Assembly Budget Subcommittee No. 5 on State Administration

K, guys. Good afternoon, and welcome to the assembly budget subcommittee five on state administration hearing today. Today, our hearing will focus on general state admin issues. We will have two items for vote only, hear from assembly member Pappan and representatives of San Mateo County on their vehicle license fee, funding, and hear several gov ops proposals and an update on GenAI. And finally, have an update on Middle Mile as well as proposals on Middle Mile from the Department of Technology.

Not on the agenda is a request from Assembly member Ward to get an update from DGS on the Hillcrest DMV, which will do which we will do after issue number one. Housekeeping. This is an in person hearing with all panel panelists testifying in person. We will take questions from members of the subcommittee after each panel, and public comment will be taken at the end of the hearing and will be limited to thirty seconds.

If you are unable to attend this hearing in person, you may submit your comments via email to [email protected].

And with that, we are going to welcome, our first panelist who are already here with us. This will be on item number one, and this would be the fiscal letter technical adjustment. Oh, sorry. Three. Sorry. Item number one, San Mateo's in the house.

Here we go. Madam chair, thank you very much.

You can wave. Wave. Everybody from San Mateo wave. There we go.

Thank you, madam chair. I appreciate that acknowledgment. Okay. We've got folks who come a long way. So, first of all, thank you for the opportunity to be heard.

We so appreciate it. You know, in 2004, then Arnold Schwarzenegger cut the BLF from 2% to point 65% of a vehicle's value. The state understood the magnitude of that decision and committed to hold local governments harmless to keep revenues whole as if the 2% rate still apply. But no policy is flawless, and the VLF backfill mechanism is no exception. The architects of that 2004 compromise didn't anticipate a county like San Mateo, where demographic and economic realities break the formula.

For the past decade, the state has recognized this flaw and stepped in with General Fund Dollars, to cover the BLF shortfall. Let me be clear. That backfill wasn't a favor. It was the state honoring its own commitment. And yet in the current budget proposal, which came out in January, that commitment disappears along with 18% of my county's budget.

For the last three years, I've come before this committee and told a more detailed version of this story. Today, I instead come with a very simple message. California, help us, help you. San Mateo County isn't asking for special treatment. We're asking you not to undercut one of your strongest partners.

We were the first county in the state recognized as a welcoming place, setting the standard for inclusive, effective immigrant integration. Our county has made significant investments in homelessness in homelessness prevention most recently through our navigation center. A homelessness housing, a homeless housing, project with support services, including even dentistry. That will serve as and it serves as a model for the rest of the state. We have one of the top gun buy back programs in the state, getting dangerous firearms off our street.

And we are just one of 10 counties in the state designated as a care champion, a recognition that we didn't just implement care court. We built the systems and partnerships needed to make it function effectively and connect people with serious mental illness to care earlier and more consistently. These are just a few examples that underscore San Mateo County's leadership within this state. And let's not ignore the obvious. San Mateo County is a net donor to the state of California.

We generate far more in state revenues than we get back in services. That doesn't happen by chance. It happens because we effectively run a strong, stable, and forward looking county. So when the state pulls 18% out of our budget, it's not trimming excess. It's weakening a county that consistently delivers to this state.

With me to testify and highlight exactly how much our county will be impacted, our supervisors Noelia Corzo and Jackie Spear. They will then be followed by folks in support from a cross section of our county as this cut hurts literally every section and every service in the county and every city within the county. Hence, our big group behind me today as Me Too's. With that, I'll turn it over. Go, please.

Thank you. We'll hear from the witnesses, then we'll hear from our LAO and our Department of Finance, and then we'll bring up individuals that want to comment and they'll just be me too. Thank you, madam chair. Thank you.

Oh, alright. Thank you. LAO won't be here.

LAO won't be here? Okay. Okay. I think Okay.

Chair Quirk Silva and members of the subcommittee, thank you for the opportunity to address you today. I'm supervisor Noelia Corzo, president of the San Mateo County Board of Supervisors. And I'm here to highlight the impacts of the loss of in lieu via left funding. The impacts the loss of in lieu via left funding will have on our county's homelessness and human service programs. As you know, every county is currently dealing with the impacts of HR 1 cuts.

And for us in our county, being faced with these cuts as well is honestly devastating. And I'm deeply worried for our county's most vulnerable residents. So I'll talk a little bit more about that here. Personally, I grew up receiving many of the social safety net programs our county provides. And so I have that direct experience also being a former social worker working with folks with developmental disabilities.

I know what these, services and what these cuts will do in our communities, and they include the closure of eight shelters displacing nearly 3,000 formerly on house residents. Elimination of rental assistance to 5,500 low income families and seniors. Cuts to production of 437 units of affordable housing, elimination of psychiatric services for 600 homeless individuals and 500 youth, elimination of benefit assistance for 3,000 better veterans. Elimination of the big lift are early literacy and educational equity program for 7,400 students. Elimination of food security services, including meal and grocery services.

Many of our cities will be forced to make painful cuts in addition to this, including cutting services from libraries, parks, mental health crisis, response, affordable housing, etcetera. This payment mechanism no longer works in three counties, but I want to make sure you hear from me that declining student population and increased property values can be can come to your counties or your districts soon sooner than you think.

And we want to make sure that we can solve this immediately and so that no other community has to face these impacts all at once. Thank you.

Thank you. We do hear some hammering. You're not imagining that. Let's see. Can I ask the sergeant to see if we can make a call?

I don't know that we can fix that, but it might be worth a try.

Oh, thank you, madam chair.

They heard you.

They heard you.

We'll see. Maybe they heard us. Do we wanna do roll right now?

We have one.

We're also gonna do a roll call vote here to establish quorum.

[Roll Call]

Okay. Sorry. And, welcome to our esteemed guest here.

Thank you, madam chair.

Both all of you are. Okay. Especially yes.

Madam chair, members of the committee, thank you very much for the opportunity to speak here today. And a special thank you to our assemblywoman, miss Pappan, for, carrying this legislation. I'm supervisor Jackie Speer. I've had other titles in the past, so I'm right here in this room. But it's a pleasure to be back here in the capital.

I'm here today to advocate for the full payment of the $157,000,000 in lieu vehicle license fees owed to San Mateo County and its 20 cities, and for a more workable permanent fix. Now back in twenty two thousand and three, there was a recall. Many of you may not have been alive, but, there was a recall of Ben, Gray Davis.

At the time, he was being objected to because you we were in a structural deficit, not like not unusual here, but he wanted to increase the vehicle license fee by some three times the cost. So then candidate Arnold Schwarzenegger made it his, calling card and said, if I'm elected governor, I'm gonna get rid of the vehicle license fee.

And so it went from 2% to down to six tenths of percent. It created a $6,000,000,000 structural deficit, which was bad then, bad now, but really bad then considering what our budget was. So the decision was made to create the swap. And the agreement was that even though we were gonna give our vehicle license fees to the state, and then they would use prop 98 to fund, that we were promised that we would have that BLF restored to us.

And for a long period of time, that has worked.

That formula no longer works in San Mateo County. And as my colleague has said, there are only two other counties in the same predicament right now, but it could grow. Alpine County has 1,200 population. Mono County has 12,000. San Mateo County is like 700,000.

So the impact on us is dramatic. It will cripple our county. It is 18% today. It could be even larger than that. That's 18% of our general fund would be wiped out instantly.

And for the cities, the picture is just as dire. In the area of public safety, for example, the county would be forced to eliminate $30,000,000 in funding for domestic violence prevention and gun violence prevention. Climate change has made San Mateo County at increased risk of fire. The loss of these funds will directly impact our ability to support wildlife, wildfire mitigation efforts, including the elimination of maintenance and repair of fire roads, a fuel reduction and management, and wildland urban interface projects.

For our cities, reductions in public safety budgets would be equally disastrous as almost all would have to cut essential safety and emergency response services.

These are public service employees. So for instance, 23 police officers or 26 firefighters in the city of San Mateo, 19 firefighters in Redwood City, eight police officers in Foster City, closure of a fire station in South San Francisco, one fire engine and nine fire department staff in Daly City, 38% reduction in police in the city of Burlingame, 20% reduction in law enforcement patrol in Petrolo Valley. I could go on, but you can see the magnitude of the cuts that would take place.

Without a fix, our county could lose an estimated $1,000,000,000 over the course of ten years. We have a flyer at your, place.

If you flip it over, it shows all the impacts on, the various cities in the county. We're not asking for anything more than what is due to us. We represent 3% of the population of the state, and we generate 15% of the revenues to the state coffers. Now some would argue, well, the county sued the state.

Well, what would you do in your city or county if they just wiped out your the money that was due to you, but you would sue them so we could start negotiations, and that is the reason why we have done that.

So I urge you to recognize that we are asking for nothing more than what we are owed and urge your support.

Thank you. Next.

Good afternoon. Chris Hill, Department of Finance. This matter is a subject of ongoing litigation, so I'm not gonna speak in too greater detail. I just do wanna note for the record that, the administration's interpretation of statute is a provision of these funds is not statutorily mandated, but is discretionary. And within the context of the current fiscal situation, the administration doesn't believe that this, is an expenditure that is sustainable given the current fiscal situation.

It's an ask of about a $120,120,000,000 for all three of the impacted counties. And I also just wanna note for the record that since 2012, the state has provided over $300,000,000 with these payments on a discretionary basis.

Thank you. Appreciate that. Questions from our panel? Go with mister Haney first.

Well, first of all, let me, thank the representatives from the county who are here and, the assembly member for for being here and for your advocacy and everybody, from San Mateo who is here, and from the other impacted counties.

And I think that we have, especially in over the last year or so, have been, furious at the ways in which California has been, punished and targeted by the Federal Government, particularly in light of all of the resources that we send, here from California, disproportionate share of resources that we send to the Federal Government, and then see the Federal Government deny our residents, the very people who are sending those resources, the the critical services that they deserve and that they paid for.

And California shouldn't act like the Trump administration. If the residents have have San Mateo, their cities, their county have paid, have an understanding of of what the the deal has been now for decades, they should receive the full amount, that they are paying and that they deserve. And I I think that, again, in light of our own experience of this as a city as a state, we should not be behaving in the same manner.

And it's important that we treat all of our counties and our cities fairly. And and it's pretty clear that these counties in San Mateo County or my neighboring county, in particular, is being treated unfairly. And the the consequences as you laid out when we cut at this level for a city or a county are very real because the margins are so much smaller. They don't have the the the ability to float millions of dollars.

It means immediate cuts to real people, real jobs, real services, real people who rely on those services.

So I I hope that we can both restore fully the the funding in in this year's budget and also have a more ongoing a permanent solution so that we're not seeing this happen or the threat of it happening year over year. I I know that there's, maybe less that can be said around this because there's litigation. Although, the fact that there's litigation, I think, makes it, that much more concerning that that we are seeing this cut in in in in the in that context.

