramatically hurt the injured workers by eliminating thousands of pending applications from the process who invested time, money, and seeking this benefit that they deserve. These workers have followed every rule, relied on law, and stood when filed—and stood when filed.

Such retroactive provision is fundamentally unfair and raises serious constitutional questions. We agree with the Assemblywoman Ortega who has introduced 1576, specific to SIBTF, and urged the Committee to take issue out of the trailer bill and debate in a policy bill.

We stand ready to work with all parties and the Administration to to find a long-term solution to SIBTF. Thank you.

Thank you.

Good afternoon. Thank you, Madam Chair and Members. Dylan Hoffman on behalf of Prism in strong support of the Administration's proposed SIBTF reforms. Prism is a local joint powers authority that provides liability pooling and risk management services to cities, counties, and other local entities.

And the looming fiscal crisis related to the SIBTF Fund would absolutely crush our local entities with increased assessments costing them millions of dollars as was stated by the Administration. And so, for those reasons, in strong support of the proposed trailer bill language. Thank you.

Thank you.

Thank you, Madam Chair, Members of the Committee Carlos Guterres with KSC here on behalf of the California Grocers Association. I'll just simply align my comments with the previous speaker. Thank you.

Good afternoon. Eric Lawyer, speaking on behalf of the California State Association of Counties, representing all 58 counties in the state, as well as the California Special Districts Association, representing roughly 1,000 districts of California. We're in strong support of the budget trailer bill language.

We think it's critical to addressing the long term sustainability of the program and bending the cost curve for public agencies. Thank you.

Good afternoon, Madam Chair and Members. Ashley Hoffman, on behalf of the California Chamber of Commerce. We are here in strong support today of the trailer bill language. We believe this proposal appropriately implements the recommendations that were recommended by not one, but two, independent entities that looked at this issue.

And we do strongly believe it is appropriate for a trailer bill, given the ongoing fiscal crisis and the billions of dollars that will be imposed on not only private employers, but also public employers over the next few years if it's not fixed immediately. Thank you.

Good afternoon. Steve Chamberlain with the California Coalition for Injured Workers. We support Ortega's legislation, 1576. Primary reason is the, as discussed, the 30,000 applications that will be eliminated. The trailer bill forces us to go back through the process dictated by the work comp QME case and we don't see any way for those to be reconciled.

So, we support eliminating the trailer bill and using the legislative process. Thank you.

Good afternoon. Scott Thompson, the California Coalition for Injured Workers. Assemblymember Ortega, you asked how much the RAND study cost at the Cheswick hearing. Most recently, the Members of RAND testified that it was $750,000 of taxpayer funds to pay for that. I think it's worth noting that they spoke to absolutely zero injured workers when they did that study.

I'm a former claims adjuster myself. Keeping in mind that according to the RAND study, the average caseload for the adjusters at SIVTF was approximately 685 open cases. There's just no way that someone can handle that many cases. As a former claims adjuster, I handled approximately 200 litigated cases and that was a full 40 hour work week.

There's just no way you can adequately handle those cases, not have them get out of hand and get more expensive. Thank you for your time.

Thank you.

Good afternoon, Chair and Members. Nick Chappie here on behalf of the California Trucking Association, in support of the proposed budget trailer bill language to reform the SIBTF. We align our comments with the Chamber of Commerce.

As we heard, the proposed budget language implements independent recommendations from both the LAO and RAND that will help realign the SIBTF with its original intent. With that, CTA strongly urges support of the TBL. Thank you.

Thank you all. On behalf of the California Manufacturers and Technology Association, my name is Sarah Bridges. I'm here in support of the Governor's trailer bill and the reforms to the subsequent injury workers comp program.

We know that without the reforms suggested by the LAO, this important program will continue to impose significant and costly obligations. For employers, like manufacturers, who are already very aware of the affordability concerns of California, these costs can be very weighty. So, thank you.

Good afternoon, Chair and Members. I'm Sabrina Lockhart, Executive Director of the California Attractions and Parks Association. We are here in strong support of the administration's trailer bill language. I align my comments to others who spoke from the business community, but specific to our industry is predictability. We hire lots of seasonal workers.

We have to make plans in advance for investments in safety, investments in new attractions. And so, the runaway costs with this program are a big concern to our members. Thank you.

Thank you.

Glenn Welsh, on behalf of the School's Insurance Authority. We were founded in 1974. We cover schools in Northern and Central California. We exist to support good public-school education and adequate funding. We're here to support the governor's proposal. It's the only proposal we have seen that actually steps up to the actual situation that exists.

One thing I would like to point out is that there's another study that's been done by the former Chief Actuary of the Workers Compensation Insurance Authority, WCIRB. Sorry. That adds quite a bit to the estimate of accumulated liability.

That report will be made available and that ups the ante to about $31 billion of accumulated liability by the end of this year. And the increase is about $2.5 billion a year every time this program continues without being changed. So, again, we support the governor's proposal. It's the only answer to the situation we're looking at now.

The only realistic answer. Thank you.

Thank you. Seeing no one else approaching the mic, we are going to go ahead and close this item. We appreciate the panelists. Thank you. Just for the public, we will go to item number six and then seven and complete Department of Industrial Relationships and then go back up to one.

So, if you are looking for your item, we are now going to item number six, which is "Subsequent Injury Benefit Trust Workload." And I think we have some of our same panelists here. We are on page 20 if you're looking for the item. All right. And we're going to be swift through this.

