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

The Senate budget subcommittee number five on corrections public safety judiciary labor transportation will now come to order. Good morning everyone, we are holding our committee hearing here in the state capitol and I don't have to ask all the members to be here because they're already here, great members, thank you, this morning. So we can now begin to establish our quorum and begin our hearing.

Today's hearing is focused on labor and public employment issues and discussion items will involve the employment development department, the California Workforce Development Board, and the department of industrial relations. The subcommittee will also be looking into, the related issues related to EDD NEXT modernization project, proposed statutory reforms to the subsequent injury benefits trust fund, and workload adjustments among many other issues.

We'll take public public comment at the end of this hearing, so, please be patient as we work through all the items. Colleagues, before we begin, does anyone have anything they'd like to add? Okay. Great. Let's go ahead and establish a quorum.

Consultant, would you please call the roll?

Richardson? Here. Richardson present. Durazo? Here.

Durazo present. Sayardo?

Here.

Sayardo present.

The consultant, Diego here, notes that a quorum has been established. Let's move on to issue number one with the employment development department. I said your name in case your mom was watching.

Issue number one is the EDD next modernization with the following panelists we have with us the EDD director Nancy various we also have Caleb Horrell the deputy director for the administration of EDD we have Ajit Turin, deputy director of the information technology of EDD and then on the department of finance side we have cynthia Elmore we also have Ellison Hewitt who is the principal program budget analysis with the department of finance and finally we have Chase Alamo, so we got a full team here, on behalf of the LAO's office.

We will now begin, director, please begin.

Thank you. Good morning, madam chair, members of the committee. My name is Nancy Farrias. I'm the director of the employment development department. Thank you for the opportunity to share our progress on EDD's modernization efforts.

EDD plays a vital role in the lives of California's workers. Nearly every worker interacts with us at some point, whether they've lost a job or caring for a new child or dealing with a serious illness. In these moments of uncertainty, we are here to help. I'm grateful to the administration and the legislature for their support and of course to our nearly 9,000 employees who deliver these services every day.

We are often asked about our readiness for a recession and I want to assure you that we are prepared.

Thanks to Senator Laird, the recession plan ensures we are ready to respond quickly to any economic downturn. This preparedness is at the core of EDD next, our top to bottom modernization effort as the chair mentioned. We've made real progress. It's never been easier to apply for benefits. Customer satisfaction for disability and paid family leave has increased significantly since 2023.

91% of unemployment customers say filing a claim is on online is easy with ninety six saying the same thing for certifying for benefits. We continue to expand self-service tools so customers can get updates on their claims online through our live chat in the top eight languages. Our new call center platform for disability and paid family leave has improved information access and allowed staff to focus on complex cases. Over a million customers used these tools last year.

We've also streamlined our online applications, modernized our website, strengthened identity verification and fraud prevention, and taking taken major steps towards updating our decades old core benefit system through the integrated claims management system that I believe we'll be talking about today.

Language access remains a priority with 246 vital forms translated into 14 languages and new tools to translate fraud hotline messages in minutes. And we are improving services for employers as well, including stronger security, simplified payroll tax systems, and a modernized job search portal. These improvements reflect just a small part of the work happening at EDD. We remain committed to continuous improvement, transparency, and delivering better services to Californians. Thank you for your support.

I'm joined as as the chair mentioned by Ajit, our CIO, and Caleb, our CFO, and we are happy to answer any questions. Thank you.

Do you have any additional comments to add?

No. Oh, no. No. No. No.

No. Sorry.

Okay. No problem. Alright. Any comments from LAO?

Good morning. Chaz Alamo with the Ledge Analyst Office. As the director mentioned, EDD Next is a wide ranging ambitious project to not only update technology components at EDD, but also process changes. A few points that we want to make here in today's hearing is that as it enters its fifth year, the project has completed many of its components. The one outstanding item is also the most challenging and most costly.

This is the integrated claims management system, sort of the backbone for EDD Next, that will bring the three programs together. We pointed out last year, and we continue to believe that now is the time for the legislature to elevate its oversight of the EDD Next project because we're now in this critical phase.

One recent change that's worth bringing to the subcommittee's attention is that the department with the presentation of this year's budget change proposal has proposed to move forward with the integration for paid family leave and disability insurance first, and then to afterward integrate the system for unemployment insurance. Sounds like a small change, and it may be, but for the first five years of the project, the three programs were to be integrated at the same time.

And so this subtle shift is just an indication that now is the hard part, and we encourage the legislature to exert additional oversight from here toward the end of the project as we work through the final stages.

Thank you.

Thank you. Department of finance?

Cynthia Elmore, department of finance. Nothing to add.

Okay. Thank you. Members, let's start with Senator Durazo today.

Morning. Thank you, madam chair. I have a sort of broader question and then a couple of very specific ones. The project date has moved from 2029 to 2031. So what's the current total estimated cost at completion?

And and what are the assurances? How can you assure us that the department will reach the 2031 date? Is that realistic given the history of of delays? Thank

you, Madam. Question. I apologize. ICMS project is a five year project, and the reason for the delay that you mentioned is the procurement. Procurement timelines are driven by not only by state, but the participating vendors as well.

So the project was, the contract was awarded earlier this year, and the delay was attributed to the time it took during the procurement, which went longer. EDD is fairly confident in delivering this project on schedule. What we have done is we have strategically divided this project into two phases. Phase one is focusing on DI and paid family leave, which will be done in two years, which is a smaller portion. PI and PFL are easier programs to modernize as well.

So we feel fairly good and confident in delivering that in the two years, and the second phase of the project is focusing on unemployment insurance, which will be done in three years, and the total duration for the project is five years.

I guess, be a little bit more specific of why you're so sure of meeting these

Time and financial goals.

Sure.

Absolutely. What what Unity has done is learned from the lessons that through the pandemic, by implementing over 200 projects. We have, all the changes that, director Fadis mentioned, for example, implementing chat bots, modernizing our call centers from complete to a completely different platform, implementing the changes that are directly impacting our customers, for example, making claim applications easier to complete, and offering additional tools to paid family leave customers. Paid family leave customers before 2025 were even unable to log in and see the claim account balances.

Right now, they can't.

All these changes were done on time. They were complex changes, especially for paid family leave program. It was a completely manual program. All claim processing was done manually. Right now, 18% of the claims are done automatically.

Given the history of delivering changes successfully, we feel confident that, yes, we can take on integrated claim management system as well and deliver it, you know, on time. I'll give you another big example, document management system project, which is the second most complex in in our portfolio is on time, and we have already completed roughly around 60% of the project on schedule and on budget.

Okay. Great. Any other?

I I would just add, because I can't help myself. I would just add that we're we have done all these projects, these large projects like this incrementally, so it's not this big bang where you flip a switch and it either works or it doesn't.

The projects that we've talked about in the February, for example, that we've done, during the pandemic for UI, they all, have, they all are they all benefit our customers each individual one and it's not none of them is like well that doesn't work then this is not gonna work you know we update we did chatbot then we did you know, automation of x, y, and z, you know, things like that. So I think that that's that makes us feel as confident as we can feel.

Great. Thank you. I I just wanna add that I was here before you became the director during the pandemic, and you've had to take on all the challenges of the pandemic, all the issues that came up with that. Everybody just it was just out of control. So I just wanna applaud you for taking those solid steps as we move forward.

And every time I ask a question, it's right on. Thank you. Thank you. I have two very specific questions on SB 1090, which, allows people to apply in advance For their, paid family leave and and, disability benefits. Can you provide an update as to when, it will be implemented as part of EDD next?

Quinn Buniel may be able to respond to that. Or Ajit?

Go ahead, Quinn.

Hi. Quinn Buniel, legislative director at EDD. That project has been a priority for us as part of our initial go live that Ajit mentioned in 2028. So we that's when we expect it to happen.

2028?

2028. Yes.

'28.

Great. Thank you. Thank you. It's Gwen. And then regarding 1058, can you provide an update on that, the language that will be used on those applications, and explain how the race ethnicity data will be will remain confidential and will not be used to determine program eligibility.

Okay.

I know that's a really specific question.

Madam chair, we are on schedule for that project as well for that effort as well that collects data demographic data from our claimants. We are making changes to our application. We are on schedule to make it happen as part of our existing systems as well, and the data will be made available on our website. Our old data will be made available so that confidentially for the claimants is maintained and not disclosed.

Okay. Okay. Great. Those are all my questions. Thank you.

Thank you very much.

Thank you. So Aye, like a good Senator, have been here long enough, but I was in the assembly when this started during the pandemic. And we were alarmed basically at what was our inability as a state to deal with some of the issues and the overimpacts of of what happened during the pandemic. So when you were brought on, the I think the specific direction was, fix this. And, one of the bigger issues was the the fraud issue.

And, so I'm I'm kinda curious, what kind of, you know, through this new programming and stuff, if if, I and I would imagine just by the natural occurrence of we're not dealing with a pandemic, so we don't have as much volume, that the fraud would go down. Are there other, pieces of this that have been, helpful in reducing fraud, and and what's our status as far as, the more fraudulent or or questionable type of claims?

And and if we're we're massively reducing that from the $30,000,000,000 or so that it was to to, you know, something that is, more reasonable, which is not, like, pretty much zero is reasonable. But I know that's a hard number to get to.

I I will just I'll just mention then Ajit can fill in some of the more technical blanks, but we I am really proud to say that we do not have criminal fraud anymore at in in the UI program. I one, obviously, that was, the PUA program, you know, based on federal regulations, which we complied with, but since September of of 2020, we, implemented ID.

Me, we have SoCure, we have Thomson Reuters, we do an employer check, it's a little bit different as as you're aware, as you mentioned the PUA program was a lot different than the UI program is now, And going forward, we are gonna continue to use these outside consultants and we or or I guess tech technology outside technology as it is. And our fraud is we have as I mentioned, we have no criminal fraud.

There is still, you know, based on, what we can see, people who say that they are working when or they're Yeah.

They're not working when they are, and that that takes a a, you know, some time for us to go through but it's nothing like it was before and in that case we issue an overpayment when there is an overpayment due and we are fairly successful in collecting that because you cannot collect unemployment or any benefits from EDD, if you are, if you have an outstanding overpayment.

So that's great because, and that's great news because you know that was one part of it was stem the tide, it stopped the bleeding and then the second part was the longer process that we're going through now and I think we're in unison where everybody agrees that I think we're making good progress and and that you know even though we have some bumps along the way that may be extended out a little bit further we're doing the things that we need you guys are doing the things you need to do to make that a functional department again and and make it so that it serves the needs of the people that need it.

One of the things that was brought up, you talked about the different vendors that we use and, you know, it had been around a long time and and a lot of times vendor contracts start out at at this, and then because everybody wants to be the low bid, and then later on they they wind up like this. Have we had a lot of cost overruns or that are

Yeah. I can take that question, Senator. I appreciate that. I'll be honest. The change request and cost overruns are part of IT projects, and there are two primary reasons for that.

First is by the time we release the procure, by the time we finish the power process, it takes like two to three years to get done with just the power. And during that period, technology changes and new legislative bills comes into play, and none of those requirements are captured in the RFP that's released like three years ago. Same thing happens with every single project. What what would that what happens is it's end up being a change request for the vendor to work on.

But we work very closely with the California Department of Technology for oversight perspective, with Department of Finance to minimize the change request that are coming out of as part of the ongoing active projects.

Okay.