It what what what is the rationale, for finding just two thirds of the shortfall? And, you noted that, this is for, Department of Finance, mister Hill, that it sounded like that the state does not view this as a binding obligation.

What what is the rationale for finding just two thirds of the shortfall? And was there any, analysis of the downstream, fiscal impact on on counties, particularly if homelessness health and public safety programs are cut and what the impact that would be on on other priorities and and and and funding needs for the state?

Chris Hill, Department of Finance. Again, I'd wanna note that the administration's interpretation of statute is provision of these funds as discretionary, not mandatory. And the provision of the funds in the current budget act was, was a legislative ad. It wasn't, proposed by the administration, so I'm I'd have to defer to, legislatures to why that amount was provided.

And and in terms of the the the particular area in which the the the the proposal in terms of the two thirds of the shortfall, and then any analysis of what the impact of of that kind of cut will be in in terms of prior, funding?

I don't know if the legislature did an analysis of that nature when it provided that funding level. But, Alan, the administration, again, is just looking at this from the perspective that this is not a statutorily required payment. And within the context of the current fiscal situation, we don't believe it's sustainable.

Got it. Well, I I Aye, again, miss Pappan and, to the folks from San Mateo County, whatever we can do to support you all in in in helping to, both address this in the short term. I know there's a long history, behind this.

But, again, I think it's important that all of our counties be treated fairly, that they get the services and and the funds that they deserve the full amount, and that the consequences of doing this kind of cut to to critical services and jobs, for individual cities and counties as we saw in this and just devastating in terms of what it would mean.

And so, for my neighboring county who's here, representative, San Mateo County, you definitely have my my full support in whatever we can do to support you as this moves forward.

Thank you. We'll just go to Assemblymember Ward and then Ortega.

Thank you. Thank you, miss Adam, for raising this issue as well. Obviously, you're a a strong champion for your county, and, so I appreciate that we have this on the agenda. And Aye, you know, am am deeply, concerned, sympathetic, for what a lot of our counties are going, but especially the compounded issue that you're facing here with San Mateo County. It is not lost on me how this translates into public services and core, deliverables that are expected of you right now.

We have to have all of our counties off to out to to to different degrees. I know the shortfalls that many of them are facing, and this is only, I think, exacerbating that issue. And so to the extent that we could be helpful with this year's budget, but also you raised the bigger question, what does this mean for the formula and thinking about how to address this on a going forward basis, begs me to have to go back to what are the inputs into this formula.

Because the fact that today, San Mateo, Mono, and Alpine, three very different counties, are now experiencing a exacerbation of the shortfall. What is it is there something unique that links the characteristics of your three counties?

What are the inputs here that are driving this shortfall so much for you beyond the county of San Francisco, say?

So much for us. Yeah. Well, it's tied to how much non basic aid or basic aid school districts you have, and that's probably the link that each county has, although they have them for very different reasons. So in San Mateo County, they have a lot of non basic aid excuse me, basic aid school districts because of their property taxes. Whereas the likes of a mono or an alpine are much smaller.

There's less districts to deal with in their instance, so they are able to meet their basic aid with their property taxes as well. But theirs is more a function of lower enrollment than it is for San Mateo County, which is a pretty, I would say, a a perfect storm, if you will, of property taxes being high enough that they can support the schools and the basic aid level that schools require.

Because the way that it works is every other county has a fair amount of non basic aid school districts. And the way that this formula works is that ERAF Right. And property taxes are used to backfill the VLF.

Right.

And then the state comes in with PropNet 98 money and satisfies the schools and their basic aid obligations.

So does he

We don't do that because that pot of money, if you will Yeah. Property taxes and ERAF does not exist for San Mateo County.

Okay. So how how is this presenting here today so acutely that what it wasn't there five or seven years ago?

Well, it's been backfilled by the it's been backfilled by the government, so we for quite a few our

reactions have been able to meet that, but given the current

We had fewer basic aid school districts back then. So the non basic aid school districts, were funded. And through that, the county and cities you know, it's it's a screwy Formula. Formula because you shouldn't link BLF money that was supposed to go to cities and counties with the schools. Yeah.

It was done back then, I think, because we were in a budget shortfall and there was prop 98 money. So if the money could be taken from prop 98 and to feed the schools, then it would have it it created an opportunity for the state to become more whole. Yeah. But it's still a complicated

But the but the link is what gets you. Supervisor Spears absolutely absolutely right. The link to non basic aid and basic aid school districts is what gets you. Super. And because we have so many basic aid school districts, we don't get the backfill.

K. If they were not linked, that might be a better situation.

Superbriety. Superbriety wants

And I just I don't think any I I don't think anybody excuse me one second. I don't think anybody anticipated that it would ever get to this situation

Where you had county that had a lot of property taxes that was able to make most of his schools basic aid. Got it. Please.

Right.

Thank you. So I just wanted to add that our understanding of what is law right now essentially is that it doesn't it it doesn't say that it's explicitly discretionary. It just doesn't ever predict the situation, period. And so the intention was always to backfill and to make counties whole. And so we're in the situation that, you know, that's it's not currently happening, but I would disagree with the fact that it's discretionary.

And just to answer your question more directly, I think, you know, I mentioned that for me, the way I see this issue is that it's tied to declining enrollment and increased property values and that and I haven't actually heard from the state or from anyone that, you know, how do we know how quickly other communities can be impacted by this? Right now, it's just us. But I don't think that in ten years, that would be the case.

And so I think the reason for a permanent solution is so that we don't continue to experience this, but also so that other communities never get impacted by this. Because it makes it very, very difficult to budget and to think about how we're going.

We we can be as prepared as possible, but we could we could have never foreseen the situation. We've been backfilled in whole all previous years.

So Right. Right. Clearly. And then that this is quite a shock to the system.

I I wanna beg a question if we're starting to see now that this is a harbinger of other issues until a formula is revisited and fixed, and I wanna get to that in a second, that are there other things locally that I know also wouldn't, like, you know, play out immediately, but do we need to look at the conditions and what in which why, under which we are having a declining student enrollment and what we can do to make, housing opportunities more available for families that otherwise might happen to be located across the bay or elsewhere where they can afford to live a little bit cheaper.

All these things could necessarily be tied. Sort of a meta question out there. No pun intended, Kevin. I think one of your key tenets that's there. But, you know, the the these problems are intertwined.

Right? And and this is, I think, another, like, sort of input into the consequence of what you're feeling right now. You know, I both agree, but I am sympathetic that, yeah, I don't blame you needing to be able to sue. It's an it's an avenue that, you know, any local government would take to try to open up an opportunity to to your fight tooth and nail to be able to keep things as whole as you can this year right now.

And you're raising this issue this issue here before the legislature to see what we can do, in advance of the May revise, which is commendable and, you know, definitely needs to be laid there on the table.

Aye, you know, might recommend to our chair and our our committee that, you know, I I I am surprised that we have not revisited this question from a 2004 agreement that clearly was creative would be a generous word, but, you know, a little bit on was definitely was so creative that it placed everybody on shaky ground.

And I mentioned if you're a harbinger as long as as well as Mono and Alpine counties of things to come, any one of our counties could be suffering future crises because of the same challenges under this formula right now that it deserves us to go back and relook at it.

May not be a solution that we have for an ongoing solution this year, but maybe this is the wake up moment that we have that we need to, you know, have a special attention and go back and look at that kind of a formula because it's just not working twenty six years later. So I wanna thank you for bringing this as well.

We'll keep it under careful consideration as we're thinking about all of our recommendations out of the subcommittee, and I appreciate you taking the time to come to the capital, come back to the capital today.

Thank you. Assembly member Ortega.

Just wanna thank Assembly member Pepin and, the presenters today for coming, and bringing this issue forward. It sounds like there's definitely two issues here. One is the more permanent legislative fix to address kind of what's happening here and to prevent it from happening in the future. But then the most immediate is the budget request and making sure that you are made whole. I understand from the the Department of Finance position that it's not a statutory mandate that we reimburse these funds to the county.

But as a legislature, we have made statutor statutory commitments to our communities, and that includes partnering with our counties to meet our overall goals, including housing, including youth, you know, serving our seniors, our veterans, our public safety. All of those things are the things that we've made commitments to throughout the state, and that includes San Mateo County. So I would really reconsider the the approach we're taking here to make sure that you are made whole, and then we continue talking about that permanent fix.

So thank you for being here today.

If I may, thank you, Assemblymember Ortega. You know, if this was truly discretionary, why is it that we would be giving this money to 55 other counties? It begs the question. So I I just take a little bit of issue with this idea that, well, it's not statutorily provided. The obligation was made by the state when they grabbed the VLF feedback in twenty two thousand four.

In any event, I I just wanted to reiterate that, and I thank you for your comments.

Thank you, Assemblymember and Assemblymember. Thank you. We're going to go ahead and go to the public, and then I will make comments at the end. If you are going to speak on this item, please come to the mic. The mic does go up and down so you can raise it or lower it, and we're doing under thirty seconds.

So if you see me doing this, it means you're going longer than thirty seconds.

Great. Thank you very much. Mike Callagy . I'm the county executive. This is the greatest taking probably in the history of California from one particular county with devastating irreparable impacts.

I will be faced with laying off hundreds of our employees and impacting nonprofits that provide critical, critical services to our to our our community. Thank you very much.

Thank you.

Greg Wright, vice mayor of Pacifica. We're looking at cutting police and fire, increasing our response times, coastal infrastructure, road maintenance, food assistance programs. We have a program that's actually working to help the homeless, and we are not a basic aid city. So we have the worst of all worlds. We really need your help. Thank you.

Good afternoon. My name is Jocelyn Manalo, Daly City Council member, and really not having these dollars affect our public safety, housing, and health programs. You know, this gap deepens existing budget deficits and limits our ability to sustain critical services over time. We're simply asking you all to honor the commitment, fully fund the BLF backfill, and ensure that our community has what it needs. Thank you.

Thank you.

Good afternoon. I'm Stacy Jimenez, former mayor, current council member in Foster City. For us, this, translates into millions and millions of dollars of lost funds, supports core safety services, critical, projects for our youth, our residents. So I urge you to please support the backfill. Thank you.

Thank you. Good afternoon. My name is Kyla Valente. I'm a resident of Redwood City. I'm a benefits analyst with the county of San Mateo, and I'm the treasurer of our union, AFSCME Local eight twenty nine, representing over 4,000 employees and their families across the county whose jobs are at risk.

I'm standing with my fellow residents and community leaders today to request the nearly a $157,000,000 vehicle license fee shortfall for San Mateo County and its cities to be included in this year's state budget. Thank you so much.

Thank you. Hello. Good afternoon. My name is Pernina Venkatesh, mayor of San Carlos. And this impact would be a shortfall of $2,300,000 for our city, which would allude to losses of police officers and maintenance workers and internships for our youth. So thank you. Thank you.