Hi, good afternoon. Josh Iverson, Chief Financial Officer for the Department of Industrial Relations. We have touched on some of my points, so I'll be swift. I might skip a couple paragraphs here. The Department is requesting a five-year phase-in of 177 positions, totaling $36.5 million.

These positions will be dedicated to the SIBTF program and they are for the Division of Workers Compensation where the claims adjusters are in the Office of the Director Legal Unit where the attorneys are and then, also, for administrative support. The totals are about 92 positions for the Division of Workers Compensation.

67 positions for Office of the Director Legal Unit, 18 positions for administrative support. These additional resources, combined with the proposed reforms in the trailer bill language, are intended to create additional capacity in the claims examiners and the attorneys. Currently, the claims examiners caseload is in excess of 1000 cases per examiner. We mentioned the attorney workload.

There's currently 50 attorneys. In '24-'25, these attorneys made over 9,000 court appearances statewide. And the attorneys are dedicated not only to SIBTF but also the Uninsured Employers Benefits Trust Fund, or UEBTF. So, adding capacity to the Office of the Director Legal Unit would ensure that the UEBTF cases are critically heard as well.

Just mentioned, the staffing levels we're requesting represent a carefully calibrated response. Assuming reform to the extent that final reforms differ from our projections, we may need to propose adjustments during the spring budget process or in future budget cycles. DIR is committed to monitoring actual caseload trends and requesting modifications as needed.

I appreciate the subcommittee's consideration of this request and I'm happy to to answer any questions you may have.

Thank you.

Chas Alamo with the LAO. We have no issues with the proposed staffing increase but would stress that it be best paired with reforms of some kind, whether they're the exact ones being in the TBL or not, that those two should go together.

And you did note, I believe in our last panel, that there were some reforms that were being proposed and hiring, but the reforms were not made. But the hiring were made. Is that correct? So, this being paired together. Let's go ahead. And any other comments here? Any questions?

Just on the budget request. So, how much is it that you are requesting?

It's a five year phase in of 177 positions, which is $36.5 million.

So, 100 million for four years?

No, it's 36.5 million total, over the five years.

Over the five years.

Okay, any other questions? Then, I wanted to go back to the vacancies that were noted by one of the speakers related to not just DIR but also OSHA. I know that came up last year, as far as us, not us, you, trying to get individuals hired.

There was, and forgive me if I'm getting the Department mixed up, but I know there was a note that some of the criteria for hiring was impacting the job hires. Has there been any rectifying that?

I can check on that if you give me just one moment.

While he confers with his colleagues, I just wanted to note that the division of workers compensation within DIR has historically had the lowest rates of vacancies with—among the three largest divisions within the Department. So, the other two being Cal OSHA, as you mentioned, and the Labor Commissioner's Office. Those are the three.

I think it was Cal OSHA that had the large vacancies.

Correct.

All right, so different—we'll get to that. Not today, but yes, that's on the topic of hiring. All right, I think that's all the questions I have. Any others? Anybody from the public wishing to speak to this item?

All right, then we are going to go swift as can be and that will close this item, item number six. Thank you to our panelists. And we're gonna go to item number seven. California Workplace Outreach Program, or CROP for short. It looks like we have a new panelist. We'll make sure you introduce yourself.

Or I'm sorry I said CROP, I meant CWOP.

Good afternoon. Josh Iverson, Chief Financial Officer from the Department of Industrial Relations.

Michelle Yoon, Deputy Director of the Office of External Affairs within DIR.

And Grace Henry, Department of Finance.

Allison Hewitt, Department of Finance.

Chas Alamo of the LAO.

All right, thank you to our panelists. And who is going to begin?

I will begin. Good afternoon, Madam Chair and Members of the Subcommittee. My name is Michelle Yoon. I'm the Deputy Director of the Office of External Affairs at the Department of Industrial Relations. I have a background in community organizing, policy advocacy, as well as philanthropy, and I joined DIR about six months ago, on September 2025.

Today, I'll be providing an update about the California Workplace Outreach Project, also known as CWOP. CWOP is a partnership between DIR and community-based organizations to ensure workers know their rights and to help employers comply with the law. The focus is on workers and industries most vulnerable to wage theft, health and safety violations, as well as retaliation.

Since its inception in 2020, they have reached 1.75 million workers and employers and have made 8 million touch points. We're currently in the fifth iteration of CWOP. The work has been underway since July of 2025. There has been 50.7 million awarded to 87 partners across the state for two years.

Again, the work started in June 2025, and it is running through end of next fiscal year, June 2027. Today, the CBOs have engaged in outreach and education to a quarter million workers through interactive tactics.

This includes door to door, phone banking, outreach at events and high traffic areas, as well as meetings. In addition to these two-way engagements, they have also helped with one-way engagements through educational promotional tactics. There have been 310 touch points through social media posts, distribution of flyers and mailers, and other educational promotional tactics.

This outreach has occurred in 42 languages, 11 which are indigenous. In addition to the origin of education that they have participated in, they have also directly supported workers with addressing worker violations. This can include navigating the complaint and claim processes within the state, as well as helping them with demand letters for their employers.

To date, since July 2025, they have supported 1,000 workers directly with preparing or filing a complaint or claim, as well as supported 1,100 workers with alternative solutions such as drafting demand letters to their employers. In addition to the direct outreach education and direct support, there's a capacity building component for CWOP.