So far, ADD Next has been lucky. We don't have any big cost overruns. Yes. There has been change requests, but change requests that are within our budget authority to handle. So no major cost overruns at this point in

time. Okay. Thank you. Like I said, I think we're all willing to continue the quest and continue the investment that we need to make to make it happen and appreciate all the the work that you guys are doing and to create a department that we can all be proud of. Thank you.

Thank you for your support.

Thank you Senator Sciardo. A couple questions that I have here. Do the various projects under the EDD NEXT modernization, integrate stress testing or other tools to ensure new system new systems can withstand claim levels like the state saw during the pandemic?

Absolutely, madam chair, yes. Every every, product, every change that we make to our production systems goes through a very rigorous testing process that does include load testing and stress testing to make sure we can achieve the volumes at pandemic level. So in future, if there's ever influx of claimants coming to our website, we can, we can sufficiently handle the the load from those claimants. So yeah.

Okay. And then building upon, the last question of Senator Sciardo, Do you publish, the change order items that are requested and then the additional funds and things that are required?

Absolutely. All the change requests are well documented. They are approved by the by the various committees. We call it, project committees, and then we have oversight from California Department of Technology, those that are presented to legislature's, LAU office as well, and Department of Finance if there is any additional funding needs associated with those change requests.

My question was, do you publicize? Does the public have access to the change order requests that are made and the additional costs that are requested?

So if the change requests are tied to a BCP, yes, those will be included in the BCP, and then that's the public document. If, it is not tied to a BCP, and if the money that is being spent on the change request is within the department of delegation authority, then it is documented, but it's a it's a document that can be made available to public through a PRA request or any such request that comes from public, but not from a EDD perspective.

We don't publish those change requests that are within our delegation.

So if you say that your change requests are done, based upon the change in technology, how would other vendors know who had applied as Mr. Sciardo was explaining? How would they know that, in fact, it is just because of change of technology or just not because a vendor said, you know, I I need more money to complete this particular part.

Thank you, madam chair. Great question. So when the RFP is released, that's the equal playing level field for all the vendors. They bid on same requirements, same technology so that everybody has an equal chance. So let's say vendor let's assume a vendor a wins that project.

Now after that, if there is a change, then that change is properly vetted and evaluated by EDD management teams to see if there is a technology change we are asking, or is the legislature driving that change? For example, a few of the bills that, Senator Durazo mentioned also, those are change requests for the vendor who are coming in. So then we look at, can the vendor absorb those changes without any additional cost to the project?

In the scenarios where the project cost, schedule, or timeline goes beyond 10% of the initial allocation, that becomes a SPR, and that's where all the control agencies, including Department of Finance and LAO, gets involved.

And so what does 10% equate to?

The 10% usually equates to the dollar value of the of the contract. So

Which is what?

It depends on the total cost of the project, madam chair. So for example, if it is a document management system project, then the total dollar value for the project is 100,000,000, so then anything over 10,000,000, is a chain is a is a SPR. Also, there is a department delegation authority which is controlled by California Department of Technology.

So for EDD, anything over 5,000,000, anything that cost that went over and above 5,000,000 becomes a SDR for us, that we have to completely follow the process to report it, properly document it, and get it approved before we give approval to the vendor to implement that change for us.

So how much have we added so far?

So there there are seven work streams in this project and four I'll talk about the the three most complex projects first. So our integrated claim management system, which started

on My question is specific to the change orders. How much additional

Sure.

Cost has been added?

Yeah. Go ahead, Caleb.

Thank you, madam chair. Caleb Horel, admin deputy for EDD. I guess I would just point out, I don't think we have that exact figure right now. We can definitely get that for you. But as far as any change orders have been done, like Ajit talked about, sometimes there are change requests that are done that have $0 value, for any IT project.

The overall cost for EDD Next, which is around 1,200,000,000 in total, that cost has remained unchanged through any subsequent change request that we've done contractually. So the overall project cost has been unchanged.

Well, but we could save some money too. There's nothing wrong with you don't have to spend 1,200,000,000, you know?

Don't just

We're kind of we're in situations here, very dire and so, I realized that you may build into the contract. I did a little work in this area myself.

You know, I I realized that what we call in the industry, you know, maybe pad the, you know, let's say you think the project is gonna cost, you know, 1,000,000,000 and you add, you know, 200, you add 200,000,000 to that to make sure that it covers any potential change request that you have, but I just want to stress in these particular times, really in all times frankly, we shouldn't look at things just that you have 1,200,000,000, we should look at minimizing as best as we can.

And if you are and if you notice several of us are asking the same related questions, I think there needs to be more transparency given the amount of money that we're talking about, more transparency to the public of change orders that are being requested and approved than thereby implemented and what are the costs associated with that?

Because these were big time contracts, a lot of people were looking to participate and if it ends up that, you know, something that really should have been included that maybe another vendor would have or was including in their, proposal and then now someone else is getting more money for it.

You can understand, I'm sure, the the concern that people would have.

Thank you. Yeah.

So can you provide maybe more public information about what has happened in the process regarding change orders and the additional amounts and what those have covered?

We can follow-up with that information.

Okay. Thank you. Building upon that, I wanted to ask, what is the rationale behind moving the UI portion of the ICMS project to mandatory optional as a part of the vendor contract?

Thank you, madam chair, for the question. Yeah, as was pointed out in in the opening, and I think by LAO, by Chaz, ICMS, it still focuses on the replacement integration of of all of the programs. It was a rephasing because of the emphasis being placed right now on DI and PFL, and the amount of modernization that the department did during the pandemic in Kinda rightsizing UI.

During the RFP process, EDD heard from multiple vendors that doing that, as Chaz had mentioned, all in one, all programs together would not be an ideal way to, implement the project. And they actually vendor a community expressed doing DIPFL first as opposed to UI because UI being more complex.

So that would be another reason why we rephased the project. But I think we wanna ensure the committee that, you know, we still remain committed to implementing not only DIPFL as part of ICMS, but also UI on the back end. And that's still overall part of the the project plan documents, UI is included in there, as part of that.

Okay. The reason why I wanted to give you that opportunity is because you said you didn't you did it, but you didn't say why you did it. And so for the public who doesn't have the benefit of our analysis and all that I thought it was important that you clarify the reason for that.

My other question has to do with and this one is a little more specific, during the 2024 and 2025 budget year, the department shifted phase two of the shared customer portal into the ICMS and the IDM portion of the project. How does this project integration, from those phases of of phase two objectives such as enhancing the customer facing portal with real time identity project, enhance user administration, and enhance customer data analytics?

No. Thank you, madam chair. Great question. So, SCP, shared customer portal, is a portal that is a single door, it's a single entry for all our customers to come in. They log in through this portal.

This portal was implemented in 2023, and we won the award for for this project in 2024 as well. The phase two of this project, which you you are alluding to, was to have a claim navigation where we would guide the claimant to which benefit they are eligible for by developing a a sub project as part of this. At the same time, we were doing market research for the in integrated claim management system as well.

It became crystal clear that the same objective It became crystal clear that the same objective of SCP phase two can be met in the ICMS project. And by shifting those requirements into ICMS, we saved state more than $20,000,000.

So for that reason, the SCP was left as it is and all those requirements were moved into, into the ICMS project. Now your second question about how we are making sure that we provide the data and make sure the identity proofing is still done, None of that has changed. Our our commitment to make sure claimants are served, best by providing the services that they're looking for will still be achieved as part of the integrated claim management system.

The data that they're looking for will still be collected and saved as part of our, shift towards integrated claim management system as well.

Thank you. My last question has to do with it's my understanding, and you referred to it, that, EDD is utilizing various contractors and their technology. For example, the state relies upon the third party vendors like Equifax, the work number and TrueView to verify employment and income for benefits eligibility. How much is the state currently spending on these types of third party contracts? And what are the limitations of that data compared to what EDD collects directly through employer quarterly wage reporting?

So so I we EDD does not use any of those.

I think, you know, probably, d DSS or DHCS probably uses those, but uses those but we don't use those to collect wage data the 1 limitation and I believe you're probably talking about HR 1 and some of the work requirements, the one limitation that we have is we do collect from the employers quarterly and it is my understanding although regulations are not out yet from the Federal Government that it is going to be required to to accept or to to collect that information monthly.

So right now, there's a work group between EDD and health and human service agencies that are also implementing HR 1, to try to figure to close that gap, basically.

Okay. Thank you very much. With that, no further yes. Senator Durazo.

Just a question about, SB 590, and, you don't have to provide it now, but, information about that refer that addresses equity concerns that which partially or mostly led to SB 590 being passed, which would help us understand, do we need more outreach programs? Do we need more education? Because that was specifically addressing the lower use of the program by low income and immigrant communities. So if you could provide that information on thank you. Thank you, madam chair.

Alright. Thank you.

Thank you. That concludes issue number one. We're now gonna move to issue number two, which is related to the request for additional operational resources with the as I stated, public comment is done at the end of the hearing for all issues. Thank you.

Issue two is related to the request for additional operational resources with the following panelists we have the executive director of CW CWDB we also have the deputy director of operations and policy implementation and branch of the same department and then we have, the department of finance and also the LAO's office.

Please begin with your, presentation.

Great. Thank you very much, chair Richardson and

Is it Kiana?

Actually I' m the chief deputy Joelle Ball. Okay. Director Pereira sends his sincere apologies that he could not be here today with you. Okay. But I' m here.

I will give a brief overview of the CWDB before I turn it over to Emily Sunahara who is our operations director to cover the two issues. The California workforce development board is the body responsible for assisting the governor in the development oversight and continuous improvement of the California workforce system. Especially now to meet the needs of the 20 century economy and workforce.

Established by the workforce investment act of 1998, the workforce development board supports statewide partnership building between employers, local workforce development boards, education, community organizations, labor unions, and workers to increase job quality, opportunities, and career advancement pathways for all Californians. Our goal is to work in collaboration with various regions in California and their local boards, There are other depart our other departments in the state, our agency, and the governor to shape workforce policies, programs, and investments that will strengthen California's economy.

Thank you. I'm happy to answer any questions, and I will turn the items over to Emily.

Thank you. I'm Emily Sunohara, the deputy director of operations and policy implementation for the workforce development board. Regarding our budget request, our governor's budget request for additional resources to support the operations of the board, this proposal outlines a plan reduction after over the next five years to bring us back in step with our baseline funding. In fiscal year 2022, 23, in response to a large influx of state funding, the CWDB expanded staffing to support the new grant workload.

This reduction is a natural response to that state funded workload coming to a close, and our state funded grants becoming a smaller portion of our workload.

I'm now open to any questions regarding this issue.

Office.

Chaz Alamo with the LAO. The request for additional appropriations is sort of consistent with precedent on setting levels for acknowledging the the pandemic era uptick in grant authority going through CWDP.

Thank you. And Department of Finance?

Cynthia Elmore, Department of Finance. Nothing to add.

Okay. Thank you. Senator D'Orazzo, any questions?

Yes. Couple of specific ones. One specific one has to do with the high road construction careers program at Caltrans. Is a $30,000,000 grant being administered by the by the board. But SB 150 originally allocated 50,000,000 in federal funding for this purpose.

So we have we now shifted to using state dollars instead of what was supposed to have been federal dollars? That is correct. And could you explain why?

Chair, if I may. Allison Hewitt, Department of Finance. I don't, unfortunately, I don't think we have our Caltrans colleagues with us, and they we did have a a discussion with the subcommittee with Caltrans where they presented the various reasons why, the state funding is being used in lieu of federal funding. At a high level, I think there were concerns about eligibility of being able to use that federal funding.