Good afternoon. My name is Scott Perham representing IFF local twenty four hundred San Mateo County firefighters, and I'm a firefighter in the city Pacifica. Department of Finance may categorize this backfill as discretionary. I can tell you from the front lines, there's nothing discretionary about a nine one one call. Our residents expect and deserve an uncompromised level of service.

The state fails to uphold the 2004 VLS swap agreement. There's more than a brief breach of public trust. It is a direct compromise to safety. While the legal merits of this case may be heard in a San Francisco courtroom, it doesn't take a judge to see that the state's current path does not honor the commitment made in 2004. Put simply, it is not right.

I urge you to restore the VLF backfill in full so we can keep our officers and firefighters on the streets serving the public. Thank you.

Thank you.

Good afternoon. My name is Eddie Flores. I'm past mayor of South San Francisco and current council member and executive board member of the League of California Cities. South San Francisco is owed over 5,100,000 this year in VLF funding that the state has failed to deliver. We are talking about a fire station, preschool fees, and community policing programs.

This is not not nice to have money. This is our general fund at threat. We are asking for nothing more than what every other county receives. Please act now. Thank you.

Thank you.

Good afternoon. My name is Charity Petes. I'm the communications and marketing officer at CORA, Community Overcoming Relationship Abuse in San Mateo. We are in support on behalf of survivors of domestic violence who are also low income. CORA serves thousands of victims of abuse every year. This funding is essential to providing the social and legal services offered by domestic violence prevention organizations like CORA. Thank you.

Good afternoon, chair and committee members. I'm Elmer Martinez Saballos. I'm the mayor of Redwood City. In my day job, I work for Life Moves, an interim emergency shelter provider, and I'm here in support of assembly member Pappan's proposed solution. The VLF funds that support the critical services our residents depend on every day.

Without these funds, we risk losing important services like our city's homelessness support and outreach, as well as the equivalent to 19 of our firefighters. So please restore funding and find a legislative fix. Thank you.

Good afternoon. My name is Diane Howard. I serve on the Redwood City Council and I'm past mayor of Redwood City. I'm here to address the vehicle license fee and an obsolete mechanism that's in place. It means a 5 and a half million dollar loss for the city of Redwood City, which are critical jobs and a job loss of 85,000 people who expect to be served with that money.

Thank you. I hope you'll consider this. Please support assembly member Pappan's request, and and thank you for your time.

Thank you so much for having all of us here today and especially to assembly member Pappen for bringing this forward. I'm Leslie Ragsdale, vice mayor of the town of Hillsborough, and all of our council members were also serve on council, but we also volunteer our time for various, community based organizations in San Mateo County, which you'll be hearing from today. For the town of Hillsborough, our shortfall this year is $760,000, which is the equivalent of three police officers that we, obviously need.

And we just feel that, this funding formula is crazy. We're all trying to understand it, but the state, made this promise and needs to fulfill the promise and not be, loosey, pulling that football away. Thank you.

Thank you. Good afternoon. My name is Julie Lind, and I represent a 105 unions and over 95,000 workers and their families across San Mateo County. This isn't just a budget issue. It's a human one.

Behind every one of these potential cuts is a worker and behind every worker is a family. If public services go away, so do our livelihoods. We lose stability, housing, health care, the ability to feed our families. This is a crisis that we didn't create, but one that you have the power to fix. So please help us. Thank you.

Assembly members, thank you. My name is Rich Seguin. I am the vice president of local twenty four hundred representing firefighters in San Mateo County. Cuts like this will be impactful. The savings that will be needed by cutting millions from fire departments can only be achieved by shutting down engine companies, closing fire stations, and laying off employees.

This in turn will impact response times. It will degrade an already lean service model. Some response times is the difference between life and death, and slow response time to a structure fire means our job becomes more dangerous. In addition, we staff eight state of California OES fire engines. Less firefighters means cities will have to make the decision whether to supplement California's wildland fire response or keep our firefighters at home, protect our communities.

Citizens who work in San Diego County deserve better than this, and we reinstate the funding, as appropriate, and we ask for consideration. Thank you.

Thank you.

Good afternoon. I am Larry Moody, a former mayor of the city of East Palo Alto, and we presently serve as the government affairs community liaison for JobTrain, a sixty year workforce development organization that's serving in San Mateo County in seven different locations. Our ability to provide free training services for the residents of San Mateo County aligns us with the workforce opportunities of Silicon Valley and certainly of San Mateo County. We put people to work.

If you take away our funding, if we're impacted by this 18% decrease in funding, it's really gonna impact our ability to train individuals at no cost within San Mateo County.

We hope that you would agree with Assemblyman Papan's recommendation today. Thank you.

Thank you.

Hello. My name is Dietrich Gale. I'm the president of IFF local fifteen o seven in South San Francisco. It represents those firefighters. We're at a point now where we're trying to expand our department with the growth of our great city, And we've been in talks to try and figure that out without these funds.

Now the talks have converted to shutting down a whole fire station. That alone blows my mind. And I know I'm more of a boots on the ground analysis here, but it just sounds completely dangerous for the brothers and sisters I work with, for the community that we serve, not to mention the police officers that won't be on the streets and the increased cost to preschool for the families that you know, need to work and live in our city.

So, again, I implore you to please ensure these funds come back to our county. Thank you.

Thank you.

Good afternoon. My name is Ed Barberini. I'm the chief of police for the city of San Mateo. The challenges and demands on public safety continue to grow, and we struggle every day to meet those demands. And that's with the existing resources.

The impact of a loss of funding of this magnitude will have a critical impact on our ability to provide core services. That means police officers on the street. That means answering 91 calls contributes to the safety of our our city, our residents, and the folks who visit and work in our cities. So I would urge you to con to strongly consider the the recommendation in front of you today. Thank you.

Good afternoon, chair Quirk Silva and members. My name is Yohair Ortega. I'm the senior policy manager at Thrive Alliance, the alliance of nonprofits for San Mateo County. Cutting BLF funds would damage a variety of communities, but specifically those investments that go to county and and cities that invest in nonprofits like the ones that you're hearing about today. We shouldn't have to make a choice between essential public services like emergency planning or literacy programs.

Please make the right choice and invest in our county and continue to solve the four, permanent solution. Thank you. Thank you.

Good afternoon. My name is Latonya Mitchell from NAMI San Mateo County. I'm the education and outreach lead. The, BLF Dollars are critical and reliable revenue source for county mental health services. Losing this funding would directly undermine the community based mental health programs that serve our most vulnerable residents, including education, early intervention, and outreach efforts that help people access care before they reach crisis point.

We urge you to support in protecting these essential funding streams. Thank you. Thank you.

Good afternoon. My name is Laura Bent. I'm the chief executive officer for Samaritan House, the one of the largest nonprofits, social safety net nonprofits in San Mateo County. And we serve 32,000 people, keeping them Fed, clothed, healthy, and housed. I want to strongly urge you to support, this funding being rein reinstated and given back to our county so that we can keep 3,000 people in our shelters, keep 5,500 families and seniors housed, and tens of thousands of people Fed in our community. Thank you.

Thank you.

Hello. Glenn Figueroa, City of Redwood City Parks, Redwood Shores. I've been a lifelong resident in San Mateo, and I still am resident. Please support VLF. Thank you.

Good afternoon. My name is Talaysa Newkirk. I'm a benefits analyst that maintains Medi Cal and CalFresh benefits for the aged and disabled populations of San Mateo County. I also serve as the vice president of AFSCME local eight two nine representing over 4,000 employees and their families across the county, including the public sector workers whose jobs are at risk. I'm in support that the 157,000,000 vehicle license fee fund shortfall for San Mateo County and its cities be included in this year's budget. Thank you.

Thank you.

Good afternoon. I'm Heather Cleary, CEO of Peninsula Family Service. And for seventy five years, we have served children, families, and older adults in our community. I'm also the vice chair at the Chamber of Commerce. These cuts will not only hurt those with the least, they will hurt our employee base.

Without our employees, we do not have an economic engine in San Mateo County. So please help us to help you and fund our BLF with a permanent fix. Thank you.

Afternoon committee. My name is Bart Pantoja. I'm here on behalf of the 13,000 men and women of the building construction trades. We are in support of payment in full and a legislative fix. Please take on the suggestions of proposal from our assembly member Pappen. Thank you.

Thank you.

Well, my name is, Jesse Dolan. I represent the city of San Mateo maintenance unit. If we do not receive these funds, 87 members of our unit would be at risk of losing their jobs. That's 87 families that could lose everything. Please protect our future. Please protect our families.

Thank you. Hi. I'm Christine Bowles. I'm the mayor of the city of Pacifica, and I support this bill. And I just wanna thank, Assemblymember Barry for your comparison to the way the Trump administration is treating California because we feel very much the same way that we're being singled out.

As a donor county, we have a lot of wealth, but we also have a lot of extreme poverty because it is so expensive to live in San Mateo County. For Pacifica, these cuts, up two and a $42,400,000 on top of our structural deficit brings that to 10% of our current operating budget. We're already running a lean budget with only two police officers on duty at night for a spread out community of 38,000 people.

So this is a direct threat to our public safety and our ability to care for the vulnerable in our community. Thank you. Thank you.

Madam chair, members, Sara Flocks California Federation of Labor Unions here in support. We represent 2,300,000 union members, statewide, and we are here to prevent the elimination of good union jobs and the hollowing out of the middle class in San Mateo County. But we also know that the impact's not gonna stop at the borders of the County.

There's a spillover effect, and we definitely need a legislative fix to make sure no other County has to come to the legislature to ask for the money that they are owed. Thank you.

Good afternoon. I'm Irma Rodriguez Mitten. I'm the executive director of Arriba South Coast. My organization serves the unincorporated coastal communities of Pescadero, Lohanda, Loma Mar, and San Gregorio, a rural area with a fragile economy and an even more fragile public infrastructure facing increasingly catastrophic impacts from climate related disasters.

Not only would this budget shortfall shortfall mean cuts to core services for people, which my colleagues have so eloquently addressed, but it would also threaten all of our climate resilience projects, our parks and public works maintenance and operational budgets, and everything that is essential to protecting our roads, our homes, our economy, and the visitors and residents of this area.

I urge you to help us continue to protect the people and the assets of the San Mateo County Coast for all of California. Thank you.

Thank you.

My name is Felipe Donaire, and I'm AFSCME local eight twenty nine president. We represent over 4,000 employees in in the county of San Mateo and the cities of in San Mateo County. I stand in support of VOF funding, which provides funding for services to many of our vulnerable residents in San Mateo County. Losing VLF would cut many of these services, and many of our members may face layoffs. I ask you that you support the crucial VLF funding for the county of San San Mateo. Thank you.

Thank you.