There's training offered to make sure that the CBOs can support workers and also train worker leaders. To date, they have trained over 3,000 worker leaders, as well as provided 885 hours of technical assistance.

This was mentioned, the last—the UC Berkeley study that was completed in '23-'24 showed evidence that CWOP engaged workers had a higher level of understanding of their rights and knew how to access government services better. And that report is available online.

Some changes that have occurred since now we're in the fifth iteration is substantively, there's now broader engagement around labor law and worker rights, as well as we've expanded the period performance. So, this is the first year where we have two-year 24 months period performance.

And there was an open RFA at the end of 2024 and then, the applications closed in January 2025. And out of the 121 applications that were received, 87 were awarded and that's the grants that totaled 50.7 million. And the program service, again, began in June—July 2025—and then it's running through June of 2027. Happy to take questions.

Thank you.

Thank you. All right, let's go ahead. Any addition? All right. From our panel, from our Assembly Members, questions?

No. Just want to acknowledge the great work that this program has been doing across the state and appreciate today's report.

Thank you so much, Chair, and thanks for the presentation. Can you give us an example of some of the organizations that get funded through this? I think it's, you know, a really important program, especially for workers that, you know, need and work with certain CBOs through, through non-traditional ways that you talked about.

I know in my district, for instance, we have a number of day labor centers and so, I'm glad to see that this funding is continuing. Do you want to talk about any of the grantees?

Yeah, I could talk about, I could highlight some of the partners that we have in the LA region and show an example of how it's been critical to work with these trusted messengers. So, because—one of the key things about this program is that we have a regional structure.

So, each region is led by a regional lead as well as the UC lead. For LA, we are funding several organizations, and I'd be happy to provide a more detailed list of all the partners and what respective regions they're serving.

But in LA, one highlight that I wanted to share is that we are funding organizations that worked on the LA Wildfire recovery and rebuilding. So, that includes the LA Department of Public Health, so called Koch, and then there was one more that is escaping me, but.

But through that partnership, we've been able to respond quickly with the needs in the region, in particular with the worker violations that we were seeing as a result of the rebuilding. So, I could give you a more extensive list of all the partners for region and any other region if people are interested. Thanks.

Thanks for that. Budget staff was great and was able to get me a list for the LA area. But would be great to see a statewide list.

So, our offices, our district offices across the state, and I'm sure other Assembly Members do this, know who our partners can be for those trusted messengers for, for our workers who are in some of the most vulnerable settings, especially what's going on right now at the federal level with ICE raids and immigration rates. So, I see some of them now in the audience, some of our CBOs.

But yeah, just wanted to say thanks for continuing this program.

Yes, if you can get all of the members, the list statewide of the partners. And this also came up last year. Remember, it was quite a robust conversation with one of our colleagues who is now on the Committee this year. But it really rang a bell with me because all of these different topics intersect.

So, when we talk about workers compensation, of course having workers who are safe while they do their jobs is going to lower those numbers. And making sure that workers have the education and the information they need, no matter what site they're working on, is essential.

I just had a visit today from some of the Eaton Fire victims who actually are now organizing themselves to navigate what's happening, more than a year later. And what came up was the workers who were working out there removing all the contaminants.

And again, when we think about that, there was such a push to do it so quickly. There's two or three things that came up just today which is are there any standards for that removal? Did they have the right health protocols? Were those enforced on that?

And we saw what happened in 9/11 with workers, many of our firefighters, out on those sites. So these are essential. CWOP, and I said CROP by mistake.

But I really, you know, when we think about the Central Valley in workers and we think about the temperatures and the heat and the chemicals, these are all areas where trusted messengers, where advocates, where community members can come in and say, you know, you are entitled to a heat break or a water break or a bathroom break.

And these are really important because we know that many of these jobs where wage theft can occur and others really are some of our most vulnerable issue workers that we see. So, I appreciate the program. I know we have increased the dollars and were able to keep 13 million last year.

And I think it's a big value to our state. So, with that, I have no other questions. Any more comments here? All right, we'll hear from our public then. 30 seconds or under, please.

We decided to bring the organizations to you too. Good afternoon, Chair Quirk-Silva. My name is George and I'm actually a constituent of yours, Assemblymember Caloza, in the beautiful city of Los Angeles in Lincoln Heights, and I serve as a Campaign Coordinator for the California Coalition for Worker Power.

The organizations behind me are community-based organizations who do this outreach from the, all throughout the state, from the northernmost point of California to the pockets in between and all the way down to the southernmost point of San Diego and below.

So, we really just want to request and ask for 30 million per each year for five years to fully fund CWOP for the program. Thank you.

Thank you. You can move the mic up and down depending on your height.

[Speaking Korean]

"Yeah. My name is Park Une. I'm Korean and I'm gonna speak in Korean." My name is Jin Kim. I'm gonna translate Une. I'm from Koreatown, Imran Working Alliance.

[Speaking Korean]

Yeah. "I live in Cerrito. I'm a family member..."

[Speaking Korean]

Yes. "I'm a worker. I'm a mom of three children."

[Speaking Korean]

Yeah. "I'm an immigrant and because of type of my, the work I do, it's hard to understand the, the, the labor right."

[Speaking Korean]

"Because of this program, you know, I'll be able to raise my voice. I fight for my pride."

[Speaking Korean]

Yeah. "This is a big push for person like us. So, I really am ask you to support this program."

Thank you. Thank you.

