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

Okay. Good morning, everyone. Let me start off by saying thank you for your patience. We were honoring a long standing lion of the Senate this morning, and so we ran a little over. So, particularly for those who are presenting, thank you very much for your patience in the public.

With that, the Senate budget subcommittee number five on corrections, public safety, judiciary, labor, and transportation will come to order. We are holding our committee hearing here in the capitol, and I ask that all members of the subcommittee be present in Room 112, so we can establish a quorum and begin our hearing. Today's hearing will cover the California State Transportation Agency, the California Department of Transportation, High Speed Rail Authority Office of Inspector General, and the Department of Motor Vehicles. We will take public comment on all items at the end of the hearing. Before we begin, let me see if any members had any preliminary comments.

Seeing none, we're gonna start with issue number one, which is the fleet replacement with Caltrans. If those presenting would please come forward, as I understand them to be mister Steven Keck and mister Keith Duncan from Caltrans. We also have with us today the LAO, members, both Goche, Seachen, and Rachel Eathers Eilers. I think I pushed her that. I'm sorry. From the LAO. And we also have with the Department of Finance, Benjamin Pollack and James Moore. And, we're ready for you to begin. Thank you.

Thank you, chair and senators. So my name is Steven Keck. I am the, deputy director for finance at Caltrans, and I'm here to present this first item. The department is requesting a one time increase of $225,000,000 consisting of $6,900,000 in personnel services and $218,100,000 in operating expense to continue replacing our aging fleet and installing zero emission vehicle infrastructure to comply with state mandates and regulations. This request represents the fifth year of Caltrans' recent multi year fleet replacement endeavor and builds upon two prior two year limited term requests that have combined funded the replacement of more than 5,790 vehicles, including 1,254 electric vehicles in the department.

The effort also initiated more than 100 ZEV charging infrastructure projects statewide within our maintenance yards and related departmental facilities where this equipment is based for use in managing the state highway system. The request is focused on the replacement of medium and heavy duty fleet equipment, such as loaders, graders, and snow removal equipment. Caltrans expects and estimates to be able to replace 1,100 vehicles with, with the funding requested, including 950 of the heavier type. And, of course, this fleet will be used by our maintenance forces to maintain and operate the State Highway System in a safe manner. As noted in your agenda material, Caltrans has not yet released the report required under government code 14,108 that was due in October.

The report will provide detailed information on our zero emission fleet efforts, including such items as best practices, procurement timelines, and the cost comparison between maintaining zero emission vehicles and traditional, gas powered vehicles. This report is expected to be released by May, and we apologize, for the lateness of this report, both to you, to the local agencies that originally requested this information into the public.

Okay. Alright. We'll turn to the representatives of the LAO.

Good morning, madam chair. Rachel Ehlers with the Legislative Analyst's Office. We reviewed this request. It didn't raise any concerns for us. Certainly purchasing zero emission vehicles is more expensive than traditional gas powered vehicles, but this is consistent with state policy and direction, and, we view this request as as, again, consistent with implementing state direction.

Thank you. Any comments from depart did you have anything? Are you with Department of Finance?

Correct. Yep. Benjamin Pollack with Department of Finance. Nothing to add.

Okay. Thank you, sir. Members, we'll start with you, mister Sciardo. Yes.

So the last few years, how much money has been devoted to this program?

Doing some mental math.

About $1,400,000,000.

Yep. About $1,000,000,000.

Yeah. You know, in the in in some of our report, it talks about the goal of being the greenest, greenest fleet in the nation. That's an awesome goal except for the goal for Caltrans needed to provide us with transportation quarters and other transportation methods, whether it's road, rail, or bus, whatever the heck it is, with roads that are adequate, not forty ninth out of 50 in the nation. And that's where we're at right now. These vehicles cost about three times two to three times as much as another vehicle can that can do exactly the same thing.

And with the cleaner burning fuels that we do have, and I know that because we we were using those in the fire service, there's a compromise there, but we're not compromising. Instead, we're creating goals to make us the greenest fleet in the whole nation. I would rather us change our goals to meeting some of those some of the efforts to to address the environmental concerns, and this is on our part. This is something that the legislature needs to do too, and, get back to doing what Caltrans and and the Department of Transportation is supposed to do, which is to provide us with a transportation system in California and roads that are reflective of the amount of investment that us taxpayers are putting into it, and we are not getting that. We're not even getting close to that.

This is the iron angst of so many of my constituents and other constituents all over the state. We have an interchange down there. It's not even a it's not even an overpass. It it's the the underpass is already there. It's been in the works for twelve years now, and it's gone from $25,000,000 to over $60,000,000 with delays because we just don't have the efforts to be able to put into it, and we don't have the personnel to get these things through.

We're done with excuses. We need some damn roads. Our district is being forced to accept a bunch of growth through more housing and things like that. We don't have road infrastructure. We don't have road infrastructure to handle that.

For the few jobs that California is creating, we don't have roads where people can drive to those those jobs if they can get them. I I don't want to put another dime into this replacement stuff. What I want is efficiency, not to be the greenest. We can be how about if we're the tenth the the fifteenth or twentieth greenest, and we spend more money on roads. That's what I would like to see.

This this, as you can see, my passion is the passion of my constituents. Every time they take a teeth rattling ride down the 215, because it can't get it resurfaced. So, I'm not a big fan of of spending this much money and trying to move that process so fast that we're replacing per perfectly good vehicles with other vehicles that cost three times as much. Putting those other ones, I don't know where the heck those go, but we're just putting them in the boneyard when they have plenty of life left in them. And, and then and and at what cost?

It's a cost to us. It's a cost to our road infrastructure that we would desperately need. And in the meanwhile, some of the and this is directly from that fund. This money comes directly from that fund that builds the state highways. So I don't think it's a good trade off. I would like to see us do something much different, adjust our mandates so that they can adjust their goals to better reflect what Californians need. That's it. No great questions.

Thank you for your comments and statements, mister Sciardo. I have a few questions, sir. The first one is in the last couple of years, Caltrans has focused on transitioning its medium and heavy duty vehicle fleet. Stakeholders have said that these types of vehicles can be extremely expensive. Stakeholders including, the senator, mister Sciardo here, and difficult to implement giving the charging capabilities. What has the department experienced in this area? And how does the department balance the function and the cost and the fleet replacement?

Thank you, senator. So first, let me say that our budget request reflects the the need to account for these higher costs when we go to purchase these vehicles. So in terms of balancing, what we're buying, what we are asking for for budget augmentation, we'll fund that. Second, we're seeing offsets, with the maintenance of these vehicles compared to a traditional gasoline fueled vehicle. These are actually much cheaper to maintain.

We've only been doing this replacement for about five years, so we don't have long term data yet. But so far, we're seeing savings in terms of the maintenance of the vehicles as they move forward. Regarding the charging infrastructure, this last probably two years, we've seen a huge change in what's available out there to to charge these larger vehicles. I think I read this morning that we're able to charge some of these big ones now in a matter of hours instead of the eight to ten hours it used to take with with the newer equipment out there. So we really come a long way since we began doing this project initially with the the smaller passenger vehicles and now with the larger, fleet vehicles.

And it's it's fair to say too that, you know, the, 1,100 vehicles that we're looking to purchase with this money, not all of them will be electric because electric vehicles are not necessarily available in every category that we need to replace. I don't have the exact numbers in terms of what we hope to be able to do, electric versus, traditional fuel. But it will be a trade off between the two depending on availability in the industry.

Okay. My second question is in 2024, the legislature included a reporting requirement, which you referred to, you apologize for, to provide information on the zero emission vehicles that the department purchases, owns, and leases. It was due 10/01/2025. Did you say in your statement you expected it to be ready in May?

I did. Yes.

May what?

I said by May. So I don't have an exact date for you, but I I am hopeful that it will be done, as soon as early May.

Why is it taking so long? You're late, like, five months. Yeah. I It's almost half a year.

Yeah. So there are some complications with, creating and compiling the data and putting it into a usable format. Beyond that, I do not have a reasonable explanation for the lateness of this report.

Okay. I would have to think with the state of California and Caltrans given the size of your department that you would have a basic Excel spreadsheet that had your vehicle information. Since I'm the chair, I'm gonna step out a little bit and say, you got thirty days. And in order for me to support, I'm not saying I'm even gonna support this request, but for us to even consider it, I think you need to give us the report, and half half a year is just not acceptable. And the questions we're asking you, if you had your report, would actually answer some of them.

How old the vehicles are, what the mileage is, typically, how often do you replace them, what other ones have been replaced, what happens to the ones, you know, that are being replaced. These are basic, you know, our job is oversight. That's that's what we're supposed to do. So, I'm gonna say you have thirty days from today, which is April 19, and we're not gonna wait anymore. Effectively review the information to then make a recommendation from my subcommittee to support your request.

Understood.

Fair enough?

Yes.

Okay. So let's see. April 19, does that fall on a weekend by any chance? April 19 is a Sunday. So if you wanna make me smile, you would turn it in

by Friday, the seventeenth. You would turn it in by Friday, the seventeenth. But definitely, by Monday, the twentieth, we need to have your report. So we have enough time to properly evaluate it and to hopefully concur with your recommendation.

Understood. Thank you.

Okay. With that, those were my two questions. Senator, Durazo.

Thank you. I I have a question. I've worked really hard and brought up to Caltrans and other departments and agencies about labor standards in our procurement process. So my question is, does this procurement for the these vehicles include labor standards for the manufacturing and the maintenance jobs? Yeah. And if so, could you explain it, what that is?

Keith Duncan, Caltrans budget officer. We we do, working with our Department of General Services, we do have standard boiler plate that does, meet, statutory requirements as well as ensuring that we have the the the labor standards that have been, expressed to us to include. We would be happy to provide you the terms and conditions that we include there. I don't have the specific language, though.

Yeah. I mean, I don't want it to be, you know, companies that pay minimum wage, you know, that that's that's a labor standard. That that's just not acceptable for for the investment that we put in, you know, with our tax dollars. We ought to be able to count on some good paying jobs. And affordability is a big issue right now, and it has been, and I'm sure it'll continue to be for a while.

We need people to be able to earn what and these are I'm talking about jobs here, you know, manufacturing, maintenance. There's so many different ways in which we could. And I really expect I'm raising and asking you the question because I really expect, manager.

Thank you, senator. Senator Seyarto, you had a final question?

Thank you. Yeah. I did. You know, obviously, Caltrans with this many vehicles doesn't replace them all at once. And usually, when you have large fleets, you have a a an an amount of money that you put aside, for equipment replacement reserves.

And and those get put aside every year, so that when a when a vehicle, it needs to be purchased, the money is there to purchase it. Have you guys adjusted your, reserve, maintenance accounts that we need to put in there every year, in the budget to reflect what these new vehicles cost?

So senator, the we do have a base budget, that we use to replace our fleet. It has not been sufficient to, meet the replacement timelines that we needed, which is why over the last, five years now, we've come forward with budget requests. This request is for just one year, and we are actually, transitioning to looking at where we are, where we need to be in the future, and assessing what we wanna do, in the future. So instead of a two year BCP like we have been doing, we're doing one year this time, and we're gonna be coming back next year with a request that more incorporates the long term needs. Instead of this big push that we've been through for the last five years, we're looking at what we're going to be doing.