Good afternoon. Claire Sullivan on behalf of the city of Belmont, urging restoration of the VLF funding. Belmont is owed 2,300,000, about 15% of our general fund. This is equivalent to 7.5 police officers, nearly half of our sworn force, or all nine of our parks and streets maintenance workers. As a hillside community facing wildfire risk, we cannot absorb this loss. Please fill please fulfill this funding obligation. Thank you.

Thank you.

Good afternoon. My name is Ken Chan. I'm the organizing manager with the Housing Leadership Council of San Mateo County. We work with committees and their leaders to produce and preserve quality affordable homes, which is exactly why we support the reinstatement of the in lieu vehicle licensing fees for San Mateo County.

By withholding these funds, you will force, our communities to pull from much needed programs to fill that gap, leading to cuts to affordable housing production, programs to prevent our most vulnerable residents from becoming unhoused, and wants to support those currently without access to stable housing.

This will have a cascading effect, putting many affordable housing proposals at risk and delaying the new homes for that our communities urgently need. This is your chance to continue supporting San Mateo County's most vulnerable residents. Please don't let this pass you by. Thank you.

Thank you.

Good afternoon. Alex Kojiken, city manager for San Mateo. The loss of VLMF funding for us in San Mateo is significant. It will truly impact our central city services. It's equivalent to the loss of 23 police officers, 26 firefighters, and our entire library system.

We need support. We need the backfill and looking for the state to help us and support us in this effort. Thank you.

Thank you.

Good afternoon. I'm Douglas Tate. I'm a community service officer in Redwood City, an SDUA member, and a constituent of assembly member Ortega. And I'm asking for the return of DLF funding. Thank you.

Thank you.

Good afternoon, madam chair. Matt Robinson, on behalf of the City County Association of Governments of San Mateo County as well as the San Mateo County Transit District, both in support of miss Pappan's proposal as you've heard today. The loss of this funding would have devastating cuts on city and county programs. I was also asked to convey the support of the San Mateo County Community College District. Thank you.

Thank you.

Jack Werson on behalf of the City of East Palo Alto, loss of VLF funding would create a structural imbalance in the city's budget and would require cuts to critical public safety services, as well as as a scaling back of parks and recreational programs, senior service reductions, and reduced funding for housing and community development programs, among other potential cuts. We ask your support of some member patents.

Thank you.

Good afternoon. Jim Lawrence, Boettcher, fixing San Mateo County. All of us understand the weight of the decision before you today. But what we said here on the ground, funding is not just a budget challenge. It affects people, our neighbors. Our nonprofits are the first ones to get the call when there's an emergency. We fill the gaps. Please restore the funding. Thank you.

Thank you.

Good afternoon. Ben Triffo with the League of California Cities. Here to respectfully ask that the agreement from 2004 is honored, committed to, and funded. If not, the cities that provide critical services will face service reductions at no fault of their own.

Thank you.

Good afternoon, madam chair. Jean Hurst here today on behalf of the urban counties of California, the Rural County representatives of California, and my colleagues at the California State Association of Counties, all in support of assembly member Pappan's request. We certainly are grateful to all the folks here, from San Mateo County and its community members for shining a light on the real impacts of this unfortunate and unintended consequence of the VLF swap.

I was not only here in '22 2004, I was here in 2012 when we started working on this issue, and I know how, difficult it can be for those counties to manage. I also wanna express appreciation for incorporation of the, context of Alpine And Mono Counties, two of the state's smallest counties, which really there's no other explanation as some member award other than that they don't have the school entities to borrow from.

Alpine County has a k eight school. It doesn't have a high school. It doesn't have a community college district. That's all they got. And just because land prices are high in Alpine and Mono, doesn't mean that the counties have wealth.

And so we respectfully encourage your support of this issue. While the numbers are small in those counties, the impacts are very large.

Thank you so much. Thank you.

Good afternoon. My name is, Delfort Lawson Ochoffo. I'm a Redwood City maintenance worker and a SEIU five two one member and also a Foster City resident. Just throwing support out there for the VLF funding. Thank you.

Thank you.

Hi. My name is Ryan Shannon. I'm a union representative with AFSCME Local eight twenty nine in council fifty seven, where we represent over 4,000 public employees throughout the county and various chapters throughout San Mateo County as well. I'm here to support a permanent fix to bail out funding, and I also like to just say that if the state uses that discretionary funding, it's making a choice against working families and against the communities we serve. That's a terrible choice, and it stands against everything that our elected leaders say they stand for.

Thank you.

Good afternoon, chair members. J. P. Hannah on behalf of the California Nurses Association. Thank you for the author for bringing this measure forward.

The state's failure to backfill this obligation will force deep cuts to services that keep communities and patients safe, and it also threatens good paying union jobs, helped by these workers to deliver these essential public services. It saves you net services are cut, patients suffer, and hospitals absorb the crisis. So we urge the legislature to support San Mateo County's request for full VLF shortfall funding. Thank you.

Thank you.

Good afternoon, and everyone. My name is Carlos Tapia. I'm president of the Deputy Sheriffs Associates Association of San Mateo County. I'm here to support the San Mateo County Fair Funding Initiative. Our county faces critical shortfall of over 100,000,000 in vehicle license fee replacement funds.

This affects essential services like public safety, health care, and libraries. As someone in law enforcement, I see firsthand how inadequate funding hinders our ability to serve the committee effectively. I urge everyone to support support this initiative and help secure the funding necessary for a safer, healthier community. Thank you.

Thank you.

Hi. My name is Leon Bowles. I'm a resident of Redwood City, and I'm an employee of City of San Mateo wastewater department. I am urging you guys strongly to look at this issue, and thank you for your support.

Thank you.

Hi. Good afternoon. My name is Rita Mancera, and I am the executive director of Puente de La Costa Sur. Ours is a rural and incorporated community, primarily of farm workers, low income families, and seniors with fixed incomes. The shortfall will impact health and safety net services for a community that already leaves unlimited resources.

One of the most vulnerable populations in our county, Please choose to return this funding to our cities and our communities.

Thank you.

Good afternoon. My name is Elida Valencia Sobovaro. I'm the director of the YMCA Community Resource Center serving South City, San Bruno, and Brisbane. And from growing up in South City to now being a service provider, I wanna highlight that the VLF funding shortfall will especially impact our most vulnerable community members and also your everyday neighbor that is one hardship away from getting their stability shaken. We are in support of San Mateo County receiving the funding it needs. Thank you for your support.

Thank you.

Good afternoon. My name is Judith Guerrero. I'm the executive director of COSI Hope, a community based organization providing services in the Mid Coast that is half of Bay and three unincorporated areas. With that, the shortfall in the BLF funding will have a significant impact and harmful in our community.

And the individuals we serve without this funding, we will not continue to have the provide the essential specialized emergency preparedness and response services, and we will lose critical support the critical support needed to strengthen our community's ability to build and sustain economic development.

I urge you to make the right decision and ensure that San Mateo County receives the funding that it's owed. Thank you for your time and consideration.

Thank you. We have anybody else beyond the individuals that are lined up, if you can line up right now?

Good afternoon. I'm Mike Stancil. I'm the executive director of Daily City Partnership. We served over 16,000 individuals last year and a half a million service points. The service points represent clothing, food, rental assistance.

One in five Daly City residents live, on public assistance and five one in five one in 20 live under the federal poverty level. These kind of cuts cannot be afforded by our citizens at all. Please restore the funding. Thank you.

Thank you.

My name is Kevin Boltzmann. I serve as the deputy superintendent for business services at San Mateo County Office of Education. We're in support. And at the same time, we strongly advocate any solution to the outside of the prop 98 guarantee for education. The impact to education in our county would be reduced mental health services for students and families, reduced behavior management, training for educators, and reduced or eliminated learning literacy programming.

Good afternoon, honorable chairwoman. Yep.

There you go.

And members, I'm Donna Rutherford, former mayor of East Palo Alto, constituent of San Mateo County, and the city of East Palo Alto. I won't reiterate what everyone has said already, but I'm certainly asking you to make the right decision and to restore the vehicle license fee for San Mateo County. Thank you so much for your patience. You have a decision to be made, and I hope it's the right one. Thank you very much.

Thank you. Any last minute people coming up to the mic? Alright. Seeing none, any final comments from members here? First, I wanna Yes.

I'm sorry. Just one thing on clarification on the notes because it it noted here unless it unless we're misreading this that currently under the state's fiscal condition, the amount provided would cover two thirds of the respective shortfalls. But we also know that the actual shortfall for these three counties is about a 118,000,000. So what what what exactly is the impact to, this proposal for this year's state budget?

Because I'm still hearing a 120,000,000 is what's needed to close that shortfall, but we're already giving two thirds of the shortfall.

Oh, last year, we received two thirds.

Last year, we received two thirds.

Which was about 68,000,068 million. So subsequent to that, there was a lawsuit to recover that one third.

Has been missing. This year alone, for San Mateo County, it's about a 119,000,000. Is he Close to $1.20 maybe. Tire shortfall, but we're not That's the entire shortfall. It has been zeroed out in the governor's January budget.

Thank you for that clarification. No problem.

Thank you. And if if you notice on that same page, they're requesting the one basically, close to $1.57, which would be the third from last year and, this year. I first want to, appreciate the assembly member. You know, people get elected in their cities and their counties, and often, you get to go home some nights. But for others like us, we travel and we leave our homes.

On Mondays, we come back on Thursdays. And many times, the public just doesn't know what the heck we do up here. And they are impressed for a moment if you get one or two pieces of legislation. But when you have been here, this is now my final year, and I've been here since 2012 with a break in between. One term, I lost.

But, really, since 2012 under two governors. And if I go to a public forum and I start talking about over 70 pieces of legislation or we even print it out, guess what? Most of the public does not care. They don't care if you did this or that. What they care about is what has been expressed today.

And, so to all the local electeds, thank you. I served as mayor Fullerton twice, and they care about things like their public safety, like their fire response time. They care about individuals that are experiencing homelessness. They care about youth. So if I start rambling off on all this legislation, they're gonna direct me back to the potholes or, to things like that.

Understanding how all of these services are funded is a still a mystique. Meaning, if you go to a room this size and you say, what is the vehicle license fee? And do you remember way back when with Gray Davis? Some people will because it got them really angry. I remember that time period.

But most people aren't. But I have a direct affiliation with the vehicle license fee related to when I was elected in 2012 in Orange County, the county that I represent, had was in the same position. And I was a brand new member, and we were asked to do exactly what Assemblymember Pappan is doing. Although, I didn't come to the budget committee. So Diane is super smart here.

Okay. But we were able to retain some of the funding as you did last year, not the whole, but some. And there was a lot of appreciation for that because, ultimately, what it means is jobs, and it means important jobs in counties, whether it's health care, whether it's, like we said, service providers, very important. So there's two major issues here. There's one is to retain, the folk the promise that has been made, and to fully fund.