Good afternoon, Madam Chair, Members of the Subcommittee. My name is George. I am the Workers Rights Program Director at Valley Voices, serving the communities of Kings County. Through the California Worker Outreach Project, we have reached over 10,000 interactions last year despite program interact, despite program interruptions. This year, we're on track to reach over 14,000 workers.

And we have already helped 72 workers file wage claims, retaliation complaints, and referrals to workers compensation. Our focus continues to be the avian flu that is currently affecting our dairy workers. We're here to request that the program continue at 30 million per year until it sunsets in 2031. Thank you.

Good evening, Chair Quirk-Silva and Members of the Budget Committee. My name is Darren Lewis. I'm a Regional Program Manager with the Southern California Black Worker Hub.

In the interest of time, I'm here to give comment on behalf of the eight and now organizations doing outreach and education work through CWOP and the 25 organizations that are here today. So, collectively, through CWOP, we have reached over 4 million workers throughout the state.

And we have had over 800,000 interactive conversations and 46 different languages to help those workers know and assert their rights. So, with the, with the current political climate, last year, the legislator passed Senate Bill 578 to codify CWOP into law. We now need to ensure that this program is funded.

And we urge you to include $30 million per year for five years in this year's budget to allow CWOP to continue without programmatic disruptions. Thank you so much.

Thank you. Thank you.

Hi, Senator Quirk-Silva. I'm Alexis Tiloro, the Worker Rights Director for the Pomona Economic Opportunity Center. We work with mainly in the Empire, but there are times where we represent day laborers in Orange County.

In your district right now, actually. I met you 10 years ago at a community meeting put together by the Los Amigos of Orange County group, who, at the time, was led by late Orange County Latino activist, Amino Vee. May he rest in peace. That organization has a motto, "Nos Gusta Ayudar." "We like to help," in English.

So, we're coming back again this year asking for your help one more time, Senator. We would like for your support to make sure that there's $30 million per year for the next five years for workers. Let me just tell you about the case in your district.

In your district, unfortunately, there's been a spike in wage theft and immigration related threats of day laborers in the Inland Empire, Pomona, and in Orange County and in your district of the 67 Assembly district. So, with this support, we will continue to support your constituents.

Thank you for your support and for your continued support to make this happen.

Well, now that you made me a Senator for sure, we're going to say yes. That's okay.

Good afternoon, Chair and Members. Thank you so much. My name is Kim Robinson. I am the Policy Analyst with Black Women for Wellness Actors Action Project and Black Women for Wellness. And I'm here as one of the grantees that received funding.

And so, when California invests in worker safety, education, and workers' rights, we are investing in prevention, dignity, and long term strength of our workforce. And through CWOP, Black Women for Wellness and Black Women for Wellness Action Project have seen over 10,000 members in the community. We see members in Los Angeles County, as well as San Joaquin County.

And so, I urge you all to please continue the funding. As we have mentioned, we're asking for 30 million per year for the next five years to continue the support to the organizations and to California as well. Thank you.

Thank you.

[Speaking Mixtec]

Thank you.

Okay. "Hello. My name is Reynaldo Rodriguez from Mixtec Indigenous Community Organizing Project serving the counties of Santa Barbara, San Luis Obispo, and Ventura. And what I do is I work with the indigenous people working in the fields picking strawberries and other, strawberries, among other vegetables."

"I speak Mixtec and many who speak this language do not speak or write Spanish. And so, what CWOP does, it helps us to help them with their theft wages and what we're seeing with the rates and whatnot. And so, this helps us keep fighting."

"And what we do is what we are doing here is asking for your support, for the continued support for the program. Thank you."

Sorry, can you tell me that language?

Mixtec.

Mixtec. Thank you. It's important.

Big height difference. Good afternoon, Chair Quirk-Silva and the board, sorry, Budget Committee. My name is Elira Rollo. I am a Program Coordinator at the Cambodian Family and also a constituent of Chair Quirk-Silva. Our organization supports refugees and immigrants all throughout Orange County, which is a much more diverse area than people give us credit for.

And with the funding of CWOP, we have been able to reach all those communities, including the Cambodian Khmer speaking population, which isn't always often reached.

With the help of CWOP, we have been able to speak to thousands, if not tens of thousands, of our very impacted immigrant communities, both the Cambodian speaking population and the Spanish speaking populations and other languages as well. Thank you.

Member community—Committee Members. My name is Francisca Camarillo, Community Organizer with Mixteco Indigena Community Organizing Project, who is part of the California Coalition for Workers Power. I'm here in strong support of continued funding for CWOP program for the next five years. Without this program, farm workers will face preventable health disparities.

I am based off directly in SLO County in Paso Robles, which is very well known for their wine. And many of the farm workers are just starting to get a lot of this information. So, we're just starting for them learning about all of their rights.

And without this support, they're not going to be able to get that information which is going to prevent health disparities. So, we do ask for that support. Farm workers are the backbone of California agriculture industry, making it the fourth largest economy in the world. Right now, for 2024-2025, $4 trillion. Thank you.

Thank you. Going to try to keep comments to under 30 seconds.

Good afternoon. My name is Ashley De La Rosa. I'm representing Bindis Neil's Partnership, a stay away organization serving janitor, custodians, airport, and security workers since—across Los Angeles, San Diego, Orange County, Palo Alto, San Jose, Oakland, Sacramento, and expanding to San Francisco.

Since 2025, our members have endured displacement, unlawful unemployment to natural disasters, unlawful ICE enforcement, and through CWOP, we have been aiding our members with over 3,000 informational materials and supporting them through these difficult times. We urge you to continue to support sustainable funding to continue CWOP. Thank you.