And I believe they provided some follow-up responses to staff to discuss the core question that was raised by the subcommittee, which is, well, where did the 50,000,000 go if this is 30,000,000?

And I unfortunately don't have those responses in front of me, but that is my understanding of the issue. I'm happy to try to answer any specific questions or take any feedback.

Okay. Thank you. So the the the workforce development board administers hundreds of millions of dollars in grant funds for programs that serve workers, and we wanna especially work with high road employers. You're now proposing a very dramatic elimination of the staff who work on these grants. So how do you see can you explain the impact that it's gonna have on the opportunities that these programs provide across California, especially for people who have faced significant, barriers to employment.

As as a contrasting example, Go Biz has a staff of a 194 to support grant and incentive programs for the business community. So why would we downsize the department that has a responsibility for developing and improving our workforce system to a staff of 42? Very, very dramatic difference in there. So how do you explain going in that direction versus a direction where we should be doing more, not less?

Absolutely. And thank you for that question. So all of our state grants to date have been one time funding. We staffed up in 2022, '23, as I mentioned, as a response to a large influx of one time funding. Our statute indicates that we are a policy making or policy excuse me.

We advise the governor and assist the governor on workforce policy. So our primary purpose has not been impacted by these moves. Granting has been a one time ask of us, and we have been fulfilling the one time efforts related to the funding.

Okay. That doesn't but there's a completely different direction that we're going in here. As far as the programs for the people of the state of California, the issue of workforce development comes up all the time. And there's even a scarcity of staffing. We talk about that all the time.

There's numerous examples of that. I I don't understand why we would be going in the opposite direction, but we can say in in the business community, which is great. Have the grant have grants, have have the the staffing, but a 194 compared to a staff of 42 in workforce development just doesn't make sense. Yeah.

As you mentioned, the high road program is that is a one time funded grant program.

Right. What whatever whatever it is, I'm talking about the direction. I'm talking about the direction of of, the workforce development board. The direction that we're going in without the resources means that these programs are not going to in whatever fashion you you move them forward, it means that they're not gonna go forward, and we're gonna have less of that for the people who need it most, especially in this particular time.

So I just wanna understand the the philosophy behind it or the thinking behind it, the rationale behind it, putting aside then then we could talk about, okay, this program needs money or this grant income, whatever the particulars are as far as funding.

But the direction is so obvious here. I don't understand. Maybe someone else wants to respond to that, but I'm Allison a dramatic change.

I I I'll wait obviously, my my colleagues are much more knowledgeable about their programs. I'm Allison Hewitt, Department of Finance. I'll just add. And and I don't like the risk of of of reiterating what my colleague said, the these positions that are coming down were added for a specific purpose. They are assigned to grant programs that are funded.

So, the high road training partnership program is is one that my colleagues speak to. Those staff are dedicated to providing technical assistance to grantees in those programs. As of now, there is no ongoing funding at the levels that were appropriated previously for CWDB. And so the proposal in front of you is to right size CWDB staffing because there's no longer a need for that staff to work on the specific programs. And it's done over a five year period, which, just to note there.

I guess what I I I understand the the policy concerns is why would we why would the administration reduce staffing for workforce development? And I don't see that's not what the proposal in front of you is intended to do. We added these positions for a purpose. That purpose has is coming down because we had 850,000,000 added into their budget, and that we have not seen those this program lasted for years, and now there is no longer that funding available.

And so I just, for that's for these I don't don't think there's any intent for the administration to minimize workforce development.

There are so many initiatives the state is undertaking for this particular entity. Funding staffing were added for these programs. These programs are finishing out their grant cycles, and and we wanna facilitate that. There's additional resources to maintain staffing in the near term, which is is part of why there's funding including general fund

in the proposal in front

of you. I don't know if that's helpful. Obviously, if we wanna increase the workforce development board staffing for other important policy initiatives, like, and to continue that work outside of the specific grant programs funded in the budget, that is a discussion between the administration and the legislature. I'm just trying to decouple a little bit.

I don't think we're walking away from workforce development efforts on a policy basis, it's that these positions were added on a surge basis because so much funding was infused into CWDB's budget, and that that funding is now cycling off.

So I'm happy to turn it over in case my colleagues have any other thoughts, but Yeah.

Thank you for that, and that is an accurate assessment. And to Allison's point, the policies will always remain whether they are funded or not. At this point in time, we are seeing our grant programs are coming to a close. The funding that we were allocated is being spent by the grantees, is coming to a close, and so it is our point in time plan for what is in front of us.

Okay. I don't wanna beat a dead horse, but the when you say the policies will always be there, without funding, the policies are worthless. I mean, you can say that all you want. But if we're if we're not proposing funding for that, if we're not saying part of our budget proposal should include this, then you're basically saying this is gonna be the new policy. So that's the bottom line is without funding, it's not a reality.

So let's not why don't we make that part of GoBiz? You know? Why don't we drop GoBiz down to 42? We don't because it's important. So that to me is the bottom line.

Thank you, madam chair.

Thank you, Senator D'Arousso. Senator Sayardo?

Yeah. Just a quick follow-up question. Do you have the appropriate personnel to handle the load that you're required to do now for to make the workforce development department work correctly?

Yes.

Okay.

And and what the good Senator was talking about was basically the part of the job that's no longer there. And so those employees, if we kept them on, would be doing essentially overlap of what other employees are already doing, which would be an an additional expense that we would have to fund. We'd have to provide the additional funding that we're not we're not doing now because it's part of that grant part that grant funding. Correct?

We're responding to closing out of grant programs and those staff no longer being allocated to those grants.

I just wanna make sure I was crystal clear, we do have the appropriate personnel now though.

Yes. Thank you.

Thank you. The board is assuming an attrition rate of 10.5 positions per year resulting from this adjusted grant administration workload. What went into determining that attrition rate?

Absolutely. This is based on historical attrition rates for the board, as well as combined with an active hiring freeze.

Okay. Which leads me then to my next question. One of the big discussions here on both sides, both in the assembly and the Senate is this new, new technology with AI, and how are we going to prepare this next workforce to be able to participate. What do you see as the role of of your particular agency in your department in helping workers to prepare for that?

Thank you, Emily. We are doing engagement with with business, with our Board Members, through various meetings that we have on the calendar to understand what the issues are and to help inform policy recommendations. We just don't have the grant funding to support any, pilots or innovation or implementation through our department.

So I'd like to encourage you to inform the committee, if you could provide back to us, what are the things that you're hearing in regards to AI? What do you see that your department is gonna need to do to assist the workforce? It is going to be significant.

CEOs are saying that we could potentially lose 50% of our workforce and yet, people are gonna be doing different types of jobs and so how are we going to, assist with that if there are new ideas for other grant programs that we should be considering partnerships with some of these companies to do apprenticeships.

I don't wanna do your job for you, but I'm assuming and our if I'm assuming wrong, I'm asking if you would take a look at what are those things that you're being now asked to do in light of the influx of AI and how we might, need to, assist from a funding perspective or grant perspective or whatever it might be to deal with this coming down the road.

Absolutely. Happy to get that back to you.

Okay. I'm seeing no further questions or comments from anyone. Oh, that okay. Excuse me. I'm on a alka seltzer and a bunch of stuff.

So excuse me if I do a few slips of like that one, do a few slips there. That concludes issue number two. We're now gonna go to issue number three which is streamlining reporting requirements trailer bill language continuing with the same panelists that we have here which is kinda leading in to some of the subjects please move forward with your presentation.

Thank you. I will actually let Emily cover this.

Alright. Thank you. The governor's budget proposes trailer bill language that would align the reporting requirement timelines relating to various grant programs, including requiring the workforce development board to produce and submit a report to the legislature, evaluating those grant programs by October 1 of every odd year. The bill would also establish new reporting requirements for the breaking barriers to employment initiative, and the prison to employment program, if additional grant funds are appropriated for the purpose of those programs.

And the reason for this proposal is that currently, the California workforce development board between all of its grant programs has about 10 to 12 annual and interim reports that we are managing delivery of.

This proposal would streamline that down to one. Thank you.

Just one question.

I'm sorry, Senator Durazo. Like to add?

Chaz Alamo, the LAO. No issues with this proposal. Thank you.

Okay. Thank you. And Department of Finance?

Cynthia Elmore I have nothing more to add.

Okay. Thank you. Yeah. Senator Durazo.

Just one question. The proposal adds reporting for breaking barriers to employment and prison to employment only if additional funds are appropriated. Given that the legislature is already investing in reentry workforce programs, why would reporting requirements be conditional on future, appropriations rather than to exist existing funding?

It is conditional on additional funding because both of those programs are closing out.

Okay. Thank you.

Senator Seyarto. Okay. I only had one question. What is the total cost savings to the board for implementing and consolidating these reports?

So for for 10 to 12 evaluations at between 500,000 and 700,000 each, that significantly reduces and that doesn't include our internal staffing evaluation costs in partnership with external evaluators. So this, streamlining will provide a consistent expectant timeline of when, evaluation results will be provided, and then also reduce costs.

Thank you. Okay. Thank you. You did answer. Alright.

Seeing no further questions, that concludes issue number three. We're now going to issue number four. Issue number four is the subsequent injury benefits trust fund s I b t f the trailer bill language and the workload of the b c p were joined by director Jennifer Osborne for opening comments for the department of industrial relations as well as the following panelists. We have, Jazzy Grewal, the deputy secretary of legislation. We have Joshua Iverson, the chief financial officer.

And, Ken Lau, chief counsel of DIR. And then we do have, our representatives, Grace Henry, the finance budget analyst with department of finance. Allison has stayed with us and so has chas. We'll begin with you.

Thank you, madam chair and members. My name is Jennifer Osborne. I am the director of the department of industrial relations, also known as dir. I was asked to just do a quick overview of the department, and then I'm actually gonna yield my seat to another program expert for the following issue just so that we have all the right people up here. As you know, DIR's core mission is to protect and improve working conditions for California's nearly 20,000,000 workers while supporting the state's law abiding employers.

The department plays a central role in ensuring workers are paid the wages they are legally owed, maintaining works safe workplaces, and supporting an a level economic playing field. DIR is California's primary labor and workforce workplace safety agency established in 1927. We administer and enforce laws related to wages, hours, and working conditions, workplace safety and health, apprenticeship, and workforce development, and workers' compensation benefits not to be forgotten. DIR has nearly 4,000 authorized positions and an annual budget approach approaching $1,500,000,000.

Collectively, we protect work protect workers, support employers and compliance, and help strengthen California's economy by addressing unfair competition and activity in the underground economy.

To deliver on this mission, DIR is made up of four key divisions through the Labor Commissioner's Office, also known as DLSC. Laws are enforced to ensure that workers are paid their earned wages, protected from acts of retaliation, and able to exercise their rights under the law. Through CalOSHA, workers are protected on the job through a combination of educational enforcement efforts. CalOSHA ensures wake workplace safety standards are met, conducts inspections, responds to complaints, and provides consultation services.

The division of workers' compensation oversees the administration of workers' compensation claims for injured workers with appeals adjudicated by the workers' comp appeals board.

The goal of the division is to ensure timely benefits and support effective return to work outcomes for employees. And the division of apprenticeship standards also known as DAS supports apprenticeship programs across California and high demand industries, creating pathways to good paying careers and helping build a diverse skilled workforce that strengthens the state's economy.