And then the second, as my colleague from San Diego mentioned, is we have to deal with this formula and hammer that out. I'm done this session, but I have good colleagues that will take, this effort. And I think there are probably some ideas that we can work on possibly this year, but many of these individuals will be here for a very long time.

And with, Assemblymember Pappan's leadership, I can't promise that there will be a resolution, but I can promise that there will be a serious look at how do we resolve this. Because some of the major issues on funding related to education, which is all across the state of California, we are dealing with class sizes being reduced.

Now I'm not gonna spend a lot of time on that, but we can make inferences of why people are having less children. Why? Affordability. There's a lot of reasons for that. But that would probably come at a later date.

We're not gonna resolve that today. But I do want to say that I appreciate all of you coming up. It really does make a difference. Can tell you this committee will, take this serious. We're holding it open, as we won't be voting on it today, but we've heard you loud and clear.

Those of you who spoke at the mic, we appreciate it. This is really government in action. So when I say people don't care, they care. They may not know that you've come up here, but they will know by the services that are in their community. So you should let's give yourselves a little cheer.

I was a former teacher. And, no, we appreciate that because this is how government works. So with that, if there's any final comments, no final comments. And you got a good audience because we have five members. Sometimes it's only two of us here.

Everybody loves... But with that, thank you all so much for coming. And to the congresswoman and to later, thank you so much. And to the supervisor, thank you.

Thank you, madam chair. Much appreciated.

Alright. Members, we're gonna go to the vote only, which is unusual on this committee. We're only going to we're going to go to vote only items, which are on the top of your agenda. So we'll do those two things, and then if any members have anything they wanna pull, we'll do that afterwards. Is that alright, members?

Yeah. Alright. Let let's let everybody get a second here to Some members were not gonna hear these, but if I can get a motion just to move them.

Once we get the room clear. No.

Okay. We can go.

Alright. Madam chair, I'll make a motion on issue one and issue two.

Second. Alright. We have a vote only on issue one and two. That would be item one sixty and eight forty to move those items and take a vote.

Quark Silva. Aye. Caloza. Kenny Ortega. Aye.

Wallace

Ward. Aye.

Alright. Both of those items are out. Alright. Alright. That any items that we want pooled on this committee?

What? Just request for DGS.

Their name.

Yes. Right. Are we doing DGS next? K. Where is that?

We're gonna confuse people a little bit. We are gonna go to DGS next. And so if you are presenting on DGS, please join us. And this will be an update on the Hillcrest DMV.

Oh, and then the oh, and then some a little bit.

I'm sorry. What?

What? Okay.

One of

the topics. Alright. We'll do it.

Okay.

Okay. Welcome.

Thank you.

And if you wanna introduce yourself?

Yeah. Jason Kenny, chief deputy director for the Department of General Services. And just so we're clear, Hillcrest is what you're asking about? Or

Hillcrest, Bell Street, Downtown San Diego property.

Okay. Okay. Sure. So Hillcrest is is fairly easy. There there is not a a project presently there.

Our colleagues at the DMV Can can

you pull that mic just a little bit? There you go.

Is that any better? Okay. Yeah. Awesome. Yeah.

The Hillcrest DMV site is is not currently technically a project. Just checked in with DMV yesterday. They've not made a for for action there. It's still, obviously, an inoperable office. It is still in their minds, I think, tied to the success or or failure of the Fell Street site, which is probably a decent transition into that.

For the committee's benefit, Fell Street is a DMV office in San Francisco. It was a capital outlay project that was budgeted, and was about to go into design and construction at the eleventh hour, literally. There was a legislative reach out to ask, hey. Is there a possibility of marrying affordable housing at that site? We, DMV, transportation agency, thought that would be a great, attempt to pilot.

We did a decent number of studies to identify the the the viability of that. We came to a couple conclusions. One, that there is probably no subsidy that was going to be available from the developer to the DNB, so they would pay their own way. But colocation should be doable. The developer we went through competition.

We selected a developer. Their original proposal was an integrated DMV into the housing site. The DMV's source of funding for that project at the time was lease revenue bond financing. That's a tax exempt financing that proved very difficult to maneuver, with an integrated DMV. So the developer pivoted and proposed a standalone DMV.

Their parking requirements, would be met by surface parking. And so essentially imagine, like, a podium open podium and buildings above it. But as they got into that, that proved to be logistically quite difficult. And so they began, identifying the the most workable solution, which would have involved building a garage, which would have made the DMB's project more expensive than could be afforded.

And given the diminished capacity of the motor vehicle fund, we, the developer administration finance, have been trying to figure out what the best option would be to move the project forward.

Ultimately, looking at the what's available in terms of funding in the MDF, the and and DMV's needs in the area long term. We came to the conclusion that we could, relocate the DMV off that site, potentially moving them into commercial lease space in the area, at a reduced footprint. They have a BCP in before the legislature. It was just heard in the Senate on the March 19. I believe that was held open.

But it's a pretty modest ask of $4,600,000 in one time cost, $1,700,000 in ongoing costs. And, provided that is approved, the next step would be to relocate the DMV out while the developer continues, their, their development scheme. In which case, DMV Fell Street would be essentially just any other vacant site and would be a a traditional affordable housing project. Should I move into San Diego, or do you wanna pause? Okay.

So our San Diego project is two lots in Downtown San Diego. I know some of the rewards are very familiar. But there's an 11 story tower on the East Side and two smaller buildings on the West Side that was awarded to the Michaels organization a number of years ago. They they have they proposed a variety of the scheme has changed over the years mostly because of changes in in collaboration with the city.

There was originally an intention by the city to co locate a fire department there, a significant amount of office space.

As that's changed over the years, TMO, the Michaels organization, has changed their scheme. Their core proposal was predominantly a market affordability, but also a lot of workforce housing, which is desperately needed in the area. As we all know, there's not a whole lot of direct subsidy for it. They've been trying to get very creative in it. One of the other elephants in the room is the abatement and demolition of the existing buildings.

That was very clearly on on TMO in our original solicitation. But HCD was given a pot of money a number of years ago, to try to help with those abatement demolition costs. Money was allocated to the site. It was not sufficient for the whole abatement and demolition, but TMO has not been able to come up with the the balance of funds. Meanwhile, we have completed design for all the abatements and demolition for both lots.

Presumptively, We've actually put out to bid the demolition of the the the West side, which is the smaller lots, and that contract should be awarded an abatement demolition underway. It actually came in significantly underbid, which is awesome. And so we'll happily apply those savings to the other one, but a hunt for a fund source for that continues. Either way, though, once that building goes down, there's still a a yeoman's task on the Michael's organization to see that to completion, but that's where that particular project stands.

Question?

Thank you. Thank you for being here today. I know we are on the agenda for non presentation. Good news is that I don't object to any of those items. So, hopefully, we'll pass those on forward to subsequent actions.

But given I think this might have been the only time that we had you on the agenda, I did wanna raise these issues as it has as they have raised these issues every year. Very important to the core of San Diego because I'm dialing it back just as I was as a council member, but also now as a representative for that area. You know, there is a, you know, you know, continual drumbeat to be more effective with our public properties. And we align with that.

We wanna be able to see that as a first round of opportunity right now.

With the Hillcrest DMV side as you'd articulated as well, you know, we push back only in that, yes, while it is accurate that today there is no request, that there's no agreement, it is not a functional building. It is barely holding itself up right now. It is as old as the annex, which is gone right next door to this room and being reconstructed right now. And it is not on any list.

I recall seeing a list in some of the budget materials this year right now for another ten or so D and D properties right now, that are making their way up.

I know that list is long statewide, but this is a major opportunity site in urbanized area where we definitely need the housing, where we can accommodate housing in the most, you know, pedestrian, you know, high transit opportunity zones that you could think of right now. And literally right now, what you have is a great neighborhood reinventing itself popping up all around. We are four months away from opening up a major publicly funded linear park immediately abutting this three acre parcel.

We have, great housing stock that is developing up around it in a really good intense mid density fashion right now. And one year from now, you're going to have this eyesore of a donut hole and that is what is the state of California.

And so I know I've been beating this drumbeat. I will continue to beat this drum as long as I am representing this area right now because we are no farther along unlocking this solution than we are years ago. And I would predict if nobody beats the drum, we're not going to unlock that, you know, for some time to come. The building will be nonfunctional in a matter of time.

And we have used the apologies, I'm going to say we have used the excuse of, well, we need to see how Fell Street is working out right now.

And I know my colleague from San Francisco had to leave early, but, you know, this would be of key interest as well because you just said somehow we're not making this thing work. We're not making this partnership model work.

And it's incredibly curious and I question whether or not if it's our own bureaucracy or lack of creativity to be able to figure out how to make a development of this partnership work because just in any other context, certainly in many other states or certainly other nations, they're able to do something creative in public private spaces right now.

So you can have these replacement site opportunities on the ground level, especially when I think of San Francisco and just how vertical its future is, that we can't somehow like find a way to be able to co locate on the site anymore to make the Eleventh Hour decision that you said and change your project scope is going to have an impact on this year's budget right now.

We hope to be able to find some efficiencies by co locating opportunities with the idea that we, through the Senate action you're talking about, are going to have a 4,700,000 ongoing cost now because we're going to lease the space rather than come back home.

Is there an end date to that?

It's a it's a 4.61 time, 1.7 ongoing. One case of ongoing. Okay.

Yes. So the the obligation is much smaller. I would say, yeah, those leases, you know, obviously, depending on duration, can can last anywhere from eight to as long as one would want it to be. We typically would look at something in the ballpark of of a eight to fifteen year range to see the payback of that one time cost. It also allows for the DMV to have more flexibility as their own evolving needs and constituent needs in DMV happen San Francisco happen over time.

But, what I I do wanna reassure you is is it is significantly cheaper than it would have been had we gone forward with the, the the DMV paying its own way on-site. A one time cost, to construct a DMV like that on that site would have been closer to, say, 45,000,000, and that would be before financing. So when you add the debt service costs on that lease revenue bond over the next twenty five, thirty years, the total payout would have been closer to $7,080,000,000.

And the NPV of a lease this lease, especially with a reduced footprint, is a lot cheaper. It was almost half.

So this was the most cost effective option. It was also the one that prevented the most negative interaction between the developer and the DMV. From a schedule perspective, from a coordination perspective, we were looking at real issues like how the DMV did their their site tests and and drive tests and things like that on the site. Going around pillars and columns. We were looking at issues that that that had to do with noise.

We were looking at there's there's I'm blanking on what the other one was that was that was material. Sure. Oh, construction staging. So, the housing units would have been in phases and so the DMV would have been completed. And so, you would have had literally constituents going into the DMV around the construction sites and deliveries and the like.

And so, there were a lot of concerns that made this not just more cost effective, but beneficial to both parties.

Those concerns weren't conceived during the during the initial design and solicitation?