Good afternoon, everyone. My name is Pastor David Green and I'm representing the Way Resource Center. We are located in the Inland Empire, Victorville area, Alka Valley, California.

But our agency has been part of the Trusted Messenger Network for over five years now and the CWOP program that we've been a part of for the past about 7, 8 months. During that time, we've already reached over 20,000 individuals and we are proud to be a part of this initiative.

What we are here today is to continue to ask for support because we understand that we don't need a break in our funding. And we also understand that this funding isn't coming from the General Budget.

We want to kind of make a reminder that it's coming from the money that has already been received through penalties and things like that. So, we just want to make sure we highlight that. And we've already emphasized the importance of this project and we thank you for this time.

Thank you.

Good afternoon, everyone. My name is Sanara. I'm the Program Manager at the Cambodian Family. We are the only nonprofit organizations that serve over 40 years in Orange County for the Cambodian and Hispanics community.

So, CWOP is very important to us because we want to continue to uplift our community that we serve by keeping the employees happy. When we serve the employee, we serve their family and we continue to support the next generation. I urge you to support and continue support. And this is so important to us. Thank you so much.

Thank you.

Good afternoon, Madam Chair and Members. My name is Manuel Pazaraguin, again, with the California Immigrant Policy Center, here in support of the California Worker Outreach Program's ask of 30 million over five years.

This is a critical program that ensures that marginalized and hard to reach workers, particularly immigrant workers who are under attack under the Federal Administration, receive crucial education and engagement on their labor rights. This program is extremely important to ensure that workers have the resources and assistance they need at this time. Thank you.

Greetings. Greetings, Madam Chairwoman and everyone else on the Committee. My name is Cynthia Thornburg Ruffin. I'm with the Earthlodge Center for Transformation. We're our fifth year in, with the CWOP grant. We reach out—we are 10,000 square feet of urban lush jungle in Long Beach, California.

Last year alone, we served about 3,500 community members, mostly black and LGBTQ oriented. And we touch 2000 members with our CWOP training. We have become—we are and have become wonderful trusted messengers in the community. And we are completely down for the money continuing to come in for CWOP. Thank you so much.

Hi. Good afternoon, Committee and Chair Quirk-Silva. I'm Mary Nguyen from the California Healthy Nail Salon Collaborative with servicing members in both Assemblymember Quirk-Silva's and Liz Ortega's district. We work with the nail salon workforce comprising of Vietnamese immigrant and refugee women who have faced unsafe working conditions, employment misclassification, and harmful chemical exposures in the workplace.

And CWOP has been vital to our program in training 200 members, 200 of our community members each year for the past five years, totaling up to 1,000 members that have been given training to learn about their rights as workers and to maintain and protect themselves in the workplace.

We're going on six years to train on more of the nail salon workforce, hopefully totaling up to 1,200 nail salon workers and owners.

And so, we hope that the Committee and Chair will continue the $30 million a year funding for each year for the next five years so that our workers can live in a safe—work in a safer and healthier environment and also live and thrive in their communities. Thank you.

Hello, esteemed Committee. My name is Yardina Aaron, Research Director for the MCTF, the Maintenance Cooperation Trust Fund and also Board Chair at the Earth Launch Center, the organization that you just heard from. At the MCTF, we're a watchdog group in the janitorial industry to stop exploitation for non-unionized janitors.

And through the efforts of CWOP, we've been able to educate and bring Know Yours Rights training to over 4,000 janitors alone where they work and also, when possible, in their home, to be able to continue the education. We continue to support five years long, 30 million strong. Thank you for your support for CWOP over the years.

Thank you.

Hi, good afternoon. I'm Gloria Arita and Lonzo Magalong. We're representing Filipino Worker Center.

My name is, again, my name is Lonzo Magalong. Good afternoon, everyone. We are representing Filipino Workers Center. I work as an organizer doing outreach and education for domestic workers, especially caregivers across the Southern California. Through our outreach, we reach thousands of Filipino immigrants workers who often do not know their rights or where to go for health.

CWOP plays a critical role educating workers, helping them report wage theft, and protecting them from retaliation. This program allows organizations like ours to reach more workers and support our communities. We respectfully ask for your support to continue funding this important project. Thank you and good afternoon.

Good afternoon, everyone. My name is Leonard Brown. I'm the Community Organizer with WorkSafe. We are the regional lead here in Northern California. WorkSafe, we have our BWI, Black Workers Initiative, where we educate blacks on our history and the workforce.

We also work with returning citizens because we want to make sure we move those individuals into work and keep them employed. But right now, we're currently, we're suing GO of their conditions of the detention centers. So, I just wanted to say that. So, it is important the money goes to good use. I just say it like that.

You know what I mean.

Thank you. Appreciate it.

Good afternoon, Chair and Members. My name is K. Liang, and I work with Chinese Progressive Association based in San Francisco. And I'm speaking today as a constituent of Assemblymember Matt Haney and ask for all of your support to fund CWOP.

So, we conduct outreach to over 6,000 low-income Chinese immigrant workers each year in the Bay Area. And also, just like support 100 workers to file wage claims to LCO or negotiate directly with their employers.

Every...workers fly in the overlooked industries including domestic workers, restaurant workers who have no access to worker rights information in Chinese elsewhere. So, I hope we can continue supporting these workers in the long term. Thank you.