DIR also carries out several cross cutting functions across the department that are often less visible but still critical to enforcement policy development and compliance and of course we have a seasoned professional staff of administrative professionals who support all of the programs in very many different ways through technology and budgeting and accounting and all of the legal work and all of the kind of things that go with that.

DIR remains committed to protecting workers, supporting compliant employers, and strengthening the economy, and we look forward to working with the legislature on shared priorities. Thank you.

I'm happy to answer questions, but as I said, I'm also gonna yield my seat to one of the people who are gonna be on the panel for the next or for the item that you announced, which is the subsequent injuries benefits trust fund, which is one of the administration's highest priorities in in getting, reforms to this year. I will be in the audience.

Is anyone else making a presentation? Yes. Who's that gonna be?

Yeah. We can see. Okay. Here we go. This.

Good morning, madam chair and committee members. I'm presenting on issue four, the subsequent injury benefits trust fund trailer bill language.

Are you Jassy?

Yes. Sorry. Jassy Grewal with Labor Agency. Thank you.

Thank you.

Over the last several years, there has been an unsustainable growth in the SABTF program's application, backlog, and liabilities that has led the program to become unmanageable. This unsustainable growth is causing long delays for workers and severe staffing challenges for the department. Between fiscal year twenty ten to 2014, around 800 new 850 new SABTF applications were filed per year. Last fiscal year, DIR received over 5,000 applications, a six fold increase. So far this fiscal year, we have already received more than 5,500 applications.

In fiscal year twenty twenty three, there were over 15,000 pending cases in the backlog. We expect the backlog to exceed 30,000 open claims by July, doubling the backlog in the past five years alone. Without amendments to the SIBTF statutes to slow the growth of cases and reduce SIBTF liabilities, DIR estimates total liabilities will increase to approximately $30,000,000,000 by fiscal year twenty nine thirty. This is a $7,000,000,000 increase from last year's estimate alone. The impact on the employer assessment is expected to grow from 14,000,000 in

fiscal year twenty fifteen to one and a half and the state share is expected to grow from 3,000,000 to 44,000,000. And the state share is expected to grow from 3,000,000 to 44,000,000. The administration understands the importance of this important program to our most severely injured workers, and has put forward a proposal to comprehensively reform the program to ensure its long term viability and availability.

All the proposed reforms are included in the agenda on pages 16 to 18, and I can walk through these reforms in more detail if helpful to the committee. I wanted to focus on one critical provision that has generated questions, applying the reforms to the application and open cases in the backlog.

This provision is necessary to reduce liabilities and ensure long term viability of the program. And I just wanna make sure that, we're clear that applying the reforms to the application and open cases would not eliminate any benefits for an applicant who is currently receiving an award from SABTF. It will not require any applicant to start over or reapply.

The reforms would not impose any mandatory timelines on applicants and applicants would not need to take any additional steps unless they or their attorney choose to submit additional evidence. Applicants will remain in the process where they were before the reforms took effect.

Unlike some State and Federal programs that operate a queue, SIBTF does not. For SIBTF, an applicant moves forward in the process once they have submitted all necessary information, regardless of when they submitted their application. An applicant's case is considered open for several reasons. First, the applicant is missing required or requested information for their case. Second, one or both parties are conducting discovery where additional information may be sought by a case examiner to determine eligibility.

And third, the applicant or their attorney and s a b t f have not agreed on a settlement or a workers compensation judge has not determined an award amount. When an applicant files a claim, an award amount is not guaranteed, and only when a workers' compensation judge approves a settlement or issues an award for benefits is the applicants case considered final. By not applying the reforms to the backlog, s I b t f liabilities across all employers by 2031 are projected to increase by $15,000,000,000.

By applying the reforms to the backlog, we would be able to reduce liabilities across all public employers by $3,000,000,000.

More specifically the State of California would reduce liabilities by $500,000,000 LA County and city would reduce liabilities by one by $900,000,000 and public education by $600,000,000 With these changes, the administration estimates that the growth of the program will return to manageable levels, ensure claims are timely processed for our most severely injured workers, and avoid increasing cost to public and private sector employers by billions of dollars over the long term.

With these comprehensive reforms, California will be able to ensure the ongoing viability and long term availability of this important benefit. With me today to answer any technical questions are as Ken Lau, chief counsel at the Department of Industrial Relations, Nicole Richardson, acting administrative director and chief counsel at the division of workers' compensation, and judge Paige Levy, chief judge, division of workers' compensation. Thank you for allowing me to make comments.

Good morning. Thank you. I'm Josh Iverson, chief financial officer for the Department of Industrial Relations. Just a few brief comments on the budget change proposal. The proposal is predicated on the comprehensive reforms included in the governor's budget With full implementation of statutory reforms and approval of this staffing request, DIR projects significant operational improvements.

The additional staffing will allow examiner case loads to be reduced from the current 1,100 cases per examiner to the industry standard of about 500 cases per examiner. We'll reduce attorney court appearances from the current 180 per year to about a 150 per year, and accelerated case resolution reducing waiting time from the current five to ten years to about three to five years.

With the proposed comprehensive reforms and these resources, the program will return to twenty fifteen sixteen benchmarks within five years, resolving the backlog of existing cases within ten years. This request assumes the reforms apply to all open applications in the backlog. If the adopted reforms exclude open unresolved cases, DIR would need a significant number of additional resources beyond what is being requested currently.

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

Thank you. Mister Lau, are you presenting or answering any technical questions?

I'm just answering the technical questions.

Thank you, sir. Chas with the LAO.

Thank you. Chaz Alamo with the LAO. Last summer, our office released a report assessing the state's CPTIM program and the major fiscal risk and liability that are associated with the program.

Our report pointed out that the SIB TIF program has evolved over time to include sort of more lax eligibility standards for these benefits from what was originally intended to be a program that would support severely disabled workers who then were injured at work, has become now a program for which most of the applicants are a worker who sustains an injury at work, who has other underlying health conditions, chronic conditions, you know, typical conditions of aging, if you will.

So high blood pressure, diabetes, asthma, common conditions listed on CIPTIF applications.

And our assessment was simply that today's version of the program differs greatly than its original intent. We propose several changes that would sort of reframe eligibility standards to again target those workers who have an underlying severe disability and who are injured at work for that original intent. Fast forward a few months, the administration has proposed this trailer bill language.

Our assessment of the trailer bill language is that it largely aligns with the recommendations that we made last year and would be a meaningful step for the state to return CIBTIFF to its existing original intent. A couple additional comments.

The program was relatively small ten or fifteen years ago, a few 100 applicants a year, and that is indicative of how rare these instances were. With the change in eligibility, the program applicants are now up tenfold each year, and that means that the change that the administration has proposed to apply the sort of historical eligibility standards to the existing case load. So these are the cases that are in that not queue, but I don't wanna call it a backlog, but that the cases that are pending.

In essence, that is the entire universe of subsequent injury claims. There are 4,000 claims that have been finalized for which workers are receiving benefits, and there are 30,000 claims still under assessment by the department.

So the trailer bill change isn't so much retroactive in our view as it is sort of recommitting the state to the SIPTIF eligibility standards that were originally intended. To take a moment to discuss the the the BCP, the workload BCP related to the trailer bill, in our view, it's the administration's best assessment of the workload that it will need over the coming years to handle the implementation of new trailer bill language and the resulting workload changes. These assessments are educated guesses.

They're the best the administration can do. Our office, along with the administration over the next couple years, would follow the implementation and assess whether workload needs were greater or lower than were included in this BCP.

We'd be happy to work with the subcommittee to right size the staffing requirement associated with that. And finally, the fiscal pressure for state and local governments from CIPTIF claims is hidden. And what I mean by that is there's no state budget line item that shows a SIB TIF liability. I think the best analog is the state's annual UI interest payment that we made to the Federal Government for the outstanding federal UI loan. That is a line item.

It's heard in this subcommittee and we talk about it. One of the reasons I point that out is that these costs aren't as salient to the state or to local governments because they get folded in with other employment costs and aren't a wide item in the budget. I think that comparison to the UI loan is is an apt one.

The CIPTIF liabilities for public and private employers in the state without changes as proposed in the trailer bill language are right now larger than the state's outstanding principal loan amount for the unemployment insurance loan that we owe the Federal Government. That stands at about $21,000,000,000 and SIPTIF liabilities currently estimated to be about $30,000,000,000.

Happy to take any additional questions. Thank you so much.

Thank you for that background. Department of finance, anything you'd like to add?

Grace Henry, department of finance available if there are any questions.

Thank you. Senator Durazo.

Thank thank you, madam chair. I appreciate all the work that's being done around it, and I'm I'm glad we're tackling it rather than just ignoring it the way that we do with the UI. And I I wanna go to your comment about returning to the original intent, so I get having to do that. The bill requires pre so several specific questions. Just the bill requires pre existing conditions to be documented before the subsequent injury.

So how will DIR handle cases where a worker had a a real pre existing condition that wasn't formally documented, is there a hardship or appeal process for that?

Jazzy Grewal with Laborgency. Happy to take that question. There are two different ways in which a worker who does not have prior medical evidence will be able to establish their preexisting disability existed at the time of the subsequent injury. So first, since a subsequent work injury must be work related, currently a worker is assigned a QME, a qualified medical evaluator.

As a part of that q m e's role in evaluating the subsequent injury, to look at other injuries, conditions, or disabilities a worker might already have through their comprehensive medical evaluation.

For example, a worker who was in a bad accident where they broke their arm over ten years ago, but was unable to access health care due to costs, their arm never healed properly. So in that q m e's evaluation, they would be able to assess that arm injury and establish that it did not occur prior to the subsequent injury. So that's one way. The second way is that the trailer bill does allow for submission of contemporary as evidence.

So in section forty seven fifty four point one of the trailer bill, it allows for medical records, testimony, or other evidence in existence at the time of the subsequent industrial injury.

What is currently happening is that applicants are trying to establish after the fact, after that subsequent injury that they had a preexisting condition. So what the t b l does is it require it allows for that contemporary evidence that was in existence before the subsequent injury. There does need to be proper guardrails to prevent abuse or fraud in determining years or decades old later that an injured worker suffered from a preexisting disability.

And we believe the trailer bill strikes this balance by allowing for additional types of evidence to be submitted and while also using it using its current QME process to establish those preexisting disabilities.

Thank you. The original would you say SIBTIFF? The original SIBTIFF, was designed to protect low paid workers without disability pensions, from employers unwilling to hire them with visible disabilities. How does the EIR ensure the reforms don't inadvertently harm the workers the program was designed to protect? You might have already covered a little bit of that.

Yeah. And I'm happy to expand on that too. So, SABTF or SIBTF, as some love to call it, was established in the nineteen forties, and this is before we had other discrimination disability protection laws on the books. And so since the establishment of SABTF, we now have feeha a d a to prevent disability discrimination. We also have s s d I to offer payments to workers who may be disabled.

And so there are other existing protections that exist in the workplace to ensure that we are continuing to hire workers with disabilities. And so I just wanted to just share that. And the other part too is that workers who have disabilities will continue to go through the process. What we have seen and what LAO has noted is the increase in chronic conditions and trying to establish that it was a pre existing condition after the subsequent injury.

And so for injured workers and workers who have pre existing disabilities and conditions, those cases will continue to move through the process.

The reforms are largely intended, to tackle the issues we have around the chronic conditions.

So the trailer bill will route CMTIF medical evaluations through the QMA process, but the system has a documented shortage of evaluators, and produces significant delays in the regular workers' comp cases. So how will you ensure, that the QME, can afford can absorb these cases without further delaying resolution for other workers who've been waiting months or even years?