And the report that we're going to get back on April 20, does that have the, the costs of the replacement for the the vehicles, the the individual vehicle costs?

Yes. The the report is required to have the the cost of EV purchases. Yes.

Okay. And the last question and follow-up to senator Durazo's request. Are all the vehicles California made vehicles? Because most of the large, equipment vehicles I see are are made in the Midwest, Nebraska, Iowa.

Yeah. I honestly cannot answer that question.

I can because I drive by them once in a while. So, yeah. Some of those equip a lot of the heavy equipment isn't even made in California anymore. So we don't have control over their, labor laws outs outside of the state. So, I can understand why.

And and that would impede getting vehicles until we were able to get somebody here to build them and then hire a workforce. So that that kind of would work in detriment to to trying to accomplish my goal, which is building more roads.

Thank you, sir. My last follow-up comment would be, in your report, you just mentioned that if I understood you correctly, we might be a little behind because of the funds that were available to do your replacement. If you could give us an idea, how many more years do we do you think you're gonna need this amount? And, you know, obviously, you know, replacing vehicles, it just kind of repeats itself. So, you know, if you expect, for example, in the next two years, or if this is the last year that you would have replaced everything its first time, You know, when do you think you're gonna need to keep replacing?

Kind of give us a little schedule so we this is the budget committee. So if we could kind of get an idea of of what is gonna be happening. The reason why I say that is we're anticipating a structural deficit for the next four years approximately. So we're going to have to be able to determine, are we going to be able to do 225,000,000 per year? Is that what you're anticipating asking?

So we we need to know those kinds of things so we can plan ahead. So just a rough idea of I I would imagine you have this schedule. So

Yeah. We'll be happy to provide some information. I I don't know if I was clear in in what I was trying to convey. This request is a one year request as opposed to the prior two requests that have been multiple year requests. Yes.

And that's because we are undertaking that review and reassessing where we are now and where we need to be to develop a long term, budgetary need for the department. So at this point, I can't give you a number, but that is why why this is only a one year request is so that we can complete that analysis and come back to you with solid information.

Okay. That's not what I'm asking. What I'm asking is to get a rough number, not necessarily the budget number, but to understand I'll I'll give you an example. Caltrans has 1,000 vehicles. Okay? We'll just use that as an example. 50% have been replaced thus far, so we still have another 50% to go. That's what I'm trying to get an understanding of, not are you gonna need 50,000,000 or 200,000,000 or 300,000,000. I'm trying to understand the problem as a whole. How many vehicles do we have?

What's been replaced? What do we need to replace to go? And then when is the schedule gonna restart again? So we understand, going into this, what are the potential liabilities or expenses that we're gonna have to incur? That's what I'm trying to understand.

Okay. Understood.

Just general timeline understanding.

Yeah. Thank you. And we'll get you some more detailed information. But just for reference, we have about 12,250 pieces of vehicles and pieces of equipment. We have already replaced nearing 6,000 or will by the end of this year, so that's almost half. But these are vehicles that all have different replacement cycles. Some of our vehicles are already twenty years old, and that's okay for the type of work that they do. But, yeah, we we can certainly provide that information.

By April? I No. Don't tell him. K. I wanna make sure he knows.

No. I understand the the seventeenth is our is our goal here.

To make me smile.

Yeah. Absolutely. Which is always my goal. That may not be included in the report, but it will be supplementary information that we will provide.

Within thirty days of that?

Yes.

Not six months.

Understood.

Yes, sir. Alright. Seeing no further questions. Okay. That concludes issue number one. Thank you very much for your participation. Issue number two is regarding s b 150 which is related to trailer bill language. First, we're gonna hear from Caltrans, mister Keck, and also mister Duncan. And then we have the same representatives from LAO and Department of Finance. Who's gonna go first? You're batting up? Yes. Alright, sir.

I think this is enough. Thank you. Thank you, madam chair, senators. Keith Duncan, Caltrans budget officer. Issue two on today's agenda, as mentioned, is a proposal by Caltrans, the California Department of Transportation, to amend government code 1014017 which, was enacted in 2023, authored by Senator Durazo.

Annually, Caltrans, on behalf of the state of California, receives federal formula funds through the Federal Highway Administration, for investment and benefits to our state and local transportation systems. Government code 14017 required that Caltrans transfer a portion of those federal formula funds to the California Workforce Development Board for investment into the state's high road construction careers program that creates reliable career pathways for through the delivery of structured high quality training throughout the state. The challenge was and is, that the use of these federal formula funds for training purposes must meet specific federal eligibility requirements as specified in federal statutes, such as having a direct nexus between, between training and the specific benefits to the national highway and national transportation systems. Unfortunate unfortunately, due to the federal eligibility requirements, we are unable to receive the necessary federal authorization to use these federal funds as the state law intended. And instead of just throwing up our hands and due to this limitation, this proposal for your consideration is to amend the government code to swap out those federal funds and replace it with $30,000,000 in state funds, redirected from the state highway account.

So these state funds can thus be transferred from Caltrans to the California Workforce Development Board for investment into the High Road Constructions, Careers Program to meet the original intent of the law. I am joined today by members, representatives from the California Workforce Development Board, as well as our friends from the Department of Finance, and we'll be happy to answer any questions you may have.

Thank you. Did you have anything to add, sir, at this time?

Not at this time.

Okay. Yes, ma'am.

Again, Rachel Ehlers with the LAO. This really just represents a policy choice choice for the legislature whether to use state funds to continue to implement this program, as the administration has determined that federal funds can't be used for it as as originally intended. So, it is at the discretion of the legislature whether this continues to be a high priority for state funds as well. Thank you.

Yes, sir.

Nothing to add at this time.

Okay. Alright. Mister Seyarto, you're up first this week.

My question is on on what's the track record for the existing program? Do we have a we have any statistics indicating the success of this program? Or is this brand new and we don't have a track record at all and we're just hopefully

Yes. Senator, I can comment on that.

Thank you.

So the track the complete data that we have is from SB 1, which was another partnership with Caltrans. Mhmm. That occurred between 2020 and 2023. So as you as you know, construction is very vulnerable to recessions, and at that time, there was a pandemic induced recession. With that being said, there were still 700 participants from that program connected to apprenticeship opportunities in the building and construction trades, and a further 500 connected to employment, mainly construction related employment, but not not necessarily apprenticeship.

It could have been residential construction and things of that nature.

So I believe heavily in our workforce development efforts and what the good work of the workforce development boards. One of my concerns is that as we try to fund this from a federal standpoint, if it's federal funding and our workers get trained here and they go out throughout The United States, you know, it's federal money, but wherever they work probably benefits the Federal Government. But when it's state money, I I kind of like to know if after we're training them, if they're taking the high road out of the state and, and not benefiting our workforce at all. And, that's what that's one of my concerns. So is there any way of tracking that to make sure that, the investment that we're making are actually producing workers here in California, as opposed to helping the rest of the nation get some, very high skilled labor, in their in their worlds where they will not be benefiting from whatever it is that California does to to make them productive.

Because without, housing and with without with the affordability issues that California is offering right now, a lot of sectors out there are are going away. And I would imagine the construction sector is no different. And in fact, I know construction people that are left the state, to go do business.

That's a great question, senator. So the goal of the program is to connect individuals to local apprenticeship opportunities. So for example, speaking in the context of a Caltrans project, an individual who goes through one of these programs after being recruited into it, may wish to become a laborer. And to do that, they will go up to the Laborer's Hiring Hall, local to them. It could be in Benicia or wherever, in Riverside, wherever.

And and they're given a book of contractors that are signatory to LiUNA, and they can go out and receive sponsorship from them and work on local projects, you know, heavy highway and civil construction projects here in California. So that is the intent. And when people join these local programs, they tend to stay affiliated with that with with the local that they signed up with. As far as I know, it's unusual to disaffiliate from your local union and move to another part of state. It's not unheard of, but they tend to stay local.

Right. Some of the experience that I've had with some of our union workers out there is they they have a tendency to try to get some work on the side because they're not getting offered enough work through their their their union. And, and so, they kind of branch out a little bit, and and then they eventually move, out of the state. And and that's we need to get a we need to be able to have some statistics that what the money that we're putting into programs like this that we're producing people for here. And, so every once in a while, I do come up with a good question.

So thank you for that, and, and I'll pass it along to, mister Razzo.

Thank you, Mr. Seyarto. How ironic that we would have the actual author here. Perfect. Senator Durazo.

Thank you. Thank you, madam chair. I know a little bit about this. So the bill that I authored, signed by the governor, July 2023, it was part of the the governor's infrastructure streamlining package. The bill was required Caltrans to work in partnership with the California workforce development board to support the high road construction careers and reserve a minimum of $50,000,000 of the federal dollars that we were receiving to be allocated over forty years in support of the program.

Three years later, today, that $50,000,000 has not been transferred, as I understand it. Statute. So not only was did it require the transferring of the $50 $50,000,000 it also took effect immediately because the legislature determined that maximizing those federal funding for California workers could not wait. Three years of administrative inaction appear to have squandered that urgency. The workforce development boards high road construction careers program has a strong track record.

They prepare thousands of low paid Californians for construction careers as my colleague was talking about. Program itself. I've spent years trying to build the kind of inner agency coordination that would have prevented this. Yeah. Year, that would have prevented us. Yeah.. So my question to you is why was no interagency agreement or MOU executed between Caltrans and the workforce development board?

The the primary driver was the lack the inability for us to get the federal authorization to to transfer or to utilize that $50,000,000 to be able to use for this training program. We are in the process of executing. We actually have the interagency agreement that's been signed by the Workforce Development Board. It's being signed by Caltrans next week to be able to transfer the state funds, assuming that's what that would be an acceptable solution as we ran into so many limitations trying to use federal funds for this effort.

I'm sorry. I don't understand. You now you're you're you're saying the problem was the federal?

Obtaining federal authorization because the federal funds that we received through the Federal Highway Administration through those formula funds, they're required to meet those federal eligibility requirements. They're not funds that are transferred to the state to spend as, within our state policies. We actually have to submit a request for authorization. And then we whenever we then, spend the funds, we then bill the Federal Highway Administration for reimbursement. So there's there's, statutory processes that we have to follow through.

And then when we requested the request for the scope of work for the original, interagency agreement between Caltrans and the, California Workforce Development Board, we were unable to get federal authorization for it. So that's been the challenge.

Because you didn't apply for it when you should have?

No. We we did. We've been working with the Federal Highway Administration, both the California as well as the headquarter divisions over the last couple years in going through different iterations of the scope of work to try to see what we can do to whether massage it, re redesign it to try to meet those federal eligibility requirements, and we were unable to.

So so what happens to the $50,000,000 in funds that were reserved?

We'll be able to invest those that monies into the, into transportation projects, both state and local transportation projects.

But, you're talking about dropping it from 50,000,000 to 30,000,000. Right? Yes. And then there's no no timeline. There's no four year timeline for allocating the funds?

The intentions are to allocate the funds over the next two to three years.

So that's the new time line that you're talking about of transferring what was 50,000,000, now it's 30,000,000. And it's 30,000,000 is state funds. It's not federal funds. So I I I'm sorry. I don't I don't get it. We started out with $50,000,000 in federal dollars that would have been used for a year, and now it's dropped down to 30, and it's not even federal dollars. It's state dollars.