Thank you. Good afternoon. Francisco Rodriguez with the Monterey Bay Central Labor Council. We are the regional lead for the Central Coast. We're here to ask for your support in funding the CWOP program. You've heard what a great program it is and so, we hope to get your support. Thank you.

Hi everyone. My name is Rocio Gonzalez. I represent... Our organization is dedicated to support janitorial workers who lack union representation. Through this program, CWOP, we have been successful recover over $500,000 in wages since 2022. And also, we are being providing a scholarship for workers that earn, are not support. Please continue to support this program for CWOP.

Thank you.

[Speaking Spanish]

"Hello, my name is Evolalia Mendoza. I'm a Community Organizer with the Mixtec Indigenous Community Organizing Project. Today, I want to share why I'm here. In 2008, I worked in a strawberry fields and I wasn't paid for the many hours that I would work. I would work 10 hours, and I would only be paid for four hours."

"And a few years ago, five years ago, I met Miko. And like many of the, like, many like myself, have their rights violated and their wages stolen. So, I ask you to fund the program so we can continue help teaching more people about their rights. Thank you."

Thank you. Do we have anybody else wanting to speak after the last gentleman? If we do, please line up because we're going to close it out after this last gentlemen. Anybody else? All right, the last gentleman there will be our last speaker.

There's people behind.

Yes, those two.

One gentleman.

Madam Chair, Members, Noe Paramo at California Rural Legal Assistance Foundation, a proud partner of CWOP. We align with the Worker Power Coalition in requesting the continued funding of the program. Thank you very much.

Yes.

Thank you.

Good afternoon. My name is Vaneli Milan, Senior Organizer with the Pomona Economic Opportunity Center. Through CWOP, we have been able to support workers like Julian, day laborer from Riverside, who was unfortunately assaulted by his employer and threatened by, you know, the employer threatened him with calling ICE. So, we just want to highlight that story and ask for your support. Thank you.

Good afternoon. My name is Angel. I'm the Health and Safety Organizer for the Pomona Economic Opportunity Center. And we've been getting CWOP for the last six years. So, we just want to continue doing the work and asking for your support. Thank you.

Thank you. All right, that will close out our public comment speakers.

And I think, as noted already, these diverse voices that are coming up to represent workers across the state of California are not only important, but essential, particularly in this time, as we see, as was just mentioned, this last threat of calling ICE or potential raids that are not just raids that we've seen in one area.

We've seen them across the California from the Central Valley to restaurants and many others. So, with that, we're pleased to have this item in front of us, and we will do our best to push it forward. I think that will close this item. We have now done items 5, 6, and 7.

We will let our esteemed panelists exit. And we're going to move to item number one, unfair labor practices.

Unfair labor practices. I need to get up for a second here because my aura ring tells me I should stretch. All right, everybody stretch. You guys didn't know I used to be an elementary school teacher, right? It's time. All right. All right.

We are going to be presenting item number one, Public Employee Relations Board and the Labor Workforce Development Agency. Issue number one, unfair labor practices. AB 2088, a budget change proposal. And again, if you all, as you speak, introduce yourself. That would be great. And we're ready to go.

Hi, good afternoon, Madam Chair and Members. Thank you. I am Susan Davie, the Executive Director for the Public Employment Relations Board.

Assembly Bill 288 seeks to expand the jurisdiction of the Public Employment Relations Board to allow private sector workers who were or would be covered by the National Labor Relations Act, or the NLRA ,as of 01-01-2025 to vindicate their rights and organize and collective collectively bargain under circumstances specified.

Those circumstances would primarily arise if their NLRA coverage was repealed or narrowed, its enforcement was enjoined, or if the NLRB failed to act within a specified time frame or otherwise expressly seated jurisdiction. The NLRB handles approximately 2,600 cases in California annually. PERB estimates about 10% would migrate to our jurisdiction under AB 288.

PERB currently has 77 positions and would not be able to absorb this workload per request. $5.5 million in 22 position in fiscal year '26-'27 and 7.04 million in 31 positions in 2027-2028 and ongoing from the General Fund.

And in addition, the Labor and Workforce Development Agency is requesting a $1 million one time in General Fund for Attorney General litigation cost. The NLRB Acting General Counsel has filed a lawsuit and the U.S. District Court Eastern Court of California to seek invalidation, and an injunction was granted partially on December 26th, 2025.

All right, thank you. Comments from our LAO.

Nick Schroeder from the LAO. Considering the court's partial injunction, we think that the agenda's recommendation to hold item open makes a lot of sense. The Administration can rethink how the proposed resources might need to be changed in light of the court's actions.

Thank you. Appreciate that. Any questions? Assemblymember Caloza. Speaking of hold item open, I forgot to say that on item number five, which is our SIBTF, we will be holding that item open. And depending on how things go with item number five, we may also use the tool at our disposal to bring that item back.

Just, I know everybody's left, but I forgot to say that on that item. So, on this, holding the item open, I have no questions.

Thank you, Chair. I mean, this is my first time on this Committee, so I'm hearing this item for the first time. Can you just give me—obviously, saw the materials here about kind of like what's going on with this implementation of AB 288 and what we're discussing today.

Can you just give us an overview and elaborate a little bit more?

Sure, no problem. So, this would be when President Trump has—the current NLRB lacks a quorum, and so, they haven't been able to adjudicate cases for the private sector workers since 2025. And so, this would give the jurisdiction to the Public Employment Relations Board for California cases.