The concerns were identified And in our in our outreach and our solicitation, that was something we kind of put as a as a window sign saying, like, make sure you thought through these things because, you know, we we were open to all sorts of development proposals, integrated, not integrated, standalone. Maybe you do less housing, and you have a parking lot between the DMV. I mean, there was a lot of options considered.

And what the developers, like, almost to a developer put forward was a more complicated scheme. I think they were really trying to maximize affordable housing.

And unfortunately, I'm being snarky, I don't think they thought through some of those issues as well as they ought to have. Yeah. And so hence pivoting post award.

But we signed off on those even if we had bought on We did.

It is. I mean, it's very conceptual on the housing side, but yes.

We did. We did. We did.

The two final questions I know I I I thank the chair as well for a little opportunity, something here that might seem district specific. At the moment, it is. But this is also an issue that I would think of we need to, you know, look at processes that are gonna be able to look at other state properties if we're ever serious about realizing housing opportunities or mixed use projects as well with with those with those rare property sites that they are.

You know, back to the Hillcrest site, you know, and and again, not have actually seen our actual proposals, but talking to a number of developers, you know, I'm surprised for the Bell Street for the San Francisco context. Were you able to conceive a proposal

that sought for the redevelopment of the DMV portion as an exaction, right, for the additional development rights that you're given. In other words, the the land is our biggest asset here. Are we not able to strike a partnership that gets a DMV for free or for low cost?

Yeah. I will say that was very, very much the hope of DMV going into that. Hope, push, desire, drive, whatever synonym you wanna use. When we did the initial RFI, I mentioned study. That's really what it was.

It was an RFI. We interviewed, gosh, it's years now, but 12, I believe, different developed companies, who had all expressed interest in the site. Their proposed schemes, fell into various buckets. There was a bucket that was that offered not a totally free DMV, but almost a fully subsidized one. To do that, the development that would have been necessary, and they were uniform in their responses, would have been, you know, fifteen, eighteen story towers, and almost entirely market rate.

There would have been a modicum, if any, affordable housing at the site. And I think, I don't wanna speak for the members representing the area, but at the time, at least a preponderance of affordable housing was the preference. And so the write off was affordable housing leaning at the expense of having the DMV pay its own way.

Yeah. I could see that trade off when it comes to, you know, cost of that project. You know, the the last thing I'll say for the Downtown State Building, thank you for the update today. Encouraging that there might be some movement in the near future on the western part of the parcel with the old garage that's there. It still leaves the big Kahuna there about the, you know, completely shuttered, downtown state building right now.

That's been shuttered since we were all kicked out in 2022. I remember well a press release going out celebrating that, you know, this day had come and we are decommissioning this building and we're gonna get 1,200 units of housing in downtown with, you know, all the all the all the, you know, community amend, development that could go around that. And notwithstanding, you you acknowledge the city was maybe in, maybe out of that part, but that deal fell apart in 2023. Oh, yeah.

All of this like traces back to a press release from four years ago.

And fast forward today, we are just at an app. We have inertia on this property, right? Meanwhile, the demolition costs and remediation that we need to do, those costs are only continuing to rise right now. And every year ticks by and we're not fulfilling our commitment that we made in this press release that that we're going to be able to do more housing down here. And I'd like somebody to be able to take this a little more seriously.

So great news that there might be a little bit of movement on part of the parcel over there, but none of that site program is going to work until we resolve the entire part of both of those parcels. And so I'll continue to engage with Michaels and my regional we consider this a regional asset between all members of the central some members of the Central San Diego area because it is.

And we, you know, stand available in any way we can to be able to help connect dots so that, you know, we're not here a year from now in somebody else's chairing the subcommittee asking the same questions.

If I can make two quick points just to to help,

a a

lay concern that there's not there's not earnest effort. Number one, I did mention that on the the west side of the demolition there, Michael's proposal is two separate distinct towers. So it's not as if originally, they had actually planned on an abandonment of the the Central Street

Right.

Kind of something more integrated, but their proposal has been separated. So it is not necessarily the case that both have to go down for the for one to go up. So there could be something interim, and we're happy to, you know, Kinda work and refine that. Part of that is an accountability piece. We definitely don't want, like, the market side to go up and affordable never to go up.

And so Sure. We gotta make sure we're working with them on that. But that is an option that once once that demo begins, which should be fairly imminently, we can we can work with them on. The second piece is because we did see bid savings on the the demo of the West Side, it was material. And we're seeing actually bid savings in general in the area when we we put out things to to bid.

And so we've we've taken the somewhat extraordinary step of beginning to put the other side out to bid to actually get real, not conceptual, not third party consultant cost estimates to try to drive down to a real price.

So between the bid savings and what that might actually look like, we're hoping that the the dollar figure ask is much smaller between, you know, the the the potentially, some of the unused funds from ACD, potentially what Michaels can bring to the table, maybe maybe we can jump start it. But we're trying to get to a most definitive number as possible so that we're not no one's throwing out conceptual numbers that are never gonna get funded.

Well, thank you, Mr. Kinney. And I would just say strike while the iron's hot. Downtown development is struggling right now, and so it seems like there's

a little bit of

competition out there that can be able to keep some of these bids a little bit more attractive. And I would just encourage you to keep reaching out. Sure. Thank you.

Don't leave. Oh,

okay. I'm here.

Yeah. No. I want to thank the member because these are are opportunities to engage. Mister Kenny, without throwing you for

a loop

here, and you can say no, you'll get back to me because we didn't ask you before. But since you're in front of me, I I too have a few questions. But you can you can say, you know, we'll revisit. There's two two things if you could just give me quick updates. One is on the Fairview development in Orange County.

I know that you know that I've asked about that over a good amount of time. And then second would be on the feasibility study, for the Southern California Veterans Cemetery. And, again, if you don't have details on your head, that's fine.

Sadly, I do. So, yeah, for Fairview, that one's fairly fairly simple. The specific plan concept is is been been refined and and and at the point where they're they're beginning their their EIR process, the city had given us a time frame, honestly, of of April, which were at the very tail end of. So looking like it'll bleed into May to begin that EIR. If that holds, that would put the entirety of that entitlement process done by the end of the calendar year.

Meanwhile, knowing that they're they're at that point, we have put the Fairview Developmental Center on our state commercial opportunities map. So we've moved away from property specific solicitations and now essentially have, for lack of a better phrase, like an auction process for properties. That way, we're not doing these very laborious solicitations. Every site that's available, people can come see. They can put offers in on.

That site is on there. I would imagine most developers will be interested in putting something on once the IR is out, and there's a little bit more specificity from the city. But the last we checked in, they're still looking at the 4,500 unit entitlement. And so make money of

those units would be affordable? If you don't know, you could get back to me.

Yeah. I'll I'll I'll get back to you. It will it will largely too depend on what the developer would would put in for, but I'll get you a percentage after this.

Appreciate that. Of course.

And then for Gypsum Canyon, we are we have we have the the the pretty pictures in the study will probably take a little bit longer, But the most important piece, the cost estimate, you know, estimates have come in. We have spent I spent the last couple of days working with the team refining those numbers, trying to also re conjugate the where pots of money are allocated so that there it's more easily comparable to the 2023 study, because that was very, very, very difficult to to untangle.

We'll be, meeting with our our client, Calvet, this week. We're on track for we said the end of the month. I think those numbers will be out shortly, and

can have an intelligent conversation about the next phase of that project.

we

And you are invited. I believe we sent a invite to your Yep. Office to go to Gipson Canyon next Friday. Yep.

I'll be there.

Alright. Appreciate it. Sure. Thank you. Sorry.

I wasn't trying to put you on the spot, but you're right in front of me. It's hard not to. Any other questions as Assemblymember? DGS?

Yeah. Why not? Just kidding. You're very popular today. You should have just been on the agenda.

But, no. I mean, I think just big picture, this is my first year on the committee. We'd love to hear, like, what are some of the challenges your agency is facing. Obviously, you have a broad scope of things that you manage for the state. Do you wanna give us any big picture challenges that you and your team are facing?

Yeah. I mean, at the risk of of getting myself in trouble, I I think we we do have a very broad portfolio. The DGS is a curious mix of service provider and control agency depending on the topic. And I'll we we are also fundamentally a fee for service agency, so we effectively look and function much like a private sector company. We charge for our services.

Very little is is really subsidized. Oh, good. Our our director.

Yeah. Don't wanna leave him.

And so and so that that provides you know, and workload goes like this depending on what happens in the budget as well. And so it's it's it's it's difficult to have, you know, really, like, a long term steady projection of things. Our buildings, as you can imagine, like, most state departments are also aging, and it's you know, some of the member Ward mentioned the DMV. A lot of our portfolio is is heading in those directions. Our buildings tend to be well past their useful life.

Rental rates don't account for end of useful life replacements. They account for maintenance, but they don't account for, you know, the HVAC that's forty five years or the roof that's forty five years. And so there's, you know, there's there's a lot of day to day challenges that we face kind of on that note, but I'll happily turn it over to my boss to AdWords.

Sure. Anna Lassa, director of the Department of General Services. I think, it's difficult to encapsulate, you know, all the things that could be both opportunities and issues for our department. We're not a monolithic department. We have 15 to 17 business lines.

Mister Kenny oversees, programs that are really in the built environment, but we have a whole slew of business services that are not in the built environment. Primarily, we are known for procurement and contracts and overseeing the delegation of procurement to departments. But we have insurance, and we have HR services for a lot of client agencies.

So I think one of the biggest challenges that we face when we provide business services to other departments is as they grow and they reach a certain size, they need to come off our roles and go to another department.

And so it's right sizing all of our business services on all the services and programs that we oversee that are not as popular as say real estate and housing and all the shiny stuff that we, you know, tend to see because they are tangible, is making sure that we are providing those good services to our client agencies, but also being a good partner to our external partners.

We are the largest group certifying small businesses across the state of California, and we certify them not only with the state, but with 45 other reciprocal partners across the state. So ensuring that we're supporting small businesses across state is incredibly important. So, I mean if there's opportunity, there's some risk, there's always challenges, and we are a very large department all over the state.

So ensuring that our culture across the state of California from the northernmost to the southernmost point of the state, we are providing good services internally and externally.

Thanks so much, director Lasso. I won't put you on the spot for for today, but we'll love to follow-up with your office. I think you're in the position to best give us advice on some of the forthcoming changes that we have come from the administration as well, you know, whether or not the the state is return to office mandates. I'm sure you all know the state of our buildings. Just would love to hear that

from

you offline as well as some of the work that you do in procurement. You just mentioned some of the things that you've done to support our small business community. And so, you know, your economic engine of an agency probably pumping millions of dollars into the economy. And so we'd love to schedule time and Absolutely. Learn a little bit more about that.

Absolutely. We're here to support and provide as much information that we can. We'll definitely schedule time with you.

Okay. Thank you so much.