Correct. Yes. We were because it in order for us to use those federal funds, we first have to get that authorization from the feds. So when we when we submitted the request a couple years ago, we were unable to get their approval or their authorization. So without that authorization, we would not be able to spend those funds in the first place.

What was what were the problems that you encountered? Because the Biden mistreat, the region reason that we had this urgency bill was because we knew that under the Biden administration standards, we met those standards. We could have met those standards.

So Yes.

We missed the timing here.

We we've submitted like I said, when when the bill was passed, when the bill was enacted, we immediately collaboratively with the California workforce development board and Caltrans, we developed the scope of work, and we immediately submitted it to Federal Highway Administration to receive their authorization so we can then execute the interagency agreement.

Did you, did you, include is there an MOU or interagency agreement? Did you do that between yourselves?

The we had to submit that scope of work so we can get the the authorization so we could execute that interagency agreement. That's the precursor, like a prerequisite for that interagency agreement. We could have executed an interagency agreement or an MOU between the two departments, but because where there was no authorization from the Federal Government, we would there would be no funding associated with it. So we needed to first get their authorization before we can execute an agreement that actually had funding associated to it.

Well, that's not that's not what my understanding is. But with the Workforce Development Board, has the Workforce Development Board been consulted on this change?

For that, I have to defer to my colleague. It has. Yeah. Center.

Yes. It has.

Okay.

It has? Okay. And do you support the switch from federal to state funds and the reduction to 30,000,000?

Yes, senator.

And do you support the high road principles?

Yes, senator.

These are easy questions. How do you define high road jobs? What what do you how do you work do you work off of a definition of high road jobs?

Yeah. The way it's I forget the code exactly, but the way it's defined in statute, one that provides a living wage, opportunities for advancement, and, worker voice.

Okay. Living wage doesn't doesn't cut it. Living wage is barely above minimum wage, so I'm not I don't think that's that's part of the high road jobs. And then how do you what what are the elements that you include in high road training?

Opportunities for advancement. So knowing that in the next few years, you'll get paid more than you're currently being paid. And then worker voice, which can look like union representation. And

You're kinda guessing at all of this.

I'm not.

This is doesn't you don't you're not giving much confidence here in terms of your your definition. So can you please give me a written explanation to the question I'm asking? Okay. Thank you, madam chair.

Thank you, Senator Durazo. I have a few questions here to ask. SB 150 originally set aside 50,000,000 for the high road construction careers program, which is what the senator just reviewed. But the administration is proposing to cut that down to 30,000,000. If the administration is getting the use of still 50,000,000 from the Federal Government, right, Why wouldn't we allocate then the true 50,000,000 towards this program, of state funds?

Benjamin Pollack, Department of Finance, so I can speak to that. SP 150 designated the 50,000,000 federal funding. And when it was determined as Caltrans noted, we didn't have the authorization. We basically are back to square one. We recognize the priority and the significance of the program and wanted to put, you know, something towards that, which we landed after analyzing the many different calls on transportation funds, Caltrans priorities.

Because the shift to state funds, we're evaluating the key work that Caltrans does to manage the state highway system. And when comparing those priorities, that's where we evaluate determine that 30,000,000 was the correct number, the available funds that we could designate to this priority program.

Okay. Let me say this in a different way. Didn't you receive 50,000,000 from the Federal Government?

The federal 50,000,000 is as Caltrans noted, there are many different requirements that they

I I understand that. I'm just saying, did you or did you not receive 50,000,000?

Did that's correct.

Okay. So what I'm saying is if the state received 50,000,000 and now we're gonna use 30,000,000 of our dollars from a different pot, there's still $20,000,000 that you received. Right? And what I'm saying is the state then is gonna have the use of that $20,000,000 for projects or something. Right? That's what the gentleman said. Is that correct?

Correct.

Okay. So what I'm saying is so as I see it, the state got an extra $20,000,000 that it wasn't anticipating to go towards some projects. Right?

Correct. The federal 50,000,000 federal funds as Caltrans noted has those requirements for what specifically can get spent on.

Okay. So what I'm not getting and what I think the Senator was alluding to is where's the money? So if you got 50,000,000, right, the state got $50,000,000 and to substitute it, we're kind of moving money from accounts is what it sounds like to me. So the 50,000,000 is gonna go towards projects that the Federal Government will approve, but we normally wouldn't have had that 50,000,000. Right? Because we were gonna direct it towards 50,000,000 towards this program. Correct?

Correct.

Okay. So what I'm saying is now that the state is using okay. You got 50,000,000, that we, the state, didn't have to pay 50,000,000 towards these other projects because now we have that money for it. So what I'm saying is now that the state didn't have to pay the 50,000,000 for those projects, you're now giving 30,000,000 here, and I'm saying, where's the other 20,000,000? You're using it for other projects.

Right? That's what he said. That's what he testified. So if we're using the 20,000,000 for other projects that the state would have normally paid for, that we knew we were gonna have to pay for these projects, Now that the state doesn't have to pay that other 20,000,000 for these other projects, what are we gonna use that 20,000,000 for?

That would be directed to projects that specifically meet the federal requirements that Caltrans would be following to complete projects with federal dollars, which have those specific requirements that this particular program didn't meet.

Okay. So are there additional projects that are maximizing the use of workforce of the apprenticeship program? Aren't there other state projects where we're identified and we focus on bringing more and more workers in?

Yes.

Okay. So is it possible potentially to help some of those additional projects go to help with those projects where, as it was stated in the original legislation, was supposed to maximize benefits to the disadvantaged communities. You're not following me. So what I'm saying is if you can bring back to the committee this other $20,000,000 that's out there that we anticipated was going to go towards this workforce program, can you share with us, provide to us this other $20,000,000 where is it gonna go? What projects?

And if potentially, is it possible that those projects that might be worked on is feeding into maybe some of the organizations we work with, the workforce labor organizations. Maybe we can feed and get more people working. So we're still kinda getting at it in some way. Is that possible versus just 20,000,000 going to who knows where and to what projects?

Yes. This Caltrans and the state do have transportation programs that are directly working to impact have positive impacts to underserved develop underdeveloped communities, and I can definitely work with Caltrans to get back to your office on what those projects include.

Okay. So not just to my office, to the committee. So that that way, maybe we can help to still get at our overall goals of where we were trying to go. Now, sir, if you could share with us a little bit more about the timeline. So now that we're going to allocate the $30,000,000 for this program, when is it gonna start? You know, how how are we gonna do this?

The intention oh, I wasn't sure if I was to find this for myself. The intentions are to start the funds flowing as early as May. It's a matter of now that the interagency agreement has been signed by both entities, we now bureaucracy is we now send it to department general services so they can officially execute it, and then we we can begin the the processes to get the funds flowing. But the goal right now is looking at a at a May timeline.

Okay. So we'd like to know which potential projects are these students' apprentice basically going to be going towards. So if you could just provide us a little more timeline. We're gonna start in May. The money is gonna go to what workforce centers.

How can we potentially notify people in the community and say, hey. This program is kicking off. You can take advantage of it and potentially apply. So we wanna make sure, you know, that we're getting people in at the right place, at the right time, at the right projects, so that the original intention of the program can be upheld.

Yeah. We'd be happy to work with the California workforce board on the first tranche of funds to get that laid out for you. No problem.

Okay. And we're asking where is that going to be is what we're trying to understand. So we can do the best that we can to make sure the original intent of helping this workforce to have this opportunity to get into this very important job area. Because, I mean, these are very good paying jobs, and when a person has an opportunity to start working, you know this better than I do. If if someone can get their foot in the door at Caltrans, I mean, the door is open to work for all not only continuing to work at Caltrans, but potentially to work for other companies as well.

Okay. Thank you, sir. My last question is, it's been three years. You explained the delay, and if you could just provide more of how long you think this program is gonna last and all that so we can maximize it as much as possible.

The intentions are to start spreading the funds over the next two to three years if we can begin execute the energy agreement, begin working with the workforce development board to start getting the funds start flowing in May. We're looking at over the next two to three years where funds are then transferred to the necessary work centers and going through the the HRCC processes. But I can definitely get that layout of what the timelines are for the rolling of the funds. No problem.

Okay. That would be great. Any other yes. Senator Durazo.

Just a final question. Is the $30,000,000 that you're proposing from our state funds, which should have been 50 from the from the federal, is that money already identified and reserved, or is this some future commitment subject to some other future appropriation? We've already lost out here with tens of millions of dollars. What's to say it's not gonna we're not gonna lose out again? So what what's the certainty here? Here?

The the 30,000,000 is set aside over the next two years. That's part of the execution of the interagency agreement so we can lock in the funds for this specific effort. It is funded to the State Highway Council with these state funds and they are set aside for this specific effort.

Thank you, madam chair.

Thank you. Seeing no further questions, no further comments, that concludes issue number two. Thank you very much. We're now gonna move to issue number three, which is equipment and operating cost budget augmentation. This is related to the California Highway Patrol.

We're gonna have with us, great to have our commissioner, Sean Duryee, and captain Ty Meeks, and also Kathy McLeod, all from the California Highway Patrol. And we have the same representatives for LAO, but a couple new folks with the Department of Finance. Mister commissioner, would you like to lead us off? It's good to see you, sir.

Thank you, ma'am. Madam chair, members of the committee, Sean Duryee and the commissioner for the California Highway Patrol, it's good to see you. I just wanna say, we're grateful for the opportunity to be here to discuss a couple proposals that are in the governor's budget. And personally, I wanna say thank you to the legislature for the support the department's felt in the past few years. The first proposal let me introduce, Ty Meeks.

He's our captain. You know him. He's the special representative. He's my wingman here today. The first proposal regard to equipment and operating cost.

Right now, the California Highway Patrol respectfully is requesting an augmentation of 15,700,000.0 from the motor vehicle account in the current fiscal year 25-26 and 44.4 from the MVA in 26-27. Historically, the CHP has been able to absorb these costs for equipment and operations within our base budget, often relying on salary savings, from vacancies that we've had. And the department does not typically come forward with specific budget requests for these kinds of expenses even when the costs have risen due to inflation. We're at a critical point that our salary savings have decreased, and we simply can no longer offset these costs. I wanna talk just a little bit about budget augmentations we've gotten over the past two decades in this space.

In since 2006, the department has received 34,500,000.0 in budget augmentations for offices, vehicle replacement, air fleet replacement, automobile insurance, and fuel cost. Since 2020, like all state agencies, we've done our part. We've participated in the reduction drills to help relieve the pressure on the state budget. For us, those reductions equaled 29,100,000.0. The difference between the two, a 5,300,000.0 augmentation since 2006.

Inflation and cost increase of the consumables that we have have outpaced that augmentation significantly. Two things that I wanna just highlight that we're known for using, fuel and patrol cars. Fuel has gone up since 2006, 57%, and even more alarming, the cost of a patrol car has gone up. Back in 2006, we could buy a fully out equipped, patrol car for $26,000. Today, that cost to us is just north of a $100,000 per vehicle.

That's nearly a 300% increase. We respect the LAO analysis, and they correctly point out the state's average inflation rate of 2.8% up to the year 2019. We respectfully request they include the two higher years that followed that, '21 and '... inflation, respectively. A quick Google search this morning on the consumer price index shows since 2006, the two decades I'm referencing, we've experienced somewhere between 60-70% inflation. As previously noted, the department's ability to absorb these increases was through salary savings or position vacancies.