With the injunction, is there anything that California can, can enforce on our own?

FERB may only assume jurisdiction over private sector disputes when the NLRB has expressly conceded jurisdiction or there's injunction on a particular matter or very rare circumstances. So, there's not much currently.

Okay, and how does this partial injunction and the lawsuit impact the BCP?

Okay, so as the litigation progresses, we'll have a better idea as to what resources we would need and when we would need them.

Okay, so I'm getting the sense here that there's not much you can say right now.

Not much right now. We're waiting to see what the court process turns out.

Okay, thank you. Okay, then, I guess I can't ask any questions because there's not much they can say.

Well, you can ask more if you have more.

No, it's okay. I mean, I think it's just—I think one of the interesting things that I learned in the materials that I didn't know that was quite pointed out as everyone has been seeing a lot of the actions by the—inaction—by the NLRB, and I didn't realize that it was a result of not having a quorum.

Correct.

And so, can you walk me through how that happened? I know obviously President Trump is not appointing anyone so that they have a quorum. How long has this existed? I'm just trying to understand whether or not there's anything here more that we can do, because obviously, it's an issue for all the work that we're doing.

Yes, of course. So, without a quorum, it's been more than a year. So, these cases are just sitting at the moment for private sector workers.

And I'm assuming the AG's office has been engaged on this?

Yes. I wouldn't know that. I apologize.

Okay. Okay. Well, I'll just follow up after. Thank you, Chair.

Do you know if that is true, if the AG's office has been engaged in this issue? All right, that's something we can follow up as well. Yeah. Thank you.

Apologies. Our General counsel has informed me there is a quorum now, but the cases are largely.

Can you say that again?

Our General counsel, Felix De La Torre Hayes, informed me that we do have a quorum now for California.

Okay. We do have a quorum now for California. Yes. So some of these cases then can proceed recently? Yes. Okay. Well, that's good news. Any other additional questions or comments? All right, that being said, let's go ahead and see if the public would like to weigh in, seeing none that will close that item.

Oh, you guys have to be fast around here.

Thank you, Madam Chair. Sandra Barrero on behalf of SEIU Health.

Is that on? Go ahead. Thank you.

Here from WorkSafe. As I say, at WorkSafe, we like to hold employees accountable. And we understand that, you know, this agency has been on, you know, a lot of stress lately. And so we try to fill in. We're a nonprofit. We try to fill in.

We get a lot of people coming to us, and so we know the importance of their work. So I just want to. We would just want to support them. Thank you.

Thank you. And I know our Chair of our public employees, Tina McKinner, is very invested in this, as this has come through her Committee. And this is actually in response to her legislation, AB288. So with that, of course, our shared goals are to make sure that people get some kind of response and can get through their cases.

With that, we're going to close the item. Thank you. All right, next we have EDD NEXT Modernization. We did talk about some of this last week. This will be continued. We know this is a major system overhaul, and if you can touch on, I believe you said two decades ago it started.

This is the fourth year, Madam Chair.

All right, so go ahead and introduce yourself as you speak and just give us a little context in that sense.

Yeah. Good afternoon, Madam Chair, Members of the Committee, thank you for having us here to talk about the ED Next proposal included in the governor's budget. The proposal requests 145.5 million in 26-27 funded by the General Fund and the Unemployment Compensation Disability Fund to continue the ED NEXT customer service improvement effort.

This will be the fifth year of the modernization of ED's benefit systems and services. This request also includes a reversion of 70.5 million General Fund previously appropriated for the Integrated Claims Management System project as these funds are no longer needed in 26-27, given the revised phasing of the overall EDD NEXT ICMS effort.

The fifth year request includes funding for the following work streams. Although the BCP as I mentioned contains minimal funding for the Integrated Claims Management system, savings from prior year is being leveraged for that.

26:27 will continue the multi year replacement of our core claim systems and implementation of the modernized claim processing capabilities with the contract award that recently happened in February of 2026.

Vendor onboarding is occurring as we speak and ICMS will begin to focus on modernizing the DIPFL programs as part of the Integrated Claims Management System and in 26-27 another component of the proposal is the Shared Customer Portal that is an easier and more secure login portal for all benefit programs which includes password recovery two factor authentication.

The funding in 26-27 will allow to continue the Department to conduct ongoing maintenance and operations for scp. There's also a component for the Document Management system that is our imaging and data capture document and content management remittance system.

In 26-27 the Department plans to complete the tax form remittance system replacement as well as data migration and maintenance operations for prior phases that we've implemented.

The Integrated Contact center, which is the next work stream included in this proposal is to allow the Department to implement IVR changes resulting from ICMS and and continue maintenance and operations for already previously delivered features.

Items such as self service options that strengthen our call center, scheduled callbacks for UI callers, text messaging updates for our DIPFL customers, virtual hold claim status without having to speak to an agent. All of those previously delivered enhancements will be things that we continue to Fund moving forward.

Fraud prevention and data analytics is another work stream included in this proposal. The funding in 26-27 will allow the Department to complete implementation of the identity proofing solution for our DI and PFL claimants, continue the incremental rollout of logging and data analytic tools, and then also continue M and O for previously delivered solutions.

The Transformation Office supports the overall EDD next modernization effort that includes things like project management services, quality assurance, quality control, customer experience teams, governments, independent verification, validation, all those types of oversight and support contracts that support IT projects. And then the last component of the proposal in 26-27 are what we consider our vendor services.