I'll I'll take that question. Ken Lau, chief counsel of DIR. So what the trailer bill language does is that it requires the, the SIBTF applicant to use the QME report that was done in the industrial case. So it's a subsequent industrial injury. So, in most cases, when a worker, suffers a work injury, they will have been evaluated by a qualified medical evaluator, as Jazzy pointed out earlier, and with a comprehensive report of the applicant's medical history.

And then you can what the trailer bill language now allows for is for the applicant to use that report, which documents all of the injuries in the subsequent injury claim, which will actually streamline the process.

Okay. Got it. The trailer bill applies retroactively to 30,000 open non final cases, including cases where workers have been litigating in good faith under existing law for for years. Has the, DIR modeled how many pending claimants would lose eligibility, under the new, labor disabling standard, and what transition or hardship provisions exist for those workers?

I'm happy to take that question. I'm currently, there everything would have to be we'd have to manually go through each case and assess each case if for eligibility, so it is very difficult for us to do that in that manual process, it's very time intensive and resource intensive, so we have not been able to do that.

We are in the middle of a modernization project, and so it is all manual at this moment, and so we don't know how many cases will meet the new labor disabling definition. But if the reforms are applied to those open cases and applications that will occur through that process by case examiners and by the judges. How the process currently works is there and I'm gonna speak in very broad strokes because, it's a very complex program with many steps is the first step is the application process.

An applicant applies for s I b t f benefits. The applicant and or their attorney will receive a letter from DWC, the division of workers comp, requesting a number of different pieces of information, and once that information is compiled and sent to DWC, they'll move into the next phase, which is what we call discovery. And in the discovery phase, that is when case examiners review the evidence that is submitted, and then they'll request, if needed, additional evidence to determine eligibility.

And once that case file is closed and all the information that is requested is needed, is in that file, then they'll move to the next is in that file then they'll move to the next phase which is where either they'll get a hearing date with a workers compensation judge to have their case heard or the attorney and the applicant can pursue a settlement with DWC and DIR.

So those are sort of the three phases and so it is very difficult for us to determine who, in each of those phases, would meet the labor disabling definition, but we would be able to, in that process of implementation, have each case examiner and judge examine that evidence, and attorneys and their and the applicants, if they wish to to do so, can submit additional evidence to meet those eligibility thresholds.

So since we don't have all that information, tracking it would be really important, you know, just to see what what what's the reality out there. And then finally, just one more question. The governor vetoed AB 1329 and called for comprehensive reform through the budget process. That trailer bill is now before this subcommittee this trailer bill language. But a a AB 1576 is simultaneously moving through the policy committee process.

So how does the administration view the relationship between the two vehicles?

I'm also happy to take that question if that's okay.

What would we do without you?

The bill continues to move through the legislative process. The department and the agency and the division have been directed via the veto message to come up with a comprehensive proposal, and we really do need comprehensive reform to address this exponentially growing workload and liabilities and growth in the program. And so from our perspective, it is really difficult to do the to address this problem in a piecemeal approach.

So that is why you see such comprehensive reform in the trailer bill, because that is the approach that is needed at this point of where we are seeing exponential growth, of the program. And so we continue to monitor the legislation, have noticed that it was recently amended, and so we'll work to continue to assess the impact that that will have.

But we believe that the comprehensive reforms and the trailer bill is the way to address the liabilities and the workload that the department is seeing. And to truly be able to address this significant backlog. We have workers who are seriously injured who are now stuck in this backlog and taking five to ten years for case resolution. Those workers need to see much faster case processing times to be able to have their cases heard.

And without comprehensive reform, we will be in a very difficult situation to be able to do that.

Great. Thank you. Senator Durazo, the LAO, I think he wanted to chime in. Do I pronounce your name Alamo or Alamo? Alamo. Okay.

Thank you for asking. Did you wanna add something?

I don't wanna step on okay. Excuse me. Senator Durazo, you asked a question related to changes in eligibility standards, and I I think I I only wanted to add a bit of nuance. The legislature has not set the eligibility standards for the SIPDIF program. The laws were written rather vaguely in the nineteen forties, and what has happened is that a series of decisions, some made by the legislature, unintentionally affected eligibility for SIBTIFF.

The Workers' Compensation Appeals Board issued a decision in 2020 that related to a legal question, but had major ramifications for the SIPTIF program. And so what I mean to impress upon the subcommittee is that eligibility has expanded by sort of actions and inertia outside of the legislature's direct action.

So to characterize it as a elimination of an eligibility for a worker is I think giving, the sense that the legislatures recently allowed for all of these uses, when in fact it it was sort of the evolution of the program rather than specific explicit legislative action, like contemplated with this TBL.

I I appreciate your comment because that gives greater context to what we're talking about here. I guess I'm referring not so technically as much as if the end result is that a worker loses because the standard for all these reasons changed, then that's what I'm concerned about. And I know you all too, but that's what all these questions are are aimed at. Thank you. Thank you.

Senator Seyarto?

Thank you. And, fortunately, I don't have any good questions for you because it's it's, pretty well much been covered. But I do have a couple of comments because this is one of the more critical, issues, that we need to get a grasp on. Otherwise, it will it it affects so many things.

And to your comment earlier about you don't see it in the line item from a city perspective, from a government agency perspective, that's because there is no decision to make when your workers' comp insurance goes up from 1,000,000 to $2,000,000.

But all employees see is that, hey. The city made a million and a half more dollars in revenue. Why aren't we getting some of that? Well, it's because that line item is not it's not a decision thing. We don't say, oh, no.

We're not gonna pay the extra 500 or million. They have to pay it. And so all of that excess revenue, and you can see that in the state budget as well. If 15 I forgot how much more billion dollars in state revenue that we we brought in this year, We're spending $3.50 instead of 2 instead of I'm sorry. $2.50 in the general fund instead of about, $2.28 last year.

Well, everybody wants to know, well, where's all that money going? All of it goes into those type of things, and a lot of it is related to programs like this. I've I've been able to see this on on both the workers comp issued later on that we're gonna we're that we're gonna talk about, but, you know, this program as well because, you know, they kinda overlap.

It's one of the most abused systems ever because there is no incentive along the way for anybody to not not do it. From the medical care parts to the the legal parts to the employee parts.

But where but where if we don't get a handle on this, our employees don't get raises because we're paying out money. The people that are egregious that are hurt the most wind up in the system waiting while it's inundated with people that are taking advantage of a system that has basically what he was talking that LAO was talking about was the scope of what the definitions of what these things are has has widened and widened and widened.

And there's nothing we can do about it because we have protection mechanisms in place for a lot of people, and and you can't go after that. It's blatant out there, and we can't go and and reel it in. There are very few cases that actually they investigate a fraud and and are able to hold somebody accountable for that.

There's so much of that out there, and we have to figure out how to to reel this in. These these steps that they're taking are they need to be done. That's one that to me, it's like a no no no questions. We we have to do these. And I applaud the LAO for coming up with those great ideas about how to fix a program.

We have to caution ourselves so that the the people that are truly injured terribly and need the help are getting the help and they're getting it rapidly, which means we kinda have to have a a way of of triaging the most injured, so that they get the the care they need. We can't have people laying in in in bed for four months waiting for their next doctor appointment.

And and so, you know, I I am in agreement that we need this and and I applaud everybody for for recognizing the dire need for it. Thank you. I have no further questions as my colleagues have perfectly brought the key points forward although I do have one point of personal privilege. Miss Grewal is your title deputy secretary of legislation? From the director who's here present that your knowledge of the program far exceeds legislation.

It sounds like you run the program. So congratulations and thank you for your very in-depth knowledge of sharing with the committee.

Thank you so much.

Put that in writing and make sure it's in your documents. With that concludes NC even Senator Durazo concurs. So you got two there, two out of three. That concludes issue number four. We're now gonna move to issue number five, which is the elimination of vacant positions at DIR.

We're joined by the following individuals, the same with the department of finance and l a o and also mister Iverson I believe is staying our c f o of d I r. Let's see if you can match, Jassy. I think she's got you Yes. Pushed on there.

Yeah. Definitely something to aspire to. And hopefully, I do because I'll be with you for the remainder of DIR's issues. So hello again. Josh Iverson, chief financial officer at DIR.

Thank you for the opportunity to provide an overview of DIR's approach to the vacant position eliminations under budget control section 4.12. In response to this budget directive, DIR conducted a comprehensive and deliberate review of its vacancy landscape, operational needs, and program priorities. At the time, the department had roughly 4,000 authorized positions with about 1,000 vacancies.

Our goal was to identify a level of reduction that would achieve meaningful savings while minimizing impacts to core mission critical functions, implementing this budget control section in a balanced and responsible approach. DIR divisions, which there are many, were given the flexibility to identify vacancies that could be absorbed with the least operational disruption.

This decentralized approach ensured that decisions were informed by program level expertise and aligned with each division's unique workload and priorities. The department focused on eliminating long term vacancies and positions that were more administrative or clerical in nature, while taking steps to protect frontline enforcement and service delivery to the greatest extent possible. Even after the reductions, DIR retains several 100 vacant positions, providing continued flexibility to address the highest priority needs as they evolve.

We recognize the concerns raised regarding workload and backlogs in certain areas and remain committed to monitoring these pressures and adapting within available resources. Thank you, and I look forward to answering your questions.

The LAO.

Chaz Allen with the LAO. Our office has no, specific comments about these particular proposed eliminations, would defer to all the work that staff have done on your behalf.

Thank you. Department of Finance?

Allison Hewitt, Department of Finance. My particular role here is I'm happy to answer any questions from the administration in terms of the statewide. Implications here and just note that the, in conjunction with the control section 4.12 of the 2024 budget act.

The administration worked to identify vacant positions across state government while minimizing to the greatest extent possible any public impact associated with those reductions. That exercise enabled the state to address a budget gap that was projected, both in 24, 25. It also helped to build budget resiliency.

So with that, I'm having, my colleague can answer any questions that are specific to DIR, and I'm available to answer any questions the committee has.

Thank you. Senator Durazo?

Thank you, Madam Chair. All these positions are paid for with special funds. So if the point of these, vacancy sweeps is to reduce the structural deficit, why are we using non general fund positions? Why are these non general fund positions being targeted?

Thank you for the question. I'll start and I will probably pass it off to my colleague for the DIR specifics. Yes, obviously general fund was the priority because that was the structural gap that had been identified, but within the control section language the Department of Finance was able to look at various funding sources so not just the general fund but also special funds.

The special fund analysis there is the administration's position is that building budget resiliency within the special funds, many of which are supported by fees or assessments. In the case of, the department of industrial relations we're talking primarily about assessments on employers, annual assessments.

There is a good case to look at those special funds and build resiliency within those funds, in addition to solving the immediate general fund budget problem that was in front of us. And my colleague can provide kind of the specific fund source information to the extent that it's helpful, but that's the construct of the drill, is that the way that the administration approached was both general funds, but also having a special fund component of that.

Well, these positions cover things like recovering stolen wages, worker safety, and they're meant to respond to California's workforce, working people, to the needs of so these. As you said, these special fund positions are paid for with fines and fees that come from enforcement activity. They're not just fines and fees, they're because of violations and they're part of addressing violations. So it's enforcement activities, not like attack where we're just trying to penalize an employer.