Why is that no longer a possibility? It's a good thing, and it's something that we did together. And when I say we, the administration, the department, the legislature, were no longer able to use salary savings due to, in my opinion, one of the most successful recruitment campaigns in the in the country. As every law enforcement agency was struggling to recruit, the CHP was no different. When I first was appointed in 2023, we were embarking on an ambitious recruitment campaign called join the 1,000.

The the 1,000 was not a, a number that we just pulled out of the sky. The 1,000 referred to the estimate of vacancies that we had at the time. A thousand uniform vacancies. That was a team effort, like I said, supported by this body, supported by Governor Newsom and his team. The campaign worked.

I'm here to tell you, mission accomplished. It it was undeniably successful. This year, we received a record number of applications, 30,000 applications. Recently, the LA Times published a story. The title of the story, I quote, how the CHP has drawn a flood of new recruits when the LAPD and other agencies struggle to hire.

Close quote. In 24-25, the department had 861 uniform vacancies trending down from that thousand. As of 02/01/2026, we reduced that number to 418 uniform vacancies. There are currently a 143 cadets training in West Sacramento. They're gonna graduate in April.

By the end of this fiscal year, we estimate our vacancies will be down to 388. And if we continue to train in our projections in retirements and graduations, we plan to have four classes next year, that number of vacancies will be down to 236. And I would just note that is the lowest number of vacancies in my 28 years with the department. These aren't just numbers. These, when you talk about staffing and putting officers on the road, that is making California safer.

There is a direct correlation between the number of police officers on our streets and how safe our communities are. I wanna highlight just a couple. I pulled this information from the attorney general's website directly in a reduction in violent crime, 5.9% across the state from 23 to 24. Property crime down 8.2% in the time frame, particularly note noteworthy auto theft, which the CHP is the lead on auto theft in the state, down 15% in that. Our bread and butter, what we're known for, traffic safety.

4,000 people a year on average die in California. Since 2023, as we've driven the number of officers up on the roads, the number of fatalities have come down. 2023, we estimate around 340 less fatalities in California from the year prior. 2024, down an additional eighty. 2025, down an additional approximately 200.

The total number of 615 lives saved over those past few years. In closing, this proposal is not vague and open ended. It's not a discretionary expansion of our mission. It's a specific request to maintain the course that we embarked on together back in 22-23 to reduce those number of vacancies, and we respectfully request your support.

Thank you, sir. Yes, ma'am.

Good morning, madam chair, senators. Gökçe Sencan with the LAO. As the department presented, CHB's augmentation request totals $60,000,000 on a one time basis from the motor vehicle account for the years 2025, '26, and 2026-27 for a variety of operation like equipment costs. Our office recommends that the legislature reject this proposal. We identified three issues that led to this recommendation.

One is that these expenses are not new. It's unclear why the department requires funding now when it has not needed these types of augmentations in the past. Inflation's always been present. Vehicles and equipment have always needed replacement, and the department already has an existing budget of $95,000,000 for the expenses listed in this budget request. The second issue is CHP's vacancy rate.

The department explained to us that in the past, they were able to use salary savings from vacancies to cover the equipment and operating costs. But because of the declining vacancy rate, this is no longer enough, hence the budget request. However, the data does not support this claim as CHP's vacancy rate is still above pre pandemic levels, which raises the question of if the salary savings from the vacancies was enough to cover these expenses in 2019 when the vacancy rate was 3%, Why is it not enough when the vacancy rate is above 6% as of 2024? The third issue is the fiscal condition of the motor vehicle account. The account has been experiencing a persistent structural imbalance and is currently projected to become insolvent by 202829 budget year.

This means that the account will not have adequate funding to cover core baseline expenses such as salaries. In order to not worsen this problem, we think that the legislature should apply apply a very high bar for approving any new requests, including one time expenses. Considering the issues we identified with this proposal, we do not believe that this proposal clears this high bar. For these three reasons, we recommend that the legislature reject this proposal. We understand that CHP disagrees with our recommendation and has new information that they believe bolsters their argument for why the legislature should approve this request.

We reached our conclusions based on the information that was available to us at the time of publication and have not had a chance to review this new new information yet. So we can only speak in the context of what was available to us at the time. We are currently working with the department and will review any new information that they will provide to us, and we will share any updates to you, with you and our to our analysis to your staff to the degree that it affects our conclusions. Thank you very much.

Thank you. Is this your first presentation? Yes. You did well. Thank you.

Thank you.

Yes, ma'am. Do you have anything you'd like to add?

Nothing to add. Just reaffirm that we are in conversation with the department. And as your staff, our our objective is to give you the best information we have whenever we have it. So as new information comes forth, we will continue to do that.

Thank you. Did we have anyone from the Department of Finance? Yes.

Yeah. Bowen Peterson, Department of Finance. I would just like to reiterate the commissioner's comments. Given the reduction of vacancies and those projected vacancy volumes at the '20 and those projected vacancy volumes at the 2526, CHP's expenditures are currently going to be outpacing its appropriation. So therefore, the historic vacancy savings that we're able to fund these operations in the past are not able to any longer, and we would be proposing this request to compensate for that.

Thank you. Mister Seyarto, you're up first.

Welcome, everybody. Hey. Question on the vacancies. So the vacancies are actually the human being part of it, but there are other assets that each one of those human beings needs, like a vehicle, like other equipment, that has that always been or is that just stored in a closet somewhere or as we ramp back up? Because through attrition, the the the vehicles go off, And if you don't have a person to fill it because your vacancies, you don't fill them.

But then when you get those vacancies back, something there we're gonna have a rate arise in in cost for all that that equipment. Is that kind of what's what's going on with some of this request?

There is some of that for sure. It it's it's complicated. Depends on to your point, do we keep it in the closet? Well, yes. For some things, weapons, duty gear, something like that, we'll have on supply. No. The horses, we don't keep in the closet. But, vehicles are a little different. Very few of our officers have vehicles assigned to them, and the vehicles are, rotated throughout personnel. And so a reduction in staffing doesn't necessarily correlate to a reduction in vehicles.

You still need so many people to go out on graveyards and then whether or not somebody drives it three times a day or twice a day. So vehicles are a little different.

But my question is if you're increasing staffing, though, in addition to what you used to have at graveyard, instead of having four vehicles out of graveyard, now you have enough personnel to send seven to 10 people out in graveyard. You would need more vehicles. And if they've been sitting around for six or seven years, they probably just need to get replaced. And since they don't cost $25,000 and cost a $100,000, there's an expense that I think is unexpected that the DMV fund does not necessarily fund.

Yeah. You're absolutely right, senator. And it goes across the board. We're using vehicles as the example, but, Yeah. 500 more officers on patrol. Think of the fuel consumption just in that alone, and so it it goes across the board. Body worn cameras, all of that type of body armor.

Alright. So I think one of our problems is this, the DMV fund being the fund that that is not going up commensurate with the costs of providing the services that that DMV fund is supposed to. And it's been going on. It's a structural problem with DMV fund for the last few years. Is that correct?

And and I think the legislature, if we're gonna look at the levels of public safety that we need and want, we're gonna have to look at ways of augmenting that DMV fund because otherwise, we're either not gonna have a DMV or we're not gonna have a CHP. And I don't think we can do with either of those. Although some people might think we can do without the other, but not the CHP. We need our tickets. Thank you.

Agreed. Thank you, senator Sciardo. We're also finding that there are other things that are being paid for out of the DMV fund other than CHP and DMV, and that's also one of the issues as well. Thank you. Senator Durazo?

Yes Just one quick question for CHP. Given the accounts projected insolvency in '28 or '29, how are you going to prioritize against other core obligations funded by the account.

Is that better for finance? I mean, our our priorities are to make California the safest place to live, work, and travel. It's hard to pick one of our priorities over the other, and and very few of our budget is discretionary when you really, it comes down to the discretion I have is how many people I put in that academy to even though I have the positions allocated. So I would defer to my colleague here at finance if he has something further.

Yeah. I I would just go ahead to add that, you know, given the insolvency that is projected out of the motor vehicle account 28-29, we're just gonna need to continue to evaluate the priorities for all of us at those points in times in order to figure out how to best allocate the resources that we have.

Right. I mean, that's why I pointed to you, sir, about what would you use. Right? How would you prioritize given that situation?

Yeah. And the only discretion I have, like I said, is reducing vacancies or increasing vacancies by slowing down the number of people that I put into the academy in an attempt to fill those. It feels counterproductive to do this at a time where every law enforcement agency in the country was struggling to hire people. We have 33,000 applicants this year. It would seem a shame to close that valve off.

Yeah. Appreciate you.

I hope that answers your question.

Appreciate your work. Thank you very much.

Thank you, senator

. If I may, madam chair. Just just to build on Senator Seyarto's comment, you know, if if we assume that these costs cannot be accommodated within the budget because the vacancies have gone down as the as the department is indicating, you know, this is a one time funding request before you now, but the types of costs represented in it really are ongoing costs, utilities, fuel, insurance, those types of, costs. So, it does highlight an ongoing an exacerbation of the ongoing structural problem with the funding source here if we assume, you know, the budget could accommodate these costs this year on a one time basis. But if they truly are ongoing costs that cannot be accommodated this year, it raises the question of how will these be accommodated on an ongoing basis.

Thank you. Alright. I just had, really, a comment and then a question. A comment, sir, you made an excellent presentation as always. The only thing I would add is, we you didn't mention that the CHP had to come in and provide, support to help us with some of the other activities that were happening in the state.

And I believe this CHP, the way that you approach the situation helped to minimize some of the additional conflict that could have in fact occurred. So you also had that on your plate, and then you have upcoming the Super Bowl again, you have FIFA that's coming up, and you also have the Olympics. So that all tells me that this is a, something we're not going to be able to avoid. Vehicles, your vehicles have to be able to run and run quickly, just inherent in the work that you do. It's not like the previous presentation where if a Caltrans, you know, truck, maybe if it, you know, can't go a 100 miles an hour, well, that's probably a good thing.

But in your case, you know, we need the vehicles to operate at their utmost maximum. Hence, I think, you know, obviously, the Department of Finance supporting this request. The only thing I would add, which I think was what Senator Durazo was getting at, and what LAO was just saying, is I think there's kind of a philosophy in government, we'll deal with it later. We really need to begin to have a better understanding of what's coming. And so, I realize that the administration may not necessarily want us to know that you're going to come back and, you know, necessarily want us to know that you're gonna come back, you know, eight months and ask us, you know, for this amount or larger again.

But we really do need to know. So maybe in a future overview that you'll provide to the committee, give us a sense with the give us a sense with the full amount of people that you have. What do you really think the needs are going to be? Because we also then have to look at the DMV budget, and maybe we say, we can't take x out of this DMV budget to pay for high speed rail or whatever it is. And we need to make sure that those dollars are gonna remain there for the anticipated increases that we're gonna have.

So I would just say, give us an idea of what's coming, so then we can begin to make those longer term decisions and say, you know, no. The this other priority that's been indicated is not gonna be able to come out of that area.

Understood, ma'am. Point well made.

Okay. Alright. Seeing no further questions, that completes issue number three. We're gonna move to issue number four, which, still has our CHP, team officers here. Issue four is our Highway Violence Task Force. We're gonna hear again from the commissioner, also our captain, and we have the same representatives for the LAO and finance. So with that go ahead, sir.