Those are technological solutions included as part of the proposal based on recommendations previously made from the State Auditor, the Strike Team and the Legislature which enhance fraud prevention, manage, help the Department of Management workloads and improve the overall customer experience. Thank you for allowing me to present the proposal.

Myself and my colleague Ajit Gurn, our CIO are here to answer any questions you may have.

Thank you.

And to yeah, thank you, Madam Chair. Brian Euler with the LAO as you've heard, the project is entering its fifth year and most of the work streams of the project have been completed, although it's currently the most complex and costly portion of the project is just beginning. As Mr. Harle has described.

And so mindful of this, we have stressed the need for continued legislative oversight over the project. Last year we suggested a number of oversight tools that could be implemented through budget Bill Language and we stand ready to continue working with staff and the Administration to explore those kinds of options in language as the budget moves forward.

Thank you. We appreciate that. Senate Member Coloza

Thank you, Chair. I mean, I think, you know, I appreciate the update and I think, you know, we went through a lot of this extensively through the last hearing as well. You know, I think my concerns around the implementation of EDD next also just revolve around when I mentioned last time around the paper applications.

Right know whether or not you've had a time to give that thought from when we last had you here before us, how are we going to make sure we don't leave folks behind who are continuing to use paper applications who don't feel comfortable with technology?

You heard from workers who have, you know, just in the item prior who, you know, have need an interpretation or translation. We have, you know, seniors who don't like technology. Have you guys had a chance to talk about that from our since our last hearing?

Absolutely. Assemblymember and we treat all our paper applicants equally as online claimants as well. So for paper applicants, what we have done so far is we have converted many of our forms in over 14 languages. For unemployment insurance, we converted over 250 forms into 14 languages.

Same thing we are doing for disability and paid family leave as well. In addition to that, we made paper application for unemployment extremely much easier for our claimants to fill in. We have a big project ongoing right now as part of EDD next, which is the document management system modernization.

This project scans the incoming paper forms and then quickly read the data from those forms and put it into the system for quicker and easier processing of the applications. With that said, we'll have the capabilities to process the forms coming in quickly much faster to provide better services to our paper applications.

These are some of the tools that we have implemented. In addition to that, we're still working with our public affairs branch to simplify the questions that we have on the paid family leave as well as the disability insurance applications as well.

Okay, so just to clarify, the paper applications won't go away Even after you finish implementation, constituents can still apply through this new program as well as on the paper applications. Does this modernization also include improvements to your call center?

100% yes. So as my colleague mentioned, we are making massive investment in our call centers as well. For a disability and paid family leave. We have already migrated a decade old call center to a newer platform called Amazon Connect platform for unemployment insurance.

And we are also working right now to move it to a better platform as well. We just implemented a new technology called PIN Drop to provide better services to our customers. More self service features have been offered as well, so. So yes, EDD NEXT does include a comprehensive modernization of our telephone systems as well.

And the last thing I didn't get to ask about last time was obviously you started working on this five years ago. A lot of AI and technology has obviously become much more accessible and readily available.

But also knowing that there's a lot of conversation happening right now and also how do we have guardrails and protections, AI, access to data from our constituents that are very sensitive. Can you tell us is AI being integrated into EDD Next, can you talk about what new systems you're implementing here that we should be aware of?

No, thank you, that's a great question. So in EDD we have three basic principles. The first one is we'll always have human in the loop. So whenever we implement something on AI, we will never let it make a benefit decision. We'll always have our employees make that decision. So that's number one principle.

The second we have is we are focusing more on operations to reduce our costs and focusing less on using AI for our claimants because we want to make sure we abide by the new policies from the CDT and work very closely with Department of General Services as well to implement the Gen AI policies that we have in place.

Keeping that in mind, for our call centers, we are using Chatbot, which is leveraging AI, but that AI, the questions are mostly about leveraging the data that is already in there. There is no generative AI being used to automatically answer questions based on what the claimant is asking. It basically transforms the question.

So example is where is my money? If a claimant asks, generally I would tell the claimant where the claimant's check is. So we are using it to answer the questions from the claimant, but not generative AI, which will be generating answers completely differently using the LLMs.

Okay, so just so I can verify, so EDD is only using it for the chatbot purposes only or. And you're saying you're not using it for any analysis of any EDD claims and their validity.

So we have three use cases for which we are using AI today. One I mentioned is the chatbot scenario. The other scenario, we are using it to validate the identities of the claimants that are coming in.

So we have a product called Thomson Reuters and IBME that we are using, and those products have some features of AI being used to validate where the claimant is accessing EDD services. For example, is the claimant accessing it from out of country? Are they using a computer that has already been blacklisted?

So they use some General AI in there to make sure we can prevent the fraudsters from accessing EDD services. So these are the three tools that we use AI for.

I appreciate you sharing that. And I don't think you answered my question, though. Is there any technology being used to analyze the claims themselves, whether or not they're valid?

No, we are not using AI to validate any claims if they're valid or not. No determination eligibilities are being made using AI at this point in time.

Okay, thanks for answering that. And I think from my end, I'm not against technology. There's obviously lots of benefits for how do we increase efficiency? How do we free up the ability for staff to focus on really complicated cases? So I understand that the investment and that there's just a bigger conversation that we're having right now.

I think what is interesting with a lot of these large investments that the state is making is obviously, I'm seeing it in the year five. I'm sure a lot has changed from when you first started implementing this. I'm sure revisions and changes to what we're implementing now.