So why would we eliminate these positions, which perform the very activities that are needed? And we we know that there is more and more of workforce violations occurring out there. And so we're taking away positions to enforce where the fines are and the fees are being used for enforcement activity at a time when there's most needed, when there's more abuse, and taking that away from them when it's not hurting our general fund.

So I don't wanna make this connection, but we just talked about a little while ago the elimination of other positions or not elimination of other positions, but not increasing or not maintaining the positions. This is not the combination of the two is not what's needed at this particular time. So what how can you explain first these positions, these vacancy sweeps, and then am I making this connection? Is that fair or not?

Yes. Thank you, Senator. The as Allison mentioned, it was a statewide approach. Historically, 40,000 vacancies statewide. The administration wanted to try to eliminate 10,000 of those, again statewide across all state departments, across all funds, across all bargaining units.

Within the department of industrial relations, we took kind of a similar approach. We wanted to kinda spread this out over all of the department's divisions. Director Osborne, when she testified, mentioned a few of them, labor standards enforcement in CalOSHA, and apprenticeship standards, and workers' compensation. We also have many, commissions, councils, boards.

It's a pretty complicated department, and so we wanted to allocate the elimination of positions across the entire department so that we weren't really focusing heavily on any one in particular. With respect to the wage claim adjudication unit within the division of labor standards enforcement, they did participate in this exercise as did practically all of the department because had we not had each division within the department participate, it would have magnified the impact in other high priority divisions in our department.

We recognize workload pressures and backlogs. However, the positions identified for elimination were vacant and the removal reflects a balancing of priorities across the entire department. As a result yes, there are some flexibility considerations, but we do not anticipate a direct immediate impact on the existing backlog attributable to these reductions. We will continue to monitor workload and staffing levels, and evaluate options to address backlog challenges within available resources.

Yeah. The problem with vacancies doesn't mean that they're not needed. A vacancy could be because we haven't figured out how to recruit people like in CalOSHA. We haven't figured out how to recruit people and retain them. That's our problem.

It's not because it's there's not a need out there. And that's a really different that leads you to a different conclusion than, "okay, they're empty, they're vacant, so we don't need to fill them because there's obviously, there's there's no need for it." That's not the case, and this, with regards to labor standards, we know that that's not the case. There's more need, more need than ever.

I mean, right now with all of the immigration rates that are taking place, a very common thing for employers to do is to use that to intimidate and retaliate against immigrant workers in order to lower the standards and not pay the wages or other, you know, bad things that employers some employers do.

So this is not the time to pull back, and I really urge you all to reconsider that because that doesn't make sense if you look at the reality of what's going on in the workplace. And that's not what, you know, California having these laws on the books doesn't mean anything if we're not enforcing them. So madam chair, I really urge us to dive into what this means to Californians. Thank you.

Thank you, Senator Durazo. I want to build upon our comments and if there are any MBA people in the room or LAO. I was always told in our projects that budgeting and cutbacks of positions aren't should not be done smoothing out, you know, just taking numbers and say, okay, I wanna take we gotta do 10,000 jobs and we're gonna take 1,000 from each department. That's not what most, people will recommend in business school. What they tell you is is that actually you're supposed to look at each and every department determine what is the need of that department.

And that may mean some departments may not have any cuts and some may have double, based upon, really frankly, where the need is. So I concur with Senator Durazo. I'm a little concerned with the view of, well, we know we need to cut and so we're trying to spread it out, and if we've already identified that this is an area where there's significant backlogs and issues, this may not be the department at this time to eliminate those positions.

These may be positions we want to keep and consider other areas within your vast department of 4,000 employees and all of that to consider, maybe looking someplace else.

So, if you could come back to the committee with really assuring us that based upon the previous discussion we just had in the issue, that these positions are not positions that are gonna be impacting dealing with the backlog and dealing with new systems and all these other things that you guys are doing because this is a priority, of the legislature as Senator Durazo has stated. Okay. Alright. So you're gonna get that back to us?

Yes. We can commit to that. Yes.

Okay. Thank you, sir. Alright with that, seeing no further questions that's gonna conclude issue number five. We're gonna move on, oh, I'm sorry. I had one question. Does this department utilize the temporary help of blanket program?

Yes. DIR definitely does utilize the the temporary help. Sometimes people refer to it as blanket because they have blanket authority to hire people in into, temporary help funded positions.

For example you may recall, it's been a few years, but, Assembly Bill, January provided the department some emergency hiring authority, and then the language of the bill also called for DIR to work with CalHR and the state personnel board to review certain classifications, and the minimum qualifications associated with those to see if they needed to be amended or updated. So, both, Cal OSHA and the labor commissioner's office utilize that authority under AB 171, to hire into the the temporary help blanket.

And one thing that's kind of not immediately clear when we talk about the elimination of positions within the department is those are authorized positions that we're referring to. It doesn't really talk much about positions that have been hired into the temporary help blanket. So you utilizing the authority under AB 171, allows a labor commissioner and the chief of Cal OSHA to kind of mitigate some of the impact of those positions being eliminated.

Well, I'm of the position that actually I would rather you hire people full time to do the work versus utilizing the temporary, blanket program. So, and we could eliminate the temporary blanket program. How about that?

Well, the yep. Thank you. I appreciate that madam chair.

That was really a rhetorical.

I'm glad to hear that.

So if you could please provide to the committee, maybe just your summary of how has the temporary help program evolved in your number of people and then is that growing? Is it reducing? Kind of what's happening with it as in relation to the vacant positions.

So we can ensure that it's always our hope that we would hire good qualified people who would be committed to the department. Who could grow with the department and then that expertise could continue to stay in the department. So if you could help us maybe with a little more details on the background, that would be great.

I can commit to that. And what CalOSHA and the labor commissioner's office have been able to do under that authority under AB 171 is hire into the temp health blanket, which allows those, staff to be trained, to meet the minimum qualifications that would allow them to be hired into a permanent position.

Yes. I understand. Okay. That concludes issue number five. We're now gonna move to issue number six.

And, the CFO is gonna stay in the hot seat here. Issue six is the Bureau for Investigation Resources and we'll be joined by the following panelists. Danielle Lucito chief counsel of the division of OSHA we're also gonna have Deborah Lee the chief division of OSHA as well, and then mister Iverson is staying, and we still have our same representatives from LAO and Department of Finance. With that, why don't you go ahead and get started?

Thank you, madam chair. Again, Josh Iverson CFO at Department of Industrial Relations. This proposal is requesting 14 permanent positions and $2,300,000 in fiscal year 26, 27, and $2,000,000 ongoing, from the Occupational Safety and Health Fund to strengthen CalOSHA's Bureau of Investigation.

This unit is responsible for investigating the most serious workplace incidents, including fatalities, and for preparing cases for potential criminal prosecution. The bureau currently handles a significant and growing workload of workplace fatality and serious injury cases each year.

This proposal reflects the need to align staffing with that workload and ensure the department can carry out timely, thorough investigations in the most serious cases. With these additional resources, CalOSHA will be able to expand its investigative capacity, improve timeliness, and strengthen enforcement of workplace safety laws.

A stronger investigative presence also supports deterrence, reinforces employer accountability, and helps prevent future injuries and fatalities. Ultimately, this proposal is about ensuring that the most serious workplace incidents receive appropriate attention and that California continues to uphold strong workplace safety standards. Thank you, and I'm happy to take any questions.

Thank you. Who'd like to go next of you two? You're just here to answer questions and support. Okay. Thank you.

LAO, no further comments, and Department of Finance? Okay. Senator Durazo? Yes. He got the message from the last question. Is your mic on? Okay. I didn't hear you very good. There you go.

Hello. Anyway, I went to visit a woman, lived in extremely poor part of town in her trailer park, and she had just lost both of her sons in the workplace. Both of them minors and both of them and the whole family undocumented. It was the saddest thing I've ever had to do in my life to visit her, not knowing what what to do. I just say that, obviously, to connect how important these investigations are, to see that there's fatalities in the workplace almost every other day.

There's something that's not a good message that's out there, that the conditions are so bad that somebody dies on the job every other day. So the BOI currently investigates about 70% of the cases in the jurisdiction each year. So theme is how we need to could do more, and I really appreciate the proposal to get more staffing on there. What criteria because you only get to 70% of the cases.

What criteria is used to prioritize the fatalities and the serious injuries that get investigated? And what kind of work do you do with the workers, the families, and the employers when it goes uninvestigated?

Okay. I can try my best to answer that for you. So when we're looking at cases that are referred to us, we look for cases that typically involve a serious accident related citation, which means that our enforcement staff on the civil side have made a determination that the accident or fatality was caused by a serious violation of regulation. We often refer to those as SARS. And if you look at the labor code 6315, it tells us that those are the types of serious cases that we are to look at.

Serious accidents caused by a serious violation is what it says in the labor code. So we're supposed to be looking at all of those, and then from looking at them, we are to pull out the ones where we think that there's a potential for criminal liability. And once we do that then we try we try and investigate those, and that's those are the ones that we actually investigate.

There is a procedure, a policy and procedure about how to determine, you know it gives criteria to the investigators. And there's sort of a pre review done by the supervising special investigators and and the chief investigator.

What kind of work or what do you do with the family and the employers?

I'm sorry, Senator Durazo. Could you say that one more time?

During the time of the investigations? Okay. So during the time of the investigation, we are interviewing people from typically, from the employer staff, if that's necessary. They know that we're conducting a criminal investigation. It does that answer your question, Senator Durazo, for the employer?

Hello?

Yeah. Thank you. It might get a little wonky. If it keeps up, we'll have you switch over now.

Okay. Well, I just since it's a fatality, since it's so serious Yep. I just wonder what is it that you do with during this process of investigation with the families, with the employers?

So to the extent that the family has information that can be helpful in our investigation, then we utilize that as a resource. Any source that we can get, so it could be people who work for the employer, it could be the employer and their staff. And unfortunately, sometimes it is the family of the decedents who know information that's critical to our determination about criminality.

If there is no evidence that we would get from the decedent's family, we typically do not have any kind of engagement with them at the BOI. That doesn't mean CalOSHA doesn't engage with them. That just means in the criminal bureau.

Right. What I would add is that during the investigation, we do make immediate contact with the family at a reasonable time. We will also keep them informed of the investigation as to what is being transpired. We will also definitely interview the family to see if as chief I'm sorry.

I call her Dan. Sorry. Lechito had stated to ensure them and give them a way of communicating to us so that we can explain the process to them. And we stay informed with them throughout the process.

Okay. Thank you. Let's see. If the 14 positions associated, and associated resources are approved, what is the timeline for which the administration expects to fully address the backlog?

Sure. Whoever has the answer.

Want me to answer that?

My co panelist or if you wanted me to be the one. That's an excellent question. I think that the intention is to not have a backlog as soon as possible, and it's hard for me to say because we have not been adequately staffed. How long it will take, I think it will be relatively quick to get through the fatality backlog.

The fatalities are a much smaller number. I think for the serious injuries caused by a serious violation, we've done math to sort of we've looked at the cases from 2024 and 2025 to determine how many of those we think would be cases we would have to actually investigate, and it's about 615 of the approximately 2,000.

So that would basically triple our workload because right now we're looking at about 370 fatalities a year that or cases, most of which are fatalities. So if we're adding on that additional 615, which currently we don't get to, it is going to add quite a lot of work.

Okay. So can you please provide to the committee, because we don't operate in as soon as we hope. If you could provide to the committee a better idea as we move forward with supporting the request, when you anticipate resolving your backlog, the time frame.