Thank you, ma'am. For this proposal, we're respectfully requesting $885,000 for a permanent budget augmentation from the ... to fund seven analyst positions. These are crime analysts to support our continued efforts in reducing highway violence in California. With the support of the legislature, the CHP created the Highway Violence Task Force in 2223 in response to the rise in violent crimes committed that we were seeing on our state highways. The year prior to the team's establishment, California experienced an alarming 477 freeway shootings.

The task force was designed to produce a focused, multi pronged approach to solving this problem through investigating, reducing freeway violence through concentrated high visibility enforcement, advanced technology, comprehensive investigation, and collaborating with our allied agency partners. The task force has been successful. Last year, there were a 179 freeway shootings. That's a 62.5% reduction from the high in 2021. A critical component of these task force are crime analyst positions that we've been funding on a temporary basis.

The crime analysts assist the detectives and the investigators by processing evidence. They review trends. They do complete, tedious analytical work of data, and they are an integral part of the success that we've experienced and the team's success. Freeway shootings, road rage assaults, and quarter based retaliatory violence follows long term patterns, and we do not believe are tied to short term effects like the pandemic. This investigative and intelligence workload to solve cases is continuous.

Long term funding enables the department to retain these trained crime analysts who, frankly, have built this expertise in a niche that doesn't exist anywhere else. Nowhere else are there crime scenes that are rolling down a freeway at freeway speeds and spread over that distance. So they truly are, one of a kind. As California State Police, we realize, the freeways are our responsibility, part of the state infrastructure we recognize. Freeways also serve as California's backbone for transportation of goods and movements of our people.

Highway violence incidents cause closures. They're a statewide economic disruption. A permanent task force and permanent analysts will help protect the state's transportation network and everybody that uses it. We're respectfully requesting the committee's support.

Thank you, sir. Anything else to add? Any of you? No? Okay. LAO?

Madam chair and senators, this proposal did not raise any concerns for for us, but we would like to highlight that this year's proposal is a smaller amount for a more limited set of activities compared to the past years, which range from 3 to $5,000,000. However, this request is for a permanent augmentation compared to the past proposals, which have been limited terms. So the decision before the legislature is, whether to make an ongoing funding commitment to this activity.

Thank you. Mister Seyarto, any questions or comments?

Just to comment, I think this is a really important program, and you guys have been more effective, I think, out there. And I see it just on the 50 here. And we need to give you the tools to be able to get it done. And a lot of people don't realize that the analytical part is almost as important as the tools that you see on the roadway, because that way they know kind of where to focus their energies. And so I've actually put those focus points all along the freeway, so I know.

So I'll slow down. But but no. I'm just kidding. I I I'm not the egregious driver. Okay? So, anyway, yeah, I don't have any problems with this this one, and I think it's really important that, we ensure the funding is done to make sure that the program stays successful because I I know down in my area where I I live, we're gonna need more help down there. And, and I think this analytics will probably show that. So thank you.

Thank you. Senator Durazo?

Thank you, madam chair. Is the task force reducing highway violence?

Absolutely, ma'am.

Yeah. If you could if you could talk about that.

Yeah. The reduction is over 65% since the highest year we experienced in 2021. They're solving cases. To the Senator's point, these cases are solved through analytics. Otherwise, you're just kinda going out and trying to lock into it. And so the data and the analytics and going in with criminal intelligence is helping us solve these cases and drive, the freeway shootings and the violent behavior down.

Because I I see here from the materials that says the prevalence of highway violence has increased, and that's except for the firearms that's that's I I see the reduction. But every other category, homicide non shooting, brandishing, violent crimes, pellet guns, homicide shootings, object throwing, they all have increased over every year. So if you could explain that, because you were pretty confident about saying that there that it has reduced highway violence?

Senator, thank you for your question. The chart that you're looking at right there, we did make some adjustments in what we were tracking as far as highway violence goes. Initially, we were looking at freeway shootings, and those shootings, when we had established this this highway violence task force. Since then, we've incorporated other items to to address, brandishing, domestic violence that's committed on a freeway, objects that are thrown from the overpass onto the freeway. Those items have increased.

Those call outs and the way that we track that has has changed since 2023, which you'll also see in there a significant climb from 2023 moving forward. We did have a meeting with our crime analysts, and we adjusted what that measurement looked like so that we can have a better picture and other objects and other things that we need to address through this highway violence task force.

So in other words, the violence isn't increasing the way we were collecting collecting data. We changed to get a better picture, and so the data that we had available would would show an increase. But just because the way we're kind of digging into the weeds to collect the different types of issues that we're seeing on the highways.

Okay. Well, it it doesn't it's not something that I could pick up if the numbers shown here show increase year after year after year. That's all we have in in front of us, except for that 11 category. So, in your prior funding, you had, included overtime license plate recognition cameras. This is analytics only. So what makes you think that or what brings you to that conclusion that analytics alone will will be effective?

Well, it won't be alone. We're going to continue the other efforts to the license plate. Reader technology is out there, and we're gonna continue that. But we're we're to be frank, we're trying to do our part and be frugal, and this is a need, what we need. And the other things, we're gonna continue and absorb within existing resources.

And then just finally, just one more question. What if the legislature approved this as an ongoing funding, what metrics and and reporting will you provide to demonstrate that you are, in fact, being effective?

Yeah. Great question. And that's our goal in trying to dig deeper into the data that we collect so that long term, the data will show a clearer picture. And so we are positioning ourselves to be able to tell that story at a future time. And so that's why the changes that we've we've made in the data collection so that is our goal, to be able to tell that story accurately.

Well, that that would it would help to, tell us, you know, get to us information as to what metrics and reporting you'll you'll provide to us. What metrics and reporting you will use?

We we will get back to you in specific on how we'll do that.

Thank you.

I don't have any specific questions. I'm glad to see I'd rather see, you know, you telling us, as I said in the previous issue, I'd rather see you tell us what we're gonna need ongoing to be effective than this one time here, one time there. At least we can plan. I have had the opportunity to see this in operation. I was on the 110 freeway going north, and apparently, there had been a reported shooting, and they literally shut the freeway down all the lanes.

We didn't move for almost an hour, and multiple, you know, Japanese folks came out, and they were walking the freeway trying to, you know, find the bullets and the different things that might have been used. So I have seen this in operation, and I could imagine if you'd find something and, you know, you have the same bullet, you know, here on the 110 Freeway that you had on the 10 and, you know, connecting the dots. So I actually have seen this in operation. So, thank you for being here and for the presentation today. Seeing no further questions, we're gonna go to the next issue.

But before we leave, mister commissioner, do you have something that you promised?

I do.

Okay. So for the public, if you've never seen a Challenge Coin Exchange, you're getting ready to see one. Okay. So for the public, if you've never seen a Challenge Coin Exchange, you're getting ready to see one.

I know. A, when someone gives you a challenge coin, they don't just hand it to you. They gotta give it to you, because it's the challenge that you're working together and, you're in one fight. And you understand what they do and they understand what we do. So, that's what a challenge coin exchange is. Thank you. Thank you, sir.

No. It it's supposed to have the impact. That that's a part of it. Yeah. If you don't feel it, you didn't get it. That's what that means. No. You were the sergeants before? Yeah. No. I didn't, but I I think they felt I was safe.

We're gonna go on to issue number five, which is the state to state verification system, s two s project, and trailer bill language that's, being requested. We have before us, speaking of DMV and DMV funding, we first will hear from our director Steve Gordon and also Lee Scott from the Department of Motor Vehicles. And it looks like we have the same representatives from the LAO and the Department of Finance. No. We have someone new with the Department of Finance here with us. Please go ahead, mister Gordon.

Mister Scott. Mister Scott. Yep. So good afternoon.

Oh, mister Scott First. Okay.

Good afternoon, chair and, members. Nice to see you. My name is Lee Scott, chief budget officer for here for the California Department of Motor Vehicles. Here with me today is director Gordon. So thank you for the opportunity to be here.

The proposals before you, State to State and DXP, are focused on maintaining core DMV operations while improving service delivery for Californians. State to State is a federal compliance requirement tied to the Real ID Act 2005, ensuring Californians can continue to use their identification for air travel and access to federal facilities. DXP is our modernization effort to replace aging legacy systems that support the DMV's core business functions. The vehicle registration phase is on track to be completed by the end of the calendar year, which is critical as it supports the collection of roughly $15,000,000,000 annually that flows to state and local programs. We understand the committee's focus on cost control, privacy, and accountability, and we are committed to delivering both proposals in a responsible, transparent, and results driven manner.

Happy to walk through each proposal and answer any questions. Thank you.

Thank you. Do you have a presentation?

Together. Yes. So we reviewed the DXP proposal, and it did not raise any concerns for us. The SDS. Apologies. SOS project also did not raise any concerns for us. The DMV explained that it plans to only share the federally required data to ensure California's compliance with the Real ID Act.

So Thank you. No? Okay. Senator Seagrdo, you're up first.

The state to state verification system is is not a a, optional item. It's a must have. Right?

Right.

And our and our deadline is February?

'27. Correct.

So okay. And you're you're anticipating what kind of cushion are we gonna have when we think we're gonna have it done?

So we're gonna do live testing this summer. That that's the plan. We were able to secure funding in the current year. I think we got it approved in Budget Build Junior around September. That was allowed us to get us off the ground and have it built.

CDT worked very closely with us to make sure that we're ensuring exactly all the correct modifications are right. Only ensuring what the federal requirements are, what the five pointers we're gonna use, and how we're gonna interact with other states. And so the goal is to have it done and have our positions onboarded in the budget year, and attack as many duplicate records as we possibly can, and make sure that we are communicating with every state as quickly as possible not to create any backlog. And so the amount of funding that we have requested should ensure a successful project.

When was the when did this thing start? It's better.

I'll give you auto yeah. Go ahead.

Well, I think you have to go back. Steve Gordon, director of California Department of Motor Vehicles. It's good to see you again, Cinder. The you know, this act Real ID Act was in '20 in 2005. So state state is an offshoot of two of of that investment.

Real ID started rolling out in 2015. So it's been alive for about a decade, and state state's always been a requirement. We signed an agreement with Federal Government in 2018, the state of California did, and to be able to go on the state state system. So it's been around for a while. So couple of decades of the program, you know, Real ID has been around for at least a decade since 2015.

As I mentioned, California now has 22,000,000 and some change Real ID holders today. Two thirds of our driver's license and ID card holders are holders of real IDs. While it's as mister Scott mentioned, you know, it's this is a compliance act for the Federal Government. Two thirds of our people rely on that to get into federal facilities, airports, and so on. And people, of course, rely on the driver's license or rent a car and so on to make sure the identities are are valid and the the veracity is high.

Why why have we waited so long? We're coming down, like, to the wire.

That's a that's a great question. It's a

I told you, every once in a while, I have great No.

This is this is, like, a couple of them the same day, so congratulations. Yeah. Look. It's it's a it's it's it's complicated. It's technical, the approach.

We're the largest state. So there is some push and pull going on at the at the federal level. And, of course, we belong to not of course, but we belong to an association called AMVA, American Association of Motor Vehicle Administrators, a very exciting group. But part of that is, you know, we're the largest state, of course, with 40,000,000 inhabitants. Many of those residents having some sort of credential.

