Senate Budget and Fiscal Review Subcommittee No. 4 on State Administration and General Government

Subcommittee four of the Senate budget and fiscal review committee will come to order. We will provide, an opportunity this today for public comment before any votes are taken. Generally, following the conclusion of the calendar, at this moment, we'll go ahead and ask our consultant to take a role and establish a quorum.

[Roll call]

Quorum established. Today, the order of business is as follows. Our agenda today involves a variety of budget items set for discussion, including those for local government financing, the Secretary of State, the Department of Veterans Affairs, the Arts Council and the military department. We also have items on our vote only calendar, but we're gonna be holding off on those items and, voting on them at a different date. We will still allow for comment on those items, and you can provide comment during the comment period.

We will now turn over our first item of discussion on the vehicle license fees. So agenda item one pertains to a backfill for vehicle licensing fees, and we have the rep we have a representative here from the Department of Finance, and please proceed with your presentation.

Good morning. Chris Hill, Department of Finance. I think the agenda does a pretty good job of laying out all the mechanics of how the vehicle license fee swap mechanism works. So I won't belabor on that. I'd just like to briefly discuss some of the numbers.

According to the Department of Finance's calculations based on data we got from the county auditor controllers, what some county auditor controller data for San Mateo County. The vehicle license fee swap amount owed to the county and the cities is $280,000,000 And the amount of excess ERAF the cities and the counties received that did not count towards that vehicle license fee swap was $330,000,000 approximately.

And because that $330,000,000 did not count towards a $280,000,000 vehicle license fee swap obligation, the county auditor controller shifted a $165,000,000 in property tax from the county's non basic eight k 14 schools. And the the difference between the $280,000,000 in vehicle license fee swap owed, and the $165,000,000 shifted from the cities and the shifted from the k 14 schools, is the the budget ask of about a $119,000,000 that is before us today.

And the, governor's budget reflects the administration's, belief that, statute does not require the provision of that, $119,000,000.

The administration believes that's a discretionary expenditure that is not supportable from the context of the current fiscal situation, and, that is why, the administration is not proposing those funds.

Thank you for your presentation. I have a couple of questions. In the past years, the Department of Finance is supposed to use the excess ERAF two. First fund, the BLF backfill. Is this still a proposal that the deal the Department of Finance would, recommend as an option?

To I'm sorry. To use the

Excess ERAF?

Well, the the the administration is not proposing the excess ERAF just goes where it goes according to statute. And what the administration is proposing is to not provide a backfill for the for the insufficiency where there's not enough basic aid. Not enough property tax to be shipped it from the schools to backfill the vehicle license fee swap. So we're not proposing any changes to the excess ERAF, formula. Those just stated those will operate the way they always do.

Right. And my second question, while the majority of the impact is felt in San Mateo County, two small rural counties are also impacted, Alpine and Mono. Has the Department of Finance looked at a different approach for these small counties, and should they be considered separately?

We we have not. We're we're treating all the counties the same in this matter. And so, yes, that we're not proposing any different treatment for those smaller counties.

Okay. Thank you. Do we have questions from committee members? Senator Caballero?

You you framed this up at the beginning as an excess EREF and BLF issue and then the chair's question said it's they're not they're not we're we're we're not we're not proposing to do anything there. Do Alpine and Mono have any substantial excess ERAF?

I haven't seen the calculations for Alpine. I believe Mono Mono does have a they do have some excess ERAF, but Alpine County, it's so small that it doesn't show up on the reports that we see from the Department of Education.

And is there can you think of a policy basis why Marin, which has substantially more excess ERAF than any of the VLF affected counties, why they should have additional sort of state directed discretionary funding?

It's just it's not something the administration has proposed. It just happens pursuant to the operation of statute.

Okay. So they're just they're just these are just two unrelated facts that have nothing to do with each other?