Grace Henry, Department of Finance, and I just wanna provide one clarification, which is that generally speaking BOI does not carry a backlog, due to the nature of these kinds of cases where there are statutes of limitations. There is a current amount of cases as the chief Lechito was saying that these resources would go a long way to addressing, and we will absolutely get back to you with, those projections.

Thank you. Thank you very much. Seeing no further questions, then that's going to conclude with issue number 6. We'll move to issue number 7, which is the workers compensation appeals board. More specifically to remove the sunset for appeal timeline provisions, trailer bill language and we're joined by the following pandelus.

We have before us Catherine i'm not going to butcher your last name chair of the workers compensation appeals board we have Mr.Iverson who's returned and then we have our LAO and department of finance representatives who have remained chair would you like to start? Or you're here to?

Yes Good afternoon. I'm Catherine Zaleski, and I I appreciate your fears of my name. And, as you know, I'm the chair of the WCAB. Labor code section fifty nine zero nine requires us to act on a petition for reconsideration of a decision issued by a workers' compensation judge within 60 days. Petitions are filed with the division of workers' compensation and then transmitted to the WCAB once the judge has prepared a report and recommendation addressing the petition.

The judge has fifteen days to issue that report. Under former section 5909, the 60 days began to run when the petition was filed. Any delay in transmitting the case did not extend the 60 day period. As a result, the ability of the WCAB to act on petitions within 60 days was substantially limited.

In order to meet the 60 day requirement, WCAB often issued an interim order granting the petition for further study and then later issued a final decision, creating a backlog of cases awaiting those final decisions.

Effective 07/01/2024, section 5909 was amended so that the 60 days begins to run when a case is actually transmitted rather than when the petition is filed. Since the amended version took effect, WCAB has significantly reduced the number of cases awaiting decisions from 637 on 07/01/2024 to 460 as of 04/21/2026.

Additionally, we've been able to limit the numbers of cases that we grant for study because we have a true 60 day period to consider the petitions as they come to us. This amendment is set to sunset on July 1. We're asking that the sunset be repealed and the amended version become permanent. I'm happy to answer any questions that any of you may have.

Mr.Iverson, did you have anything to add?

No.

Support. Okay. Thank you. LAO's office? No. Department of finance? Okay. Senator D'Orazzo?

One question, What's the size of the remaining backlog?

Right now or as of April 21, it was 460.

637. Yes.

Oh, and that so that before the change, it was 637?

Thank you. That's all.

Yes, ma'am. That will include item number 7. We're now gonna move to item number 8.

No further questions? No? Okay. Alright. That's gonna conclude issue number 7. Thank you for your updates and your progress, more importantly.

Thank you.

Issue 8 is the apprenticeship training grant augmentation. We'll be joined by the following panelists, for this issue. We have Adele Burns, chief of the division of apprenticeship standards and mister Iverson is staying in to support and we also have our LAO and department of finance representatives. We'll start with miss Burns.

Actually, if you don't mind, I'll go first.

No. Ladies go first. Sure, go ahead.

Okay, thank you appreciate it. Josh Iverson, chief financial officer at DIR. The department requests approximately $18,200,000 annually from the apprenticeship training contribution fund to increase training grants for building and construction trade apprenticeship programs from the current level of $3,000,000 to $20,000,000 per year through fiscal year 29-30, along with some limited term staffing to manage increased workload.

This proposal is driven by an accumulated fund balance, a surge in contribution check processing demands, and urgent workforce needs tied to the Los Angeles fire recovery efforts. This proposal better aligns available resources with current workforce demands. Apprenticeship programs are critical to developing a skilled construction workforce, particularly as the state faces increased demand for rebuilding and infrastructure projects. Current grant levels underutilize available funds and limit training capacity.

By increasing grant funding, the proposal will expand training capacity and help ensure a pipeline of skilled workers to meet near and long term needs. The limited term positions will support timely processing and program administration, avoiding delays or backlogs. This is a targeted fund supported proposal that leverages existing resources to address immediate workforce needs. Thank you, and I'm happy to take any questions.

I'm sure she'll be fine. Who else? Or are you gonna make some comments?

Okay. Great. LAO? None? Department of Finance? None? Okay. I do have let's see. Oh, we're in issue eight. Right? I wanna make sure I didn't lose my place here. Just the the grant cap has been at 3,000,000, which I'm glad now to see that it's significantly increased.

I'm just here to answer questions.

But if the current ATCF fund what is the current fund balance? And why would we let it expire in 29/30 rather than make it a a permanent, given that the ATCF revenues are expected to continue growing with LA rebuild and infrastructure investments. So two questions, what's the current balance, and why let it expire?

Thank you, Senator D'Orazo, for the question. The current fund balance is in the neighborhood of about $80,000,000, and that's why it gives us great confidence to put forth this proposal to increase the annual grant amount from 3,000,000 to 20,000,000, and start to, utilize that fund balance. Yes, we believe the revenue into the fund is sustainable. However, we wanna be fiscally responsible and not overcommit or overleverage the the fund balance.

That's why we put the end date of 29/30 on there. If it ends up being more sustainable at an amount above, you know, $3,000,000, we'll definitely come back and discuss it with the legislature on what maybe we can put in into place at that time.

Okay. Any comments?

Grace Henry, Department of Finance. Just echoing the the comments from Daire.

Okay. Just wanna make sure sometimes you get better proposals when you know that it's gonna be several years down the line rather than year by year by year. That's very uncertain. So I think you get better proposals and better when you can project and when you can plan several years in advance.

Okay. That's my only question. Thank you. Thank you very much. Let's see. Okay. Sorry here. So moving on. Thank you very much. Moving on to issue 9 regarding the pre apprenticeship program. Okay. Thank you. Go ahead.

Good afternoon. Josh Iverson, chief fiscal officer at DIR. DIR requests two permanent positions and $336,000 in fiscal year 26, 27, and $300,000 ongoing from the apprenticeship training contribution fund to support the rapid growth of pre apprenticeship programs in the building trades. California's pre apprenticeship programs serve as a critical entry point into registered apprenticeships, preparing participants with the foundational skills needed to succeed in the trades and connect to career pathways. Demand for these programs has increased significantly.

New California apprenticeship council pre apprenticeship registrations have grown from just four programs in 2021 to 21 programs in 2024, and are projected to reach 170 by 2029. This growth reflects broader statewide efforts to expand apprenticeship opportunities and build a skilled workforce to meet California's infrastructure and economic needs.

The requested analyst positions will ensure the department can keep pace with this growth by conducting program reviews, processing registrations, and providing ongoing compliance monitoring.

Without these resources, delays in program approval and oversight could limit the expansion of pre apprenticeship pathways. This proposal supports the governor's goal of serving 500,000 apprentices by 2029 by strengthening the pipeline into registered apprenticeship programs. Thank you, and I'm happy to take any questions.

No. Alright. I have I have one or two questions. For the pre apprenticeship programs, what are the completion you may not have this specific thing now. What are the completion and placement rates for the Erika program and for the high road trading partnership funded building trades pre apprenticeship?

Hello? Okay. Yes. For the pre apprenticeship programs, what are the completion and placement rates for the Erika and the High Road Training Partnership funding, building trades, pre apprenticeships, and what share pre apprentices successfully enter registered apprenticeships. Obviously, that's a that has to be part of the goal, right, to actually move through the apprenticeship programs.

So first that, any any information on that?

Yeah. So Adele Burns. I'm the Chief at the Division of Apprenticeship Standards, And, those are great questions, and I'm happy to take those and and follow-up specifically since those were about two programs. One thing that I will just clarify is, DAS obviously does run the the Erika grants, and so we can gather that data for you. And we do track it in our system, so we can do that analysis and follow-up with you about that.

The high road to construction careers, some of those programs are registered pre apprenticeships with DAS, but not all of them. And that is a grant program administered by the California workforce development board. So, we may need to I I will probably be able to give you a partial answer on that, because, of course, if they are not registered with DAS, we do not have the ability to tell you which of those individuals have matriculated into an apprenticeship.

But this, of course, is part of why we are broadly encouraging the registration of pre apprenticeships so that we can have exactly those kind of metrics. And, so we will follow-up with you also about the completion rates of pre apprenticeship programs, but I will say just high level pre apprenticeship programs typically range from two weeks to twelve weeks.

So the completion rate is usually pretty high on those. Where there's more variation in completion rates is in apprenticeship programs. So the I will say the key metric that we track with pre apprenticeship is more around the matriculation into an apprenticeship program. So we have the the stronger data around that.

I was privileged to visit a I forgot the name of it, in in Los Angeles, the women's pre apprenticeship program.

Winter, perhaps?

Yes. Yes. Yep. And it was fabulous. I mean, the experience of what it takes, and things that you maybe maybe weren't as a bigger challenge in more traditional careers, but to be in the construction career.

How how your family responsibilities, childcare is really different to have to get to work at four or 05:00 in the morning on the other side of town. I mean, really, just down to the nitty gritty, it was really, really wonderful. So I could see how that's gonna increase because just saying, okay, apprenticeship programs should have more women. You know, okay, you know, you can say that all you want, but without these preparations for the apprenticeship program won't won't work.

So given the success of these programs, shouldn't we consider additional resources?

And I'm you know, we all know that we need more construction careers, more people in construction careers with the fires and so many other housing. We're doing a lot on the policy level to increase housing production, but we're all the people who can actually build. So I would really encourage you as part of our vision for California and the needs for California, this could really use additional resources. Thank you.

Thank you.

Thank you, Senator Durazo, for not only your good questions, but covering for me there. You're a great wingman all the time.

I just have one more. Yes. And can you provide a status update on the California Youth Apprenticeship Program? Happens to be my bill. Anyway, my understanding has been a a model for federal programs, and other states.

So if you could get that to me, that would be great.

Absolutely. Is there any particular area of the Youth Apprenticeship are you thinking specifically about the pre apprenticeships funded by the California Opportunity Youth Apprenticeship Grant? Are you looking for sort of the same metric for that program?

Whatever you have.

Whatever okay.

At 50,000,000 over three years. Right?

Yeah. So I mean, I can give you just a high level update about the, we call it the COIA grant, the California Opportunity Youth Apprenticeship Grant. And we have been allocated $65,000,000 over three different budget years, and we've done two rounds of awards.

We've awarded $46,000,000 in grants, and there is a third round of that grant that we are soon to announce the awardees, and what we did with the third round of the grant was actually to provide continuation funding to the round one and two grantees that have really met significant milestones and registered their programs, whether it be a pre apprenticeship or apprenticeship, and providing continuation funding to those programs to help them launch and continue to scale and serve more opportunities.

So that's kind of the the high level, but happy to provide any other further updates you're interested in.

Thank you. Seeing no further questions, that's gonna conclude our issue number nine, and now we're moving to issue 10, which is the increased support for judgment enforcement we will be joined by the following panelists for this issue we have miss Garcia Brower from the the labor commissioner with the division of labor standards and enforcement Mister Iverson, who's still hanging in here, and then we have our final same representatives from the LAO and department of finance.

Are you going to are we gonna do miss Brower First, mister Iverson?

I'd like to be consistent and and go first myself, if that pleases the chair.

You haven't convinced me why yet.

Because I wrote it down and everything. I

Well, she's prepared too. Go ahead, Mr. Iverson.

Alright. Thank you. I appreciate it. Good afternoon. Josh Iverson, Chief Fiscal Officer at the Department of Industrial Relations.