So in some sense, there's been a caution amongst the association to make sure California went last, because you can imagine as we dump 40,000,000 people in the state into the system, there'll be duplicates as mister Scott mentioned, and other states are gonna have to deal with those. So there's been this push and pull about should we go earlier, should we go later? But the point is that we're at the very end of of the implementation date. So we we need to go. We need to go now.

We are the last state to enter. But it is that bow wave as California enters is gonna cause, you know, challenges for Texas, for Arizona, for Nevada, all of our neighboring states, maybe where there's some migration in or out. So there's, again, some push from the association to push us out a little bit. But but the fact of the matter is that we're out of room, and we need to make sure that we go now. So it's

And I I completely agree that we have to go now. I just things that are this complex. I get a little concerned because frankly, the state hasn't been and not just the DMV, but the state in general, isn't very good at, complex type issues and getting them done, in a compressed time frame. And so we've compressed the time frame as much as we can. And so I'm hoping that we can get some updates along the way that we are on track and that a bunch of us aren't gonna be able to fly after February 18 next year.

Fair statement. And I would even add to that. Yeah. Coming out last, you know, a lot of other states that we worked with, a little nervous that California was gonna come on board. I mean, we're dumping millions and millions of records.

And so we've seen the automation working in other states. We're trying to see, like, a minimal amount of touching as much as possible, and what worked and what didn't work. And so being the last state does have a little bit of a benefit to seeing that we get to gather all the information and implement what is truly successful from the state that went one versus the one that went 50.

Yeah. I'm glad about that part. I just Mhmm. I just get a little nervous when we're that close to the end. We're nervous. Thank you.

Alright. Thank you, senator. Senator D'Orazo?

Thank you. Good morning. The can I is it correct to say AMBA? Can I say that?

Yes. Mhmm. AMBA.

Okay. Says that the Federal Government did not have access to state to state data through the state to state, process. So has AMBA ever provided access to real ID information to any federal agency?

Not to my knowledge, senator. It's, you know, it's meant it's in it's in the name, state to state. So it's it's meant for a neighboring jurisdiction when somebody comes in to apply for a license to be able to reach out when there's a conflict, when there is a concern that maybe there are multiple Steve Gordons and they're trying to, you know, deduplicate the system and cause the state to reach out to another state to deduplicate the process. AMVA is really just the pass through. They're the holder of this connector.

They call it a pointer system for me to know that the other Steve Gordon is in another state. Federal government is not involved in any way, shape, or form other than this is a federal requirement for Real ID certification.

So that Kinda leads me to my next question is, do federal agencies have access to that through some other means? Do they have access to your data?

Not to my knowledge.

No. And the Real ID Act requires a state to bulk upload all driver's licenses and ID records. How will the a b 60 IDs be accounted for in this system? And is it possible based on the information that is uploaded to determine what type of driver's license or ID someone has?

In California and they answered in reverse order. In California's data, there's no differentiation for a federally non compliant card from somebody who has legal presence and somebody who does not. So there's no differentiation in the data. So there's no way to be able to tell by just looking at the data that it is a particular type of card if you're in a federally non compliant card, which would be somebody in the a b camp. So that's the first part.

There's no way of noticing that by just casually looking at the data. So as the data gets uploaded, there's no way to differentiate in that system, which is which. And just to add to that, since we know people with an a b 60 categories often do not have a Social Security. Some some do as you know, some people had legal presence or or didn't or or obtained it, so they're still in that particular card. But as that information is uploaded, we're only loading the last five digits of the Social Security, not the full.

So you're gonna need you're gonna need first name, last name, date of birth, and other criteria. In addition to Social Security would be a tie breaker if you can't determine if there's a duplicate based on the other criteria. So it is gonna be safeguarded. Of course, it's

transmitted encrypted encrypted in transit, encrypted at rest. It's restricted about who has access to this to your Federal Government question. So very limited access even to the states, and it's on a it's on a one by one basis. So if another state is trying to determine if there's a duplicate Steve Gordon, you know, that they'll have to do it one at a time. And and that's not a way that you would expect anybody who's trying to do anything nefarious to do it, you know, one at a time.

It's not not a super effective way. So it's intentionally made to go slow. It's intentionally intentionally made to be careful.

Okay. Thank you.

Thank you.

Okay. Thank you, sir, for being here. Why are Social Security numbers included in DMV information anyway?

That's a great question. It's social security number, as you know, is included in a lot of things, including when I got hired on the state, I've never written my social security number down as many times as I did on state forms. So it is a common

But what does it have to do with my ability to drive?

It has nothing to do with your ability to drive. But it is a common element across the states long before, you know, we got to this point to the senator's point that decisions were made about the information that was available twenty years ago. Social Security number was in the mix because it was a common element. As much as we wanna get Social Security number out of these systems and wanna use an alternative strategy, you know, the rest of the nation is not there yet today.

Okay. And, why would you provide five digit numbers? Because it's pretty common that if you call, you know, you're gonna buy something or whatever, they'll typically ask you what are your last four digits of your Social Security number. So given the fact that hacking does occur, hacking does occur of government systems, why would we include even more numbers that could put people in a vulnerable position that those numbers could then be taken to be used to be hacked and used in another way.

That's right.

So Why wouldn't we just provide three numbers versus four or five?

There are many design choices that were made with the system. I'm not quite sure why the architectural decision about using five versus four versus three. I I agree with you. Most most of us use when we're inquired about a social security. Give us your last four of your social.

Very common. My guess is they were trying to, you know, reduce the amount of duplication by using five digits versus four, give you a greater level of precision so you can continue to do deduplicate without actually being rejected into a manual process. So I think they're trying to reduce cost, reduce the labor of deduplicating the transactions, meaning that they can match more because there's more precision in the numbers in in front of them. That's as best as I can deduce from But

if no other entity is requiring five digits, why would we? This is the first I've ever heard of someone requiring five.

I don't have an answer for that, but how the system was architected, ma'am.

Who's requiring five?

This is the the association that we belong to. So it's 50 states, DC, various protectorates are part of the system and and part of the governing body for AMFA.

Okay. So, what governing authority does this association have?

It has no governing authority, ma'am.

Okay. So a nongoverning authority is requesting that we provide five digits?

Member states who run the association architect to the system, and they've agreed that the best way to reduce duplicates and reduce manual processing is to have an architecture that includes those five digits and many other facets. So we were at that table as well. As I mentioned, 2018 is when we signed the agreement. California agreed to this, in 2018. And that is how

Who agreed?

My predecessor in this role is is a signatory

So the legislature didn't agree?

I don't know exactly how that process works.

Okay. Can you let us know whether the legislature actually agreed or the governor agreed or just the head of DMV agreed?

I would be happy to

What authority does California have to audit how the information will be uploaded and how uploaded and how it will be used and who will have access?

We have full contractual rights to do all of those things, including alerts and notices when, you know, incidents occur where there may be something occurs that appears to be a typical require request of particular data, if you have a request pattern, all of those things are opportunities for us to trigger and alert on interesting activities. As you would do with, you know, looking at a if you were a bank, you'd be doing something very similar. You're looking for fraud signatures to make sure that if something bad has happened, you can get notification earlier. So we've been working with Ambon, making sure those are identified and those are effectuated by the time we get onto the system.

So how many more people are you gonna need to help to do that?

Well, in in the broadest sense, most of the resources here are actually to deduplicate the data, and they're in the first couple of years. As I mentioned, as California enters, you know, our 40,000,30,000,000 of us have credentials. As they enter that system, there's gonna be a large deduplication effort. Technology will do a number of those deduplications, but other states that have gone through this process see about ten percent failure rate of people that have moved to another jurisdiction or people from another jurisdiction that moved here, and we have to be able to then figure out which one is the right Steve Gordon, in my example, and which one is the which state has the last license for that. So the the the plan is there are several there's a 100 and I don't have the exact number in front of me, but I actually do have it in front of me.

But there's, you know, a 100 or so people in the in the first year than another 100 or so folks in the second year to make sure we actually get through the deduplication process. Then we are then we're on a regular ongoing run basis. We're going to learn a lot in that first year based on the number of people that were based on what we've learned in that first year about how much work we're gonna have in the out years. So there is some investment.

What options does California have for enforcing violations of any agreement or contract we make with AAMVA regarding uploading wholesale of the information of millions of Californians?

There's contractual, obligations and, you know, legal legal options to hold AMVA accountable as well as our peer states accountable if if those were to occur. But there's no way to download or upload other than a state uploading our data into the system. I've probed that point many times with the chief technology officer of AMBA, because I I too am concerned that we wanna make sure the system is robust, it's protected, to make sure that there are no back doors that people can get information that they should not have.

Is the attorney general aware of this program?

I he I would believe so. Yeah. But we can Yeah. I mean, I think I I think it's important to note too, madam chair, that it's not optional. You know?

So it's it's part of the Real ID Act, and the consequences are that, you know, your Real ID wouldn't be compliant, that Californians wouldn't be able to board a plane or be able to go into federal facilities. We're also the fiftieth state like we were sharing earlier, so we have asked all, not all, but many other states in our in our process in the current year. So far, we haven't seen any problems, but you have to participate in order to have your real ID be compliant. And so to your point, if any other state ever heard of any misuse or problems, you know, we would definitely collectively be talking to each other, and then evaluate it or contract to pull back from there.

Well, isn't Oklahoma suing regarding this matter, the legislature?

I'm unaware of Unaware of that. But I can But I will I can check.

I have a question here. Is the administration considering this option or suing to obtain it as legislators are doing in Oklahoma?

I'm unaware of the lawsuit. I mean, Oklahoma is on the system. I mean, 44 jurisdictions plus DC, so 45 jurisdictions are on the system today. Oklahoma is one of them. I'm unaware of any legal action by Oklahoma or what that legal action would be based on, but I will follow-up and find out.

Yeah. I can work with your staffers to

If you could check into that.

Absolutely. Yes. Thank you.

Alright. My next question is, who governs the AAMVA, and what decision making authority do they have?

So AMVA is member driven. So we are a voting member as part of AMVA. We are a funder of AMBA, as are 50 other jurisdictions plus the District Of Columbia.

So could you potentially, as a member, go back and say, you know, our legislature has a concern of releasing social security information of Californians, would you be able to make a motion and gain support to potentially either avoid providing Social Security information or minimizing the number of digits that are provided?

Senator, we have made various suggestions to the AMBA board as well as the state state operating committee regarding different strategies so you can improve privacy preservation. But we have been in ineffective in actually being able to convince the other jurisdictions that changes such as you're suggesting would be the right approach. We are gonna continue to try those, so we think it's the right approach. We don't believe Social Security numbers should be as pervasive as they are, but they are pervasive for for a multitude of reasons. But we're trying to do our best to make sure that in fact that over time, that will continue to remove those as unique identifiers in American society.

So you had a concern as well?

I think anybody who has a social security number that's sharing information, of course, would have a concern.

Okay.

So I'm not here as a denier. I'm here to make sure that we can do the best we can, but we also this is a compliance matter, and we need to make sure I'm I can keep both of those hats and we're you know, both of those thoughts trying to improve for the future, but also making sure that we stay compliant today.

Well, it's a compliance matter, but I think it's debatable of whether an average California driver, was under the assumption that by providing this information, it would be provided nationally for use of a non-governing body that we really don't know how could be utilized.