Before you leave, just we I know the director as she sits on the book state board allocation and I sit on that board as well. So, thank you for your public service.

Thank

you. Last just one big high level question. How many employees under DGS?

Approximately 3,800.

Across the state. Yes. And then, I know we're just pushing it so much, but it's okay. I know there's been a lot of talk about, if you wanna say rehabbing state buildings and possibly turning those into housing. And yet, I've heard everything from it's much more costly than you would expect.

It's not really feasible. Do you have any top thoughts on that, either of you?

Yeah. It it it is more of a mixed bag. I think there is a presumption that gets made that, you know, hey. You got a structure, and you can just gut the interior and and do stuff with it. But what really matters is floor plate depth.

What really matters is what the exterior facade looks like. Light penetration is huge. The what what what one would expect in a housing unit and where you would get sunlight is is not a small issue. So there's there's generally a depth that you really wanna see. It's more like 37 feet.

And so these buildings that are built with very large floor plates, which has been the trend in the last twenty, thirty years or so, if not longer, tends to be non adaptive reuse compatible. What you tend to find is, like, your class c buildings from, like, the fifties tend to be much, much more conducive to it. We actually did a study of the buildings that we thought would be, you know, long term would probably be our most likely to be gotten rid of.

There are some that were deemed to be conducive for it. One big, you know, not challenge, but one big variable too is that those tend to be somewhat higher risk than greenfield developments, just because you never know what's actually behind the wall.

We've had some very interesting experiences ourselves as we renovated buildings. And so if you're a developer and you've got a choice between an empty lot and adaptive reuse, it's riskier to go the adaptive reuse. But it is not impossible. It just takes the right product type.

And I would say, and add to that, that one thing is to do adaptive reuse for housing and others to do adaptive reuse for education schools, and so you have different building dimensions and codes and requirements for light and also for your mechanical engineering system. So it always depends what the scope is and what the ultimate programming goal.

Alright. Well, we have kept you long enough. We appreciate you being here as well. And with that, thank you so much. Thank you.

To our next group who's been waiting patiently, we sorry sorry we diverted a little bit. But when we get the DGS got people here, we gotta talk to them. Alright. This next part, we're gonna speed through, I believe. We are going to government government operations or gov ops as as some might say.

We are gonna be on issue number two, the California Education Learning Lab. And as usual, if you'll introduce yourself.

Thank you, madam chair and members. Lark Park. I'm the director of the California Education Learning Lab. We are a state funded higher education grant making program in our eighth year of operation. We fund intersegmental projects led by faculty of the UCs, the CSUs, and the California community colleges to promote innovation in teaching and learning and student success in STEM and other fields.

Over our history, we have funded more than 120 projects across the state of California, and our funded projects have reached more than 13,000 faculty and 300,000 students. Our faculty grantees develop innovative curriculum, teaching resources and technology tools to improve and support student learning. With regard to the governor's budget, with the California Education Learning Lab, there are three components. The first component is, permanent restoration of learning labs funding. The second component is the move from LCI, the, Office of Land Use and Climate Innovation to GovOps.

And the third is a trailer bill, that, relates to the two and, and also, has clarifying and technical changes related to it. With regard to the move from LCI to GovOps, the learning lab was created in 2018 under the old governor's office of planning and research as neutral territory for these three segments, to engage in, and compete for and collaborate with grants.

And, in 2020, the learning lab, entered into an administrative partnership with the Foundation for California Community Colleges, because, the Foundation for California Community Colleges was more embedded in, in post secondary education, Whereas OPR did not have much expertise in that area. This is in, the relationship, is one that we've enjoyed since 2020. In the last couple of years, as the committee knows, the, the office of planning and research has become land use and climate innovation.

That agency has refined its mission and restructured itself. And so it has become a less, well fitting organization to house the learning lab program. Gov ops, because of the, the approval of the California Education Interagency Council, as well as the Cradle to Career Initiative, which is also housed in GovOps. GovOps has become the de facto state agency for, post secondary education.

And so it makes sense, to have all of the higher education initiatives at the state level, under one roof rather than spread out amongst different agencies.

Regarding permanent restoration of the $4,000,000, between 2018 and 2022, the learning lab program was funded closer to $10,000,000 annually. In 2024, the learning lab program's budget was reduced by 50% as OPR's mission had become more more defined and further away from higher education. This made our successes and our projects less visible to that agency. So, permanent restoration is come is coupled with the state reasserting itself in terms of its influence in the post secondary collaboration along with workforce.

Also, it is, with the understanding that learning labs work is neither duplicative, nor inconsequential related to the work that the segments themselves do.

We often partner with, different segment offices, on, on a variety of, projects. And we have, benefited from their collaboration and they have benefited from ours. So, given that the state continues, and higher education in particular, continues to face some pretty big challenges, the administration wants to leverage the networks, and and the grant projects that we have, had over the past eight years. The challenges include federal assaults to higher education unpredictable swings in research funding, particularly educational research funding, which is different than basic science research funding.

What has saved California research dollars has often been based, on prevailing in the courts.

Second is pressures on higher education institutional budgets and enrollment trends. These will these factors will continue to cause instability for investments into teaching and learning. There are also tremendous changes in the workforce driven by AI and other technology advances such as Quantum computing, agricultural technology, advanced manufacturing, robotics, as well as AI itself. This is really going to force higher education to step up to the challenge in order to prepare the workforce for these advancements.

And then there is there is AI itself, which is the biggest change of all.

And it's been widespread. The challenges of AI in the classroom environment is faculty and students struggle with how to, integrate it effectively and educate, on ethical and effective uses versus harmful and wasteful uses of AI. This is impacting all institutions and all disciplines, although not necessarily in the same way. In late twenty twenty four, we did award $12,000,000 under an AI challenge, so California could be on the forefront of understanding how AI would impact higher education and learning across, various disciplines.

With me today is one of our AI grand challenge project leaders, Mark MacArthur.

Doctor MacArthur teaches writing at UC Davis and is a co leader of a $1,500,000, grant project that involves eight different institutions, more than 200 faculty, and impacts more than 12,000 students. And doctor MacArthur's project is about how to adapt student writing and critical thinking in this age of generative AI with all of its challenges.

Doctor MacArthur is here to respond to questions in case you'd like to hear directly about what is happening on the ground relative to, student use of AI, as well as perspectives on the learning lab and, LAO's analysis. Thank you.

I think we'll go to the Department of Finance next.

Kayla Landman, Department of Finance. Nothing to add available for questions.

And LAO. Good afternoon, madam chair

and members. Natalie Gonzales with the legislative analyst office. Though we recognize that learning lab promotes innovation in teaching and learning, we recommend rejecting the governor's proposal to retain it. As you know, the state is facing a deficit in twenty twenty seven, twenty eight. To address that projected deficit, the state is already considering ways to reduce its spending.

The most notable proposal for reducing spending in higher education is the governor's proposal to cut funding for the middle class scholarship program in half. Given the state is already considering cuts to ongoing student support programs, we think it is reasonable to begin considering cuts to faculty professional development programs such as learning lab. Along those lines, we recommend maintaining the plan the state initiated last year to begin winding down learning lab's work. This recommendation yields ongoing general fund savings.

Without Learning Lab, a notable amount of faculty professional development would still occur at UCCSU and the colleges.

Though we understand it might not occur in exactly the same way as learning labs work. As a final note, the state created a new education workforce entity last year, the California Education Interagency Council. The council is tasked with improving coordination and workforce development across the segments. If the legislature would like to continue to prioritize funding for faculty innovation grants while still achieving general fund savings, it could consider directing the council to look for intersegmental grant opportunities that do not rely on state funding. Thank you.

I'm happy to take any questions.

Thank you. Appreciate it. Madam chair, may Aye, just say we are not

a program of professional development. It is part of what we do, but it is not the entirety of what we do.

Thank you. Appreciate that. Members?

Nope.

Let's see if we have anybody from the public who would like to speak. No one from the public. Obviously, we heard this last year. It did go from from being possibly phased out now to permanent ongoing funding.

Let's see if we have anybody from the public who would like to speak. No one from the public. Obviously, we heard this last year. It did go from from being possibly phased out now to permanent ongoing funding.

I believe it's at 4,000,000.

And, we have this whole to hold open. I would say, I know I spoke positively about it last year, but as we continue to move into this direction of a deficit, I don't disagree with the a LAO today on, there may be points where we're going to have to make tough choices. But I know as a faculty members, I appreciate that leverage as far as attaining grants and those attaining additional grants.

But we're going to be hearing about the interagency council next, and there could be some possibilities there. But we will hold this open.

Madam chair, may I ask though Dr. MacArthur just to respond briefly?

We're gonna close the item. We're gonna move to the next item.

Thank you. I've waited for hours to say something. Could I please?

We're gonna go to the next item. Thank you.

This is very necessary. I'm really irritated that I'm not allowed to speak.

It's a good way to not to get anything done.

We're gonna go we're gonna go to item number three, which is the office of the California Education Interagency Council budget.

Thank you Madam chair, fellow committee members, my name is Justin Howard. I'm the deputy secretary for fiscal policy and administration of the California Government Operations Agency, and I appreciate the opportunity today present on the next couple items on the agenda, starting off with the request for positions related to the California Education Interagency Council. Specifically, we're requesting four ongoing positions to begin staffing up the council.

As part of last year's budget, 1,500,000 was built in the government operations budget to fund activities related to the potential for our council. That council was ultimately defined in statute later on in the fiscal year through two pieces of legislation.

We are requesting that we only need position authority because the funding's already in the budget. I am pleased to announce that we've done a bunch of work behind the scenes in order to stand up the council. We've established domains, payroll headers, and everything else. We have a separate program set up for ensuring that the council is distinct from our regular operating budget within the office of the secretary.

We have put into place website drafts, and I can announce as well that the governor has appointed an executive officer for the council.

That person's name is Debbie Cochran. She's currently the bureau chief at the California private post secondary education bureau within the Department of Consumer Affairs. She'll be moving over as the executive officer for the council effective May. So just next week, we'll be swearing her in, and she will have a lot on her plate to do. The other three positions that we're hiring for relate to this office.

Those positions are posted. We are actively recruiting for those positions. Obviously, we need to get the director position filled first before we can start filling the other positions. So with that, I'm happy to answer any potential questions you may have. Just noting that this is a new area for the government operations air operations agency.

This is not something that we've delved into in the past, but we are hiring the proper subject matter matter experts to work on this space.

Appreciate. Department of Finance.

Kayla Landman in Department of Finance. Nothing to add available for questions.

Alex Spence, LAO. We have no concerns with this particular budget proposal. Happy to answer any questions.

Thank you. Members? Assembly member Caloza.

Thank you, Chair. Thanks for your presentation. Can you just share a little bit more about how the council will be staffed? Will staff from GovOps be moved to the council permanently or how that will work?