This request is for 14 permanent positions phased in over two years and up to $2,300,000 in fiscal year '26-'27 with $2,000,000 ongoing from the labor enforcement and compliance fund to expand the labor commissioner's judgment enforcement unit. This unit plays a critical role in ensuring that workers actually receive wages that have already been legally determined to be owed to them through the wage claim adjudication process.

When employers fail to comply with final orders, the judgment enforcement unit uses legal tools such as liens, levies, and asset investigations to recover unpaid wages on behalf of workers. The unit is currently managing a substantial and growing volume of enforcement actions, reflecting both increased enforcement activity and continued challenges in securing payment from non compliant employers. This proposal will allow the department to expand its capacity to process referrals, pursue enforcement actions more quickly, and improve outcomes for workers who have already prevailed in their claims.

Strengthening this function is essential to ensuring that judgments are meaningful and that bad actors are held accountable. This proposal supports the core mission of the labor commissioner's office to ensure a just days pay for every worker and to promote a level playing field for employers. Thank you, and I'm happy to take any questions.

Thank you. Miss Brower, did you have anything you'd like to add?

I'm available for questions.

Okay. Thank you. Alright. LAO office, any comments?

Chaz Alamo with the LAO. Only comment is to say that several years ago, our office reviewed the administrative data behind several years worth of wage claims at the labor commissioner's office. And one of our key findings was that oftentimes when an award is made by by a staff member through the the the proceedings and hearings of a wage claim, the word cannot be collected. And that is the the sort of responsibility of this entity.

And so pointing that out here, that's clearly a a shortcoming of the current wage claim adjudication process, and these positions would go toward writing that, something that we'll be following more closely in the future, and also suggest that the subcommittee continue paying attention to as the the labor commissioner's office manages its its growing backlog of wage claims.

Thank you. Department of finance, anything you'd like to add?

Your Department of Finance, nothing further to add, but here to answer any questions.

Thank you. Senator D'Orazo?

Thank you. I just wanna thank the department for all the work that you've done on in this area. My first year I was elected, we had a budget hearing. And I remember so distinctly, there was this long line of garment workers who had these judgments from employers who owed them, and it was and they've done everything, and it was still years later. So that really left a big impression on me.

So thank you all very much. So what is the current backlog of unaddressed judgment referrals and in dollar terms, and how much in unpaid wages do you estimate you could recover with the proposed additional staffing?

Good afternoon. I do not have the dollar amount, but we can share that with you later. We have on the liens, we have 28,000 is our current backlog. On levies, it's 30,000, and I'm estimating. On the the demand letters under labor code two thirty eight two forty, we have about 3,500.

And on in-depth investigations, so those are generally low wage industries that we prioritize, and

we have about 15 and we have about 1,500 in those.

Do you have idea what the dollar value is?

I do not have that.

Thank you.

Thank you, Senator D'Orazo. Seeing no further questions, that's gonna conclude our issue number 10. Thank you for your participation. Before we move on to public comment, I wanna give, Senator de razzo, any final opportunities of questions or comments, based on today's agenda.

I don't wanna repeat the specific ones. Thank you, madam chair. But, obviously, you know, there's progress that's been made on certain fronts, and I just don't want us to go backward, you know, on other fronts, especially dedicating where we know there's an issue. We know it. We we just can't walk away from working people.

I'm really proud of the apprenticeship programs, worked with certain people here in the room on those apprenticeship programs over several years. The youth apprenticeship program, the women's apprenticeship pro it's it's really great to see moving in that direction. That's why I don't wanna see us work backwards in in other parts of the work. So with that, thank you very much. And I will fight hard alongside of you madam chair for the resources that are needed.

Thank you. Thank you very much. With that, that concludes all the items that we have and now, we'll you may wanna listen to some of the public comments before you depart. Thank you very much. We will now move on to public comment to ensure that everyone has a chance to be heard.

Please limit your comments to one minute AND, THANK YOU VERY MUCH.

Cesar. Madam Chair, members, Cesar Diaz here with Capital Advocacy.

Just a moment. Could everyone please keep things down so we can hear the comment? Just a moment. Let them get a chance to okay. Go ahead.

Thank you, Madam Chair, members. Cesar Diaz with Capital Advocacy on behalf of the California Hospital Association. Here in item number four in support of the SLBTF. Thank you.

Thank you for staying.

Good afternoon, and thank you for your patience while you're with us. We'll be very brief. My name is first, I just wanna say good afternoon, chairwoman, Madam Richardson, and members of the Senate Budget Committee. My name is George, and I work with the California Coalition for Worker Power, CCWP, and I'm a constituent of yours in the beautiful neighborhood of Lincoln Heights. First, we just wanna thank you and this committee for the leadership in supporting our budget request last year for the California Workplace Outreach Program, CWAP.

Just wanna share some quick numbers. Through CWAP, we have reached over 4,000,000 workers in the state, had over 800,000 interactions from 89 organizations in over 45 languages. Workers right now need our help more than ever with federal immigration enforcement endangering our communities. A lot of workers don't know who to go, who to trust, where to get these resources. And so these community organizations behind me are trusted messengers that reach our most vulnerable workers and provide them with the resources they need.

We have brought some of these organizational stakeholders to share the impact they have made to workers and constituents of your district. I'll close by saying, it is for these reasons we request your support for 30,000,000 per year for five years to front CWAP. Thank you.

Thank you.

Hello. Good afternoon. This is my name is Soraya Leonard from the April Parker Foundation. We're based in Long Beach, so it's nice to meet you. For the CWAP program, we've been doing a lot of groundwork with individuals in the workplace and understanding what their experiences are behind the scenes as we help engage and empower them as they understand what their workplace rights are, both inside and outside of the workplace.

It's clear that workers need protections in their workplace and the fact that they feel taken advantage of, and not understanding their rights is a big issue, something that we're trying to absolve. So for example, I had met one worker that was denied giving getting time to be able to take care of his, family member back home, and, other workers who felt racially discriminated against and targeted in the workplace, and just don't feel safe to, go to work on a on a daily basis.

So this work and the CWAP program helps us give them some insight on what their workplace rights are on a daily basis. So just wanted to give you some notes on that. Thank you.

Thank you. So, I was a little lenient on the first two because we were kinda warming up and you guys were so great and participating today, but please try to keep to a minute. And if you get to a minute, I'm gonna say please summarize. Okay? Alright.

Yes, ma'am.

Great. Thank you. Greetings, chairwoman. I'm also a constituent, in Long Beach of yours and to the rest of the budget committee. My name is Dawn Motkins.

I'm the director of the Southern California Black Worker Hub. We coordinate black worker centers throughout Southern California, reaching more than 15,000 black workers. Please fund our CWAP program, 30,000,000 per year through the 2031 term. We are also members of the California worker of the CCWP, California Coalition for Worker Power. It has proven critical to our abilities to deepen reach and education and engagement around worker rights with black workers across all industries, public and private sectors.

Through our c wap echo black voices project, we've become the trusted messenger in connecting workers to our local and state agencies like EEOC, DIR, Cal OSHA, civil rights departments, and to support their worker protections where so many have never trusted these government agencies before. The outcomes are workers are more activated and empowered to actually address the insisted worker workplace.

Please summarize.

Yep. Violations that so many are harmfully harmfully experiencing. And in addition, please also fund the 14 staff positions at the labor commissioner's office. Thank you.

Thank you.

Good afternoon, Senator Richardson and other committee member. I'm DJ Yoon. I'm from beautiful city of Inglewood. Special shout out to my Senator. I'm with the organization, Koreatown Immigrant Workers Alliance.

My Long Beach people, I used to represent most of Long Beach. Now I only bit, but Inglewood's full in the house. But I still I still love Long Beach. Yes.

So I'm also with the organization Koreatown Immigrant Workers Alliance in, Central Los Angeles. I follow in, to share a story why CO OP is so important. A worker from a L'Oreal restaurant, it's a local chain in Southern California, reach out to us because he and his workers were so fearful of going to work while ICE kidnapping was separating so many families in Southern California.

So we met with workers and owners, and we will agree that business cannot open while workers don't go to work because of the worry about being kidnapped by the ice. So we had a great relationship with the owners and workers.

We provide a direct know your right education to all workers and the owners in multiple location. I think this truly demonstrate the Siwa program, help us to build a partnership among owners and workers and community organization to protect the workers also to protect the workplace businesses. So this is a very critical moment for your support, and your support will continue and build up our partnership to protect our local economy. So thank you so much for your support.

Thank you. If you're representing an organization, if you would kindly leave your organization's name and address, email, and phone number so we can follow-up if needed. Thank you.

Good afternoon, chairman and the members of the Senate Budget Committee. My name is Cammy Johnson, raised in Long Beach, now I'm a current resident of Englewood. I just wanted to let you know. The Southern California, I'm from the Southern California Black Worker Hub, represent over 15,000 black workers across Southern California. I'm a proud resident of Inglewood, California.

And I'm asking you to support allegation for $30,000,000 per per year for the five for five years to fully fund our California worker outreach program, CWAP. Especially as tourism events are coming and world events are increasing, I'm right nearby, all of the, you know, all of the areas in that that are world events that are happening that are coming to New York City. We want to ensure our workforces are informed and protected. This is our trusted we are trusted messengers.

Keep, keep us connected to our government agencies and well and worker right protections.

Please adequately fund CWAP.

Thank you.

Hi. Good afternoon, y'all. My name is Sirach McKeel, and I'm a black worker organizer at EBACE in the East Bay. Alongside these wonderful people from all over the state, I'm in support of full funding, which exists because of fees paid for by bad actors. So let's make sure this funding can educate and protect workers.

And on the other issue, hiring adequate staff to recover lost wages. Thank you so much and appreciate you all.

Thank you. You did excellent. Less than a minute.

Good afternoon, Chairwoman and Members of the Senate Budget Committee. My name is Flower Alvarez Lopez with Universidad Popular, which is based in North County, San Diego, beautiful sunny San Diego, serving communities alongside the 78 And 76 Corridor in the rural areas of Julian, which is in Senator Seyarto's district. We support workers and small businesses across North County San Diego region. We're here in strong support of additional funding for CWAP. Our organizations reach some of the most underserved and vulnerable community members.

Thank you.

Thank you. Great job. Thank you. Thirty seconds. You were great. And your name is Laura. Right? Laura.

Flower.

Flower.

Oh, excuse me. Alka Seltzer is clogged.

Good afternoon, Chairwoman Richardson and Members of the Senate Budget Committee. My name is Alondra Alvarez with Universidad Popular from North County San Diego. Our team reaches constituents of Senator Seyarto's district, laborers across the rural area who rely on us to connect them with workers' rights resources. As those trusted messengers, we are here in support of CWAP funding to continue the necessary work our organization provides to the force and backbone of California labor. Thank you.

Thank you. Wow. Great.

Good afternoon. My name is Daniella Urban. I'm the Executive Director of the Center for Workers Rights here in Sacramento. I'm gonna speak first on item one then on items five and ten. So on item one, since 2020, we have convened the UI, the unemployment insurance network of advocates that support claimants on their, unemployment claims.

EDD next rep represents a major opportunity to modernize California's employment development department across all three benefits programs. However, we are highly concerned about the lack of oversight and accountability and independent review of the modernization efforts, as well as the meaning lack of meaningful insight from claimant advocates like myself. For example, the recent update on the SDI and paid family leave phone lines have not resulted in any noticeable difference to claimants, and yet EDD moves forward with implementing these systems on the UI program.

We wanna make sure that these concerns are not replicated as they go through the ICMS system and as you approve the considerable amount of funding for that work. Thank you.