Yeah. And and in addition to that, I mean, the goal is to try to have only one Real ID as well. And so when you're moving across other states, the goal is not to have multiple IDs in your pocket. And so as many as the five pointer information can identify immediately that you are who you say you are, then states are communicating with each other to say, I moved to New York, and I'm going to become a resident of New York, and I go into DMV office, and I say, hey, I'm I need to get my Real ID here in New York. It's allowing New York to then communicate with California to say that my driver history and all my information will now be housed in New York, and not in California anymore.

And, you know, oddly, it was a lot of states weren't talking to each other. It wasn't kind of like an order based system. So the goal is to make sure that we can get that information to New York as an example, and that we will not have two IDs, that you're not boarding a plane with two different identifications, and that your information I'd be a little bit repetitive, but your information should flow with you to the next state.

Is this the first time you've informed the legislature of an attempt to provide all Californians social security numbers to this organization?

I don't believe so. No.

We because we we proposed to to start building the system in the current year. So when the budget passed in September and Budget Build Junior, this was a topic of conversation. And the goal at that moment was to

With the legislature?

Uh-huh. Yeah. It was not.

Which which depart this this body or which one?

Correct. Yeah.

Okay. Last question. We're hearing a lot about a deadline of 02/16/2027, which is now less than a year from today. Is the state backed by any federal statute or regulation or just this member body that's asking for it? And, what happens if states don't comply or they're a little slow to

So the federal statute is, let's say, vague with respect to a particular date. So I have personally spoken with

They're vague to what?

Vague with respect to the date you mentioned. Is there a particular hard date? But as I mentioned, you know, California signed an agreement back in 2018 to effectuate, you know, the Real ID act and make sure that in fact that we're compliant including state to state. So the agreement we have with the Department of Homeland Security as well as the the Transportation Security Administration is we have an agreed upon that date, which is the February date that you mentioned, and we're working with AMBA to actually be able to go through the structure testing and all the steps it takes so we can go live on that date. So it's a multi party thing that we've agreed to.

Is there a particular statute that says you have to be live on this particular date? No. But that is the date we've been agreed on, we've agreed to. And the question you ask, well, what would happen if we didn't? There's the risk of, being out of compliance with with with the federal with the federal law.

We could potentially, you know, as the Senator mentioned, we could, you know, have have chaos at airports and so on. As you know, Real ID is the primary, identification used at an airport just for most common people to to get in and out of of the transit authority. That's specific.

Well, you can also use passports, and I believe passports are providing on your passport your Social Security number.

Passports are you know, passports to adoption is around 50% is what I I understand at the nation.

That's not my point. My point is you can also travel with your passport. That can be a means of identification, and the passport is not, I don't believe, providing your social security number. My questions aren't regarded to travel, safety, all of that. I'm with you.

My questions, if you notice, have been all directed specifically to providing Californians social security information to a nationwide database that they're not aware of, and there's no official managing this other than an organization which you and other DMVs happen to be a member of. That's what I'm saying. And I think Californians are entitled to at least know where their information is going and why, and whether they anticipated that at the point of completing a Real ID, because they're not anticipating that, for example, with a passport to travel. And a passport can equally be used to travel. So that's why my questions are are very direct, specific to providing personal, Social Security information.

I understand. Thank you.

Thank you, sir. Okay. Any other questions? Yes. Senator Durazo.

I, I, I'm sure from last year and previous times that you're aware that some of us have a big sensitivity towards sharing information, whether social security number or if you have an 8060 driver's license. There's over the years, we've built up a lot of trust on that front. And now there's issues even with voter ID requirements. So this trust is really important, fundamentally at its core, important to us. And we need we may be coming at you with different questions, but we also need you to be proactive with us.

If you think there's an issue that would jeopardize the privacy and the information and the trust that we built up, then we expect you and we need you to be to put that on the table. We we we can't well, we didn't ask that question or we didn't ask the right question. Fundamentally, what we're getting at is how to protect the privacy of the Californians, and it's either Social Security or it's 8060 it's voter IDs. There's a number of ways. And some of us are very I don't wanna say nervous, but we're looking out for a federal administration that has a very aggressive deportation agenda.

We're not gonna we we can't participate in something like that. So we expect you and need you to be, you know, fully cooperative and proactive on this issue.

We will be there. Thank you for the question.

Thank you, Senator Durazo. We're gonna this will conclude this issue. We would like to follow-up with you probably a little bit more. Please do follow-up with the attorney general to make sure they're aware of this request and what's happening. And before we go to the last issue, I wanna establish a quorum. So we didn't do that in the beginning. So let's make sure to do that while everyone is still here. With that, our consultant, would you please call the roll? Eunice?

[Roll call]

Thank you. Thank you very much. That concludes that section. We're now going to go to our last one, which also includes the DMV. First, we're again going to hear from Director Steve Gordon and Mr. Scott from the DMV, and then we have the representatives from the LAO and Department of Finance. Please go ahead.

Yeah. So like as I entered into my, my opening remarks, we're here to discuss any questions that you have on DXP. It's a continuation of our replacing our old, legacy system. We are finishing up VR by the end of the calendar year, and we hope to have DL up and working as well. Any questions that you may have, go ahead and ask them.

So, yeah. So as as I kinda say in my opening remarks, DXP is our modernization effort to replace agents in legacy systems that support the DMV's core business functions. The vehicle registration phase is on track to be completed by the end of this calendar year, which is critical as it supports the collection of roughly $15,000,000,000 annually that flows to state and local programs. We understand the committee's focus on cost controls, privacy, and accountability. We're here to answer any questions that you may have.

Thank you. Mhmm. Senator oh, I'm sorry. LAO.

And thank you, Madam Chair. We reviewed this proposal, and it did not raise any concerns with us. The DXP project is essential to improving the quality of service that DMV provides to Californians. The old system is very outdated and in danger of losing functionality. However, the project has also experienced experienced significant cost cost overruns and delays of since its beginning. For this reason, the legislature's oversight over the progress of the DXP project will be essential in the next few years.

Okay. Department of Finance? No more comments? Alright. Thank you. With that, Senator Seyarto?

Thank you. The other day, we had a hearing. I think you remember the hearing. There were some concerns expressed about efficiencies at the DMV and thing. This project, once completed, that address a lot of those type of concerns.

I think this project, once completed, does address stitching systems together, so you don't have, as I was explaining, system a trying to talk with system b via paper. So, yes, it does unify many of the systems that are today very disconnected.

So it'll make our lives easier when we're dealing with the DMV.

Everything we've been working on since I've been at the department is to make our lives easier, keep things on a mobile device, keep you in at your house, on your car, on your couch so that you don't you can do anything you wanna do with the DMV from where you are. That's been our objective. Some things are harder than others, but that's the objective.

Okay. And and this should be this will get done by the end of the year?

The vehicle registration? Yes. Okay.

Thank you, Senator. Thank you. Senator Durazo?

Alright. Alright.

Speaking of service, how will this actually help improve that customer service?

Well, several things.

Softball for you.

Oh, good. Well, I mean, everything we're focused on today, I mean, we're measuring customer satisfaction on every transaction and every facet of the business. So we have a really good baseline about how people engage with us and and how satisfied they're. And surprisingly, despite, you know, us being a tax collector and the DM of DMV fame, people are very happy when they engage with us. Our you know, we have a 5.0 scale.

We're seeing an excess of 4.4, tending towards 4.5 satisfaction on a 5.0 scale. So that's good. That's a that's a good baseline. We have a good benchmark. But everything we're trying to do now is to better anticipate.

When you come to us for service, we wanna make sure we know who you are, what vehicles you have, driver's license if you need, what what is up for renewal. And today, the systems are isolated and siloed, and sometimes we have a hard time connecting the left hand with the right hand. Sorry. I should have said it but said it this way. But the idea would be to make sure when you do engage with your constituents, engage with my parents, whatever who engage with the system, we wanna make sure that we can best anticipate why they're there, anticipate what they're the next thing they need to do, and make sure they they don't have to do a number of data entry steps to be able to do something or fill out a form, God forbid, to to give us information we already have in the system.

So this will help unify those systems, help simplify the transaction, and hopefully be able to actually reduce the cycle time of when our our staff needs to do things. And, of course, reduce the cycle time that you might want to spend, you know, on d and b task. Many people don't want to spend any time doing d and b task. We wanna make sure it's just easy for you and be effective. I think we have a lot of really good accomplishments over the past five years where we've really driven cycle time and efficiency and effectiveness of the of the of the product line so that our processes work and and serve the constituents.

This is the next building block. But as the LAO mentioned, I mean, the systems are dated. The systems we're talking about here are in excess of 60 years old. There are very few people that know anything about them. They're the people that actually helped design them.

I have all passed many of them passed away, so it's very hard to get advice about what were you thinking back in 1970 or 1975. So it's critical that we get them onto a standard platform, get them on a modern platform, so we can build and and hopefully create the agility that you're looking for as legislators, so we can be able to do things in a new way and do them quickly.

I'd even add on to that too. I know a lot of the focuses on how it's gonna impact our customers or even our employees, you know, more transactions online or having things more, simpler. But also, any type of legislature wants to introduce a bill that's gonna have a fiscal impact, and that that eventually would turn into alleged BCP. With having it tied to the legacy system is very expensive, you know, and sometimes it becomes kind of adversarial back and forth of why I really wanted to fix this part. However, it's gonna cost x amount.

With a new system, we're hoping to have cost be a lot more minimal if if we can, and then have it be that much more efficient. So it should be You know, when we're looking at the MVA, we're not gonna add a high cost on a legacy system, whereas if you work on a DXP system, it could be half even, you know, 80% less.

And the the the cost has almost doubled, right, from the original estimate?

Yeah. I mean, if I

Short answers to what what happened here and

what Yeah. So when we started the cost, it was back to, like20192020 COVID hit, that we had, like, 60% increase in IT market cost, inflation, vendor pricing. I mean, things have just astronomically gotten more expensive. I the cost of living for, you know, most Californians, you could tell, you know, things are a lot more expensive than they were even 78 years ago. But when you're dealing with large scale project of this size, cost ticket lot more expensive.

But I think I think what I think Lee also shared, I think, with with the the adviser committee here is that the way the state does contracting, you know, it's a you have a prime contractor and and they do a fixed price, and you have things that are sixty years old. And it's like bringing your car that, you know, hasn't been looked at by anybody or even yourself into a doctor. Do you haven't had any medical treatment or have any no medical record? It's very hard to have a fixed price contract with a relatively low risk profile. So you we do see that when we go to bid and we seek a prime.

You sometimes get inflated prices because of the fear of the unknown. They're afraid when they open that door to see what's in there that they may not like what they're gonna see. So that's why I think there's been some challenges with price escalations because of the way the state does contracting business. So there are there's work we're doing with, with GovOps and others to see, are there alternatives we can use as we modernize these systems to reduce that that that that multiple that we we we have seen in in cost growth so we can actually still get things done and we can reduce the risk for the marketplace, but at the same time, get more done with with, you know, less dollars up at stake.

Yeah. I asked that because if when if we approve something like what it was originally five years ago, $388,000,000, it's it's a different decision.

And the the budget and to to look at it and then turn around saying, now it's 767,000,000. So there's got to be a better way. All those things that you said are pretty normal. I mean, except for the pandemic, but everything else is pretty normal. So when you come up with your request for for funding, this project or that project, it's got to be closer than, you know, half half of what or double the the amount that you originally requested.