Yeah. Because what it comes down to is in Marin County, I believe there is sufficient money from non basic aid schools can be shifted for the vehicle license fee swap. And that situation doesn't exist in San Mateo County. San Mateo County does not have enough non basic aid schools from which property tax can be shifted to backfill the vehicle license fee swap.

So if, if San Mateo County and other counties, as you know from last year's hearing that this is a looming every year threat in Napa County as well, but these are artifacts this challenge is an artifact of just the way different lines are drawn. So this will never hit LA County, because LA County is one big gigantic county with lots and lots of different kinds of school district. They will never have 100% basic aid. It's just it's mathematically impossible for that to be the case.

The Bay Area, on the other hand, is divided into nine counties.

So the chances of a single county having an entirely basic aid is not trivial. In fact, there's one already, obviously, and potentially two. But then within the counties, this is also an artifact. And so I'm curious if the Department of Finance has a view about what will happen to our budget here if, for example, in Napa County, the the the the people of Napa County were to decide to, let's just say, partition one of the school districts into two school districts.

Napa Valley Unified, for example, serves both the city of Napa and the city of American Canyon in some unincorporated areas.

It's not hard to imagine how to draw that line. You don't it doesn't need to you don't need Prop 50 sophistication to draw that line in a way that would create one basic aid district and one non basic aid district, which would then automatically, without any action by the department or by the legislature, automatically entitled NAPA, essentially, permanently towards the VLF revenue. I'm not enough familiar with San Mateo County's school district boundaries and what have you to to know whether that's possible there.

But, well, it certainly is possible if if in in our if if we use the level of sophistication we did for proposition 50. So this issue, in some respects, is is is in the hands of the locals to deal with in a way that would give the state no discretion whatsoever.

We would just be given our regular bill like we get from LA and San Diego and, and, and Marin and everyone else. So what's the what's the department's view about the the necessity to try to find a solution for this that that is not necessarily all or nothing? Have you and have you contemplated that the the possibility that the locals could take action to solve it from their perspective that would leave the full amount of exposure that you described as a reality in our own revenues?

Kind of a complicated question. I don't know that that that just shifting school district boundaries, I don't know how that would interact with proposition one a from twenty o four that says you can't move property tax between agencies. So but in terms of a solution, this this is a subject of litigation. Also, I wanna note, San Mateo County has filed suit against the state for not providing funds in the last budget act.

So, I don't wanna speculate too much on anything that could touch upon that litigation.

Proposition one a has no impact whatsoever on the on the on changes to school district boundaries or the creation of new districts from within existing districts. So I, I, I, I, I, I was mayor when proposition one a was passed and sponsored by the League of Cities. I understand its its implications, but it doesn't have an effect in this case.

And so if if any school district reorganization to change a boundary or to split the boundaries of a district were to result in one of those districts not being basic aid any longer, then there's no longer a VLF problem in that county. Now I'm not suggesting that anyone is contemplating doing that tomorrow, because, obviously, there are other implications of of that procedurally and just hassle for the local community.

And, of course, of course, we don't wanna disrupt collective bargaining contracts and school school assignments and all of that. But the point is that, this is not the, the Department of Finance and we are not we are not king with this with respect to this issue, that we either solve it or it has the potential of being solved in a way that would remove any flexibility by the department and by the state.

And we ought to be we ought to be having those those conversations about how we resolve it here in in at the state level in a way that makes sense, doesn't disrupt disrupt the the communities, and that that rights this inequity that has been baked into the into the law since the shift was made. Thanks, Madam Chair.

Any additional questions from committee members? No? Okay. Well, thank you so much for your presentation today. And at this moment, I we will call up.

We'll take public comment from Senator Becker and Supervisor Jackie Speer. And for other members of the public who would like to make public comments on this item, we will take those comments at the end of the hearing after all discussion items have concluded. And you may present whenever you're ready.