Yeah. So the council is made up of about 10 individuals that are outlined in statute, mostly people who are ahead of various organizations, whether it's the chancellor of the community colleges, state university, UC, etcetera. There are four dedicated staff that we are proposing for the council. On the administrative side of it, gov ops will be performing all the administrative duties, whether it's human resources activities, IT activities, procurement activities. So we will be providing support.

We are not asking for any additional positions on the administrative side to support the council. We'll be absorbing that workload within our existing operations. So the four staff will be solely dedicated to this council. We we've asked for an analyst. We've asked for a working supervisor level and as well as the the OT is an executive assistant to the executive officer.

So we will have a bunch of work. We'll also be providing comms work. We'll be providing legal services work all from within our own budget as it currently stands. So we're trying to be as fiscally prudent as possible given the budget situation.

Thanks for sharing that. And did I catch you correctly? Is this the first, like, education related council that will be in GovOps?

Yeah. Right now, we currently have the cradle to career data system, which is the data system that brings together a bunch of datasets from varying various state departments, and many of it's education related. But this is specifically the first council that we will be setting up that's specifically related to education workforce activities in Marion.

And how do you foresee this interagency council working within the other educational bodies in the state? Obviously, you know, this was handed to gov ops. I don't wanna ask you that question in your, you know, implementing something that that was tasked to you, but how do you foresee this working with the other related education agencies?

Well, I do think that's gonna be one of the first things that the new executive officer is gonna have to work out as we bring her on board. We are setting up a series of meetings so that she can meet with the appropriate council members. When they have their first meeting, ultimately, they will have to kind of formulate what is their work plan for the council and identify those areas that they need to work on first and how to go about working in those areas.

So it's not something I can speak to specifically given that I don't have the background and expertise in this education or workforce area, but we do think that will be the first line of responsibility for the new executive officer.

And so that person's not yet hired. Right?

They've been announced, appointed by the governor. They will be sworn in next week.

Can you give us the name of this person we will be looking for?

Debbie Cochran. She's currently or winding up her responsibilities at the Bureau of Private Postsecondary Education. She's currently the bureau chief there.

Okay. Great. So she'll be the one speaking on this item in the future is what I'm hearing from you. Okay. Thank you so much.

Not a question, but a request as, again, we held open the prior item, which was on the learning lab and depending on how that shakes out in the budget, I definitely think it would be worth the interagency council at least keeping an eye on that item and perhaps finding out if there's any overlap that can come into play related to to that item.

Yeah. Sure. No problem. And I do think, you know, by putting these education area little programs in one space, we'll be able to leverage knowledge across those entities, as well as look for there might be duplication and things of that nature so that we can streamline operations as well. So

Right. And as we are holding open this item as well, Do we have anybody wanting to speak on this in the public? Did I already say that? Oh. Got mixed up.

Alright. I think that is it. Thank you. We appreciate your presentation, and we're gonna move on to the Office of Civil Rights, VCP.

I have that one as well. So Okay. This would be the third education related thing that has been proposed to be placed into the government operations agency. So, specifically, there were two pieces of legislation passed last year, AB 715 and SB 48 that established the office of civil rights and then placed that office within the government operations agency. OCR or the Office of Civil Rights is charged with providing technical assistance to LEAs to the local education authorities.

I'll try to avoid the acronyms here. To prevent and address antisemitism and other form of discrimination and bias in our local education entities. So they will work OCR will work directly with our local education authorities to support the existing California Department of Education uniform complaint process. They'll recommend proactive strategies to combat discrimination or bias, to local education authorities, administrators, and educators.

They'll review complaints of discrimination submitted under the uniform complaint procedures and provide advice to implement corrective actions, including technical assistance to resolve discrimination issues at school sites.

They will also develop a training module in consultation with the Department of Education, the State Board of Education, and the Office of the Attorney General regarding the appropriate manner to process and resolve discrimination complaints. And that we will be pulling various discrimination prevention coordinators, approximately five. We are aware of pending legislation that may meet that, six as well as some deputy discrimination coordinators as well.

In total, we are we are asking for, 10 positions, and 3,500,000 in the budget year to implement these two pieces of legislation ongoing that does drop to 2,800,000 because there are some one time costs in order to get the office up and running. Again, we've done all the behind the scenes work related to the Office of Civil Rights.

They are set up as a separate program, unique and distinct from the Office of the Secretary. They have domain set up. We have We're ready to go on the website and other administrative tasks. So we were just waiting for the for director to be appointed. Right now, that has not happened.

So

Thank you. Department of Finance.

Kayla Landman, Department of Finance. Nothing to add, but available for questions. Thank you.

Alex Spence, LAO. We have no concerns with this.

Thank you. Members?

Just wanted to thank you for undertaking this as a joint author of SB 48 as well as a strong support of AB 715. I know that the value that we are able to get to critically address rising incidence aid we have across all these student populations is deep deeply necessary. We'll pay for itself certainly in the form of other many other social benefits, and I think it is a very worthy expense for the state.

So I I think I heard you say this in your in your in your presentation, but I'm I'm aware of the SB. I think it's nine nine eight is the bill that is going to further improve upon SB 48 for some like, in introducing some of the deputy coordinators as well that is not yet budgeted for?

Yeah. Correct. That is not included in this proposal to the extent that measure passes that would add some additional positions that we would like to need funding for, for those additional positions.

You mentioned the director is not yet hired for this. Are there any other positions that, or any other positions that are filled yet?

So all the all the civil service positions for the agency are posted.

Okay.

And they're open until filled. We're just waiting for the direct. So once that position gets filled, we can then have the director weigh in on who they wanna hire from the position.

So Okay. Thank you. How do you vision then this department, this office being able to liaise with other established organizations like the State of Hate Commission or the Civil Rights Department?

Yeah. I'm not as familiar with what those other agencies are are doing. We do expect to the extent that we identify any overlap or things of that nature that they'll coordinate and see who's responsible for which activities. We don't wanna duplicate efforts in state government for sure. And that, again, will have to be something that the new director will have to kinda undertake when they get hired on and kind of evaluate that.

And we'll work with our partners at finance and within the administration to make sure that we're not duplicating efforts across these other organizations.

Okay. Thank you for this today.

Yeah. Thank you. I have no questions. Anybody from the public wishing to speak on this item? Not seeing anybody.

We will close that item. All right. We're going to item number five. Update on Artificial Intel intelligent Pilots and pure cure Procurement.

Yeah. Or say that word.

Alright. Thank you. Again, Justin Howard, and I'm gonna give a brief summary. Your your agenda really goes into it well and kind of lays out where we're at here. In 2023, Governor Nissom issued an executive order directing California state agencies to explore the responsible use of Gen AI, generative artificial intelligence, to improve government operations, enhance service delivery, and strength of the state's capacity to address complex policy challenges.

In response, the state entities launched a series of what we call Gen AI proof of concepts, commonly referred to as POCs, designed to test the practical applications of the technology while adhering to California's core values of equity, transparency, privacy, and accountability. The POCs came in two tranches. The there was five as part of the first round of POCs and three of the next round of POCs.

I could if you want, I can go into the end the eight individuals, but just as a real quick update, I mean, we are pretty much at the end of the POC process here.

Of the first five POCs, four of them went on to the MVP stage when MVP stands for minimum viable product, meaning they worked with the vendors to develop a minimum viable project that they were then able to evaluate, whether or not that department then proceeded beyond the what we call the MVP stage was up to that department, whether they had funding or they needed to enter into a a follow on contract for those services.

My understanding is of the first five projects, only two are potentially moving on to ongoing projects, and those are primarily in the Caltrans area, if I recall correctly. Of the remaining three of the second round POCs that started afterwards, one moved on to the MVP stage, the minimum bioproduct stage, and that was for the Department of Finance. And I believe finance is still working on developing whether or not they move on to a follow on contract related to their use of this technology.

And with that, I'm I can I have CDT in the audience in case there's some technical questions or anything related to just the GenAI in general, but that's kind of where we're at with the proof of concepts and and the state's effort?

Thank you. Appreciate that. Department of Finance?

Yeah. Ryan Bender, Department of Finance. Nothing to add, but we're available for questions.

LAO. Xin Ma, LAO. Nothing further to add. Thank you.

Alright. Madam assembly member, anything to add? You don't have to. It's okay if you don't want to.

Thank you, Chair. And thanks for your presentation. You have just like a wide breadth of responsibilities. We'll do your own special hearing next time. But I yeah.

I mean, I know you didn't go into a ton of detail on too many of the things. We obviously have, the great report here from our chair and our our, and our team. But would love to hear kind of, like, how is GovOps kind of leading this conversation around AI? There's obviously a number of bills, a number of things that are being considered as we look at putting guardrails, on the private sector and how they are doing work in this space.

And, you know, each week, each day, it seems like there's something new that's coming up with AI and how do we balance trying to spur that innovation, cultivate this industry while at the same time, really understanding the very serious concerns, raised by a lot of my colleagues, in this space around privacy.

And so as we look at that, on the private sector side, and we're also doing things here in the public sector to modernize government, can you just elaborate a little bit more about what that looks like, how gov ops is kind of leading in that space, what what more you can share if you can go into detail?

Yeah. Well, I I think I'll just kinda speak high level here because we we work primarily with our control agency department. So that would be the Department of Technology who helps sets the regulations and state that all state departments have to follow when they go out and, you know, procure generative AI technology. We also work with the Office of Data and Innovation to help spur innovation. That's not to say CDT also does the same thing.

It also helps spur innovation in the technology space. So working closely with them, we we collaborate routinely on projects within the state. We we routinely review legislation and provide input to authors who have pending legislation that they wanna look at, and we are trying to foster an environment where we're not necessarily stifling the development of the technology. We do wanna do it in responsible way as as we stated in the goals of the original executive order, and we will continue to do so going forward.

We have regular meetings that are set up with our agency information officer.

They he meets regularly with the parties at both CDT and ODI and the governor's office as we discuss all these challenges that are out there. And we always stand ready to work with the legislature and any members who want to work on legislation in this space, and we will continue to do so. I mean, so at a high level, that's really what we do. We help convene and collaborate and coordinate activities across the state on this space.

Thanks for kind of those high level comments. Can can you give examples of what would be low risk ways in which you're incorporating AI into the workspace? And then on the flip end of that, what are some higher risk ways we are using AI that maybe involves more discussion?

Well, I don't know if I can go into the higher risk ones. But in in the lower risk one, the state has developed its own kind of generative AI tool called Poppy, and that's done by that was created by the Department of Technology, which is essentially a secured environment in which there is similar to, like, a chat g t t type effort where state departments can sign up and, you know, use that as a tool for doing their work, hopefully, to streamline and speed up the way in which their work is being done.

So that is a low risk way because it's done in a very secured environment. It's state owned. We have everything.

We control it. I'm not sure I can speak to a high risk example. I don't know if my colleagues at CVT have any high risk examples that they may think of. But