Yes.

We can't function like that as a state just to fear that it's gonna be double what you're asking for.

Completely agree. And, again, we're working with with gov ops and others to make sure that we think about the the the pow process, the, you know, project approval life cycle, reducing those steps, and making sure that, in fact, we can streamline the steps that are value added I mean, that are non value added and, you know, focus on the things that are value added. And part of that is the way that we actually, you know, procure these services where they are fixed price. And and, again, fixed price, old systems, lot of risk. People are going to be very cautious about how they bid on those, and there's going to be a risk multiple that will be higher than we want to do.

So I take your point, and it's an opportunity, I think, for the state, and it's an opportunity for us to make sure we can derisk. A matter of fact, as we've moved into this next phase, we've actually broken into smaller modules. So the risk is much lower. So people can see very discrete components that we're building. So they know exactly what they're bidding on and there isn't the fear of what's necessarily hiding in the closet.

So we're going to try to break into smaller pieces. We believe that will reduce risk and reduce cost and also increase speed.

So has the TV series helped you or not?

I've watched the first one, and after that, it was like, I don't know. But but thank you for asking. Not a lot of technical insight there, but thank you.

Thank you, Senator Durazo. Just one question for me. Last year, the DMV, you requested a delay in the DSP improve the department's ability to implement legislation that you have on the table and allow you to be more agile and responsive to potential improvements in the DMV process?

Yeah. Don't have a scientific algorithm for you, but the the intent of actually getting as a platform as a service using commercial off the shelf technology and configuring versus building from scratch gives you that agility. Today, you can the the system we're talking about here that we're replacing is in the assembly language. The assembly language is something if you Google it, right, goes back to kind of the early days of the mainframe. This is what people used to code bit by bit because they're trying to conserve memory utilization.

So now that we're we're past that, there's all these layers of extraction that are built on top of there. It makes it very easy for us now to add a configuration and add a new thing. We have to make sure we change our processes and our policies and our approach, so we take full advantage of those configurations. And you add, you know, some of the, you know, advanced tools on top of that. We believe we can go much, much faster.

So doesn't mean we we would not advise to have, you know, rapid expansion of maybe questionable legislation, not our not our lane, but but the idea would be for the things that need to get done, we wanna have the agility, you wanna have the agility to do, we wanna be able to respond quickly. So you can have an estimate that's reasonable, things can get done, you know, in your term. You can see the results in your term, and that's really one of the design goals of DXP.

Thank you. My last question for you, I did sit on the transportation committee a couple weeks ago, and the we were talking about the, ignition lock, breathing in with the DUI driving. And the federal the person representing the federal, group that funds it said that sometimes they do include it if they're asked. And I said, have they been asked? And they said, no.

So I just want you to know you have a letter forthcoming to you requesting that you ask. So then now maybe they'll consider getting some of their support.

Yes, ma'am. We've received, your letter and I think

Oh, see how fast we are? We're And you you know that you got it. I'm impressed.

I read it again this morning.

Alright. Well, you get you get a smile for that. Thank you, sir.

Thank you.

Okay. Thank you very much. That concludes the sixth issue. We're now gonna move to public comment. To ensure that everyone has a chance to be heard, please limit your comments to one minute. Thank you very much for everyone participating and for the public for your patience. Having so with that, we'll have you come over here to the mic, to your right, my left. Yes, sir.

My name is Edward Hasbrouk, and I'm with the Identity Project, a national human rights project focused on identity requirements. The point of this, budget proposal is to, 4S so called S2S, is to upload information about every Californian's driver's license to the SPEC's national ID database operated by AMVA. And the rationale for that is a rationale of preemptive capitulation to a lawless overreaching DHS ultimatum and threat. As with other lawless or suspect DHS threats, it's important not to make that choice without looking first at the implications of both sides. The threat is that the DHS will retaliate against Californians, by interfering with their right to travel.

If California doesn't comply with some set of, requirements which are actually optional in the Real ID Act. I my many of the specific questions asked by the senators are addressed in our detailed written submission. We'd be happy to discuss those in more detail. But I wanna highlight, a couple of key issues of either compliance or noncompliance.

Sir, your time has expired. If you could summarize and then you can always submit your comments to the committee, which we will review.

I'm sorry. Very briefly, compliance would require uploading all information about all licenses, including a b 60 licenses by the plain language of the statute, and that information would be and might already have been accessed by by federal agencies without the state's knowledge. On the noncompliance side, there's no evidence that there's been any investigation of the possibilities of pushing back as California has successfully pushed back against other lawless DHS threats. Thank you very much.

Thank you. And thank you for your information. Becca Cramer.

Becca Cramer on behalf of the Electronic Frontier Foundation. EFF is likewise extremely concerned about the DMV's plan to participate in the state to state verification service pursuant to the federal Real ID program. Of the very many reasons for concern, I'll focus today on the fact that DMV's plan requires that California's information be uploaded to a database specs that is not governed by California or by California laws that protect individual privacy. Constitutions governed by due process and other rule of law norms. AMVA is not.

AMVA is carrying out a government task of identification verification, but is not meaningfully transparent. Many documents about specs database and the s two s system are not available for the public in the first place. We therefore do not know who will have access to California's information or driver histories. What restrictions, if any, bind those who participate in the s two s system as to how they can use California's personal information?

Please summarize.

Thank you. How often federal agencies have received the information and what risks California information faces once it's uploaded and we lose control of it. We respectfully urge you to obtain complete and public answers to these and other questions before beginning to even consider embarking on this one way journey of transferring our information to other states.

Thank you. Yes, ma'am.

Good afternoon, Chair and Members. Symphoni Barbee on behalf of the ACLU California Action. I'm here to respectfully oppose the budget change proposal in issue five to implement the state to state verification system for Real ID. The disclosure of personal information that will be shared with federal authorities goes against the very protections California has worked so hard to ensure. The state to state system is not immune to breach.

This information is shared with non state actors, creating an opportunity for massive harm as other states that are participating will also have access to this hostile to California's robust protections. For these reasons, we urge the committee to reject this budget change proposal. Thank you.

Thank you. That was excellent. Forty two seconds.

Good afternoon, committee. Mark Fucsovich on behalf of Streets for All. First and foremost, we're supportive of the DMV systems upgrades. We think they're long overdue. Wanted to say, so as an LA based organization, we've been really alarmed by the the street safety crisis that we're experiencing across California that CalMatters is only just highlighting.

At the DUI hearing, Senator Archuleta looked dead in the eye of the first panel and asked, what would you do if you waved the magic wand? And at least two of the three panel members said, we need better infrastructure. We need safer infrastructure. Our active transportation fund, which I think has a terrible name, by the way, this is our premier pot of money in California, is underfunded. It funded about 25 or 30 of 270 applications last year.

This is a premier pot of funding that will save human lives in the state of California that we need to be funding. And you have two reports, by the way, that came to the legislature this last year that recommend more money for it. Both the Transit Transformation Task Force see it as more first last mile money, and the Mineta Transportation Report on e bikes are recommending more money on this. We desperately need more infrastructure money in addition to DMV changes. We can't fix this through the penal code.

Thank you.

Thank you.

Good afternoon, committee members. Sofia Frico, Coalition for Clean Air. Echoing, my colleague's comments so that investments in active transportation can save over 200 lives, reduce GHG emissions by almost a 100 metric tons, and improve public health accessibility, and reduce transportation cost burdens for all Californians, and thus, we requested that legislature allocate an additional 200,000,000 to the active transportation program over the next five years. The ETP program has funded over 800 projects since its inception, 85% of which go to directly benefit disadvantaged communities. At the same time, this program was cut last cycle and had only slightly above 150,000,000 to spend on almost 300 applications that it received.

And this is why the Sacramento b article recently described the ATP program as being just a hairless competitive than admission rates for Harvard University. And we asked for additional funds for the program to ensure it provides long term benefits for Californians, such as improving air quality, reducing climate emissions, reducing vehicle collisions, reducing traffic, and providing transportation alternatives for those who cannot drive or cannot afford a vehicle. Thank you.

Thank you. Fifty seconds.

Good afternoon, Madam Chair and Members. Christopher Sanchez with the Mesa Verde Group here on behalf of the Central American Resource Center, CARES, and on issue five. First, I wanna thank the Madam Chair and Members for the comments that they made related to their privacy. For us, we represent lot of Central American communities who have different immigration statuses, some that are legal today and not legal tomorrow, unfortunately, because administration has pulled some of those back, so we share our concerns, related to, issue five, and we'd love to work with, the committee and other stakeholders to make sure that we get it right for all Californians. Thank you, Madam Chair.

Thank you. Excellent. Thirty seconds.

Good afternoon. Linda Wei with Western Center on Law and Poverty Poverty, me, would like to align my comments with the previous speaker as well as express appreciation for both the Chair and Senator Durazo questions related to the protection of this very sensitive information. We know that the the the, that this, Federal Government has been hostile, and so any opening up of of of data sharing is something that we are concerned about and look forward to working with, the the committee as well as the administration to to ensure that there are, guardrails. Thank you.

Thank you very much. Thirty two seconds.

Good afternoon, Chair and Members. Anieli Martin with the California Immigrant Policy Center. Also wanna align my comments with my previous two colleagues. California has taken important steps to protect the privacy of DMV information and prevent it from falling into the hands of ICE. However, California's entry into the state to state verification services puts this progress in jeopardy.

We have strong concerns about the sharing of personal information such as such such as Social Security numbers. The Department of Homeland Security or other federal agencies could attempt to access this information that could identify individuals as immigrants and be used for immigration enforcement purposes. We have seen recently many attempts by DHS seeking information held by CMS, the IRS, and other agencies in order to execute their mass deportation agenda. We need protections in place now, and we look forward to working with the committee. Thank you.

Thank you.

Good afternoon, Madam Chair and Members. Mike Sharif with Fanslau Government Affairs on behalf of the Safe California Roads Coalition, respectfully, requesting the committee and legislature to fully fund the all offender IID program as the corresponding bill, AB 1830 by Petrie-Norris, moves through the process. Thank you very much.

Thank you.

Good afternoon, Chair and Members. Kelly LaRue here with the SteerSafe Partnership. I'm here to highlight the important, role active intelligence speed assistance or active ISA can play as a traffic safety tool. We appreciate the discussion today regarding the motor vehicle account solvency and making it more feasible for the DMV to add functionality and tracking for drivers who consistently choose to drive dangerously. Speeding dramatically increases both the likelihood of a crash and the severity of injuries when collisions occur.

ISA offers an evidence based tool that uses location and speed limit data to detect the posted speed limit and prevent a vehicle from exceeding it. Thank you for the opportunity to, share this information and for your continued commitment to keeping California's roads safe.

Thank you. Having heard from all members of the public, members, are there any additional questions or comments? Alright. Seeing none, thank you to all the individuals who participated today in the public testimony. If you were not able to testify or if you have any additional information you wanted to submit, please do so, in writing to the budget and fiscal review committee or visit our website.

Your comments and suggestions are important to us, and we want to include your testimony in the official hearing record. Thank you everyone for your participation. We have concluded the agenda for today's hearing. The Senate budget subcommittee number five on corrections, public safety, judiciary labor, and transportation is now adjourned.