Great. Thank you, Chair Hurtado and Members of the Subcommittee and staff. I thank you for the opportunity to speak to you today about a critical issue in my district. I'm here alongside San Mateo County Supervisor and former state Senator Jackie Speer, and we have a delegation of county leaders you'll hear from later to urge you to include the dollars requested in the state budget of in lieu vehicle license fee revenue the state is obligated to provide to San Mateo, County.

Additionally, we ask for a permanent fix as was just, discussed, by, Senator Cabaldon, a permanent fix to a broken state payment mechanism that is leaving my constituents uniquely and unfairly short changed.

As a donor county, we like to talk about California being a donor state. San Mateo County is a donor county with GDP of over 203,000,000,000. We pay significantly more to the state than we see back in funding. Historically, San Mateo contributes approximately 15% of California's total income tax revenue, proud to be one of the economic engines of the state. Yet year after year, the county must fight for funding that we are owed for critical services.

This is a flawed funding formula, as we'll discuss, that was created to address the state budget deficit in the nineteen nineties and early two thousands. And this formula no longer works. And we're fortunate to have people who were here when that deal was made. So contrary to the testimony we just heard from the Department of Finance, the administration has agreed in every year, prior to the last one that this money is owed to San Mateo County. Last year, it was a partial, payment.

But the mechanism enabled the state to eliminate the projected budget sore shortfall at that time, and the state promised to substitute this revenue source, this in lieu VLF tied to the school funding process. But, again, it's nothing to do with school funding. That is just the mechanism that this money was agreed to be returned, to, the county. In San Mateo County, the number of state funded school districts has dropped to only four out of the 23 total districts.

As a result, the county and its 20 cities have faced an annual funding shortfall to the state, this year has refused, to address and, again, has agreed to address in past years.

So I respectfully ask this committee to help fix this unfair practice and reimburse the revenues that support essential local services that the residents in my district rely on every day. We're fortunate to have many of those providers here today. You'll hear from them later. So this isn't just a technical issue.

This is really a matter of fairness, and I'm here today to advocate for every dollar that our county is owed as agreed to with the state, and push for a permanent fix so we can end this cycle of uncertainty.

Thank you.

Thank you, Senator Becker, and thank you, Madam Chair and Members of the Committee. It's it's a pleasure to be here today, sort of, but I'm grateful for the opportunity to talk to you about this issue. When I was here in 2004, long time ago, there was a recall on Gray Davis and Arnold Schwarzenegger was running. Gray Davis had just increased the vehicle license fee by 300 percent And it was Arnold Schwarzenegger as a candidate who says, I'm gonna get rid of it completely.

And, of course, he won.

And then when he won, there was recognition that, well, this is the money for the counties and the cities. So we'll take it from 3%, I think, or from 2% to six tenths of 1%. And then there was this process that all the parties went through in which the commitment was made to take the VLF from the cities and counties and, swap it for money that would come through prop 98. Now when mister Hill, I think it is, said, well, this is discretionary.

If what we're saying is that every time there is a deal made with the governor's office and the legislature that a deal is discretionary and not, a deal that is a contract, then we're all in trouble on a number of levels.

So everyone in good faith did that. They made the commitment and it has worked for most counties and cities with the exception of three. Now the reference to Alpine with 1,200 people and Mono with 12,000 people, the total loss of revenue to them, for the two of them, is $2,000,000 It is truly budget dust. But the hit to San Mateo County is a $157,000,000 over this year and what was not provided last year.

DOF has been consistent in paying us back for what is owed to us until this year.

And, you know, just like you, I've been in lots of situations where we've dealt with really traumatic and, and, and tragic conditions. This is catastrophic for San Mateo County and its cities, and it's through no fault of our own. The loss to San Mateo County in our budget will be 18%. The loss to many of the cities will be as high as 10%. In San Mateo County, from our perspective, we would have to close eight of our homeless shelters.

That's nearly 3,000 homeless people. Or eliminate assistance for 5,500 low income families and, and seniors. Eliminate the psychiatric services for 600 homeless people. Eliminate benefits for 3,000 veterans. I mean, you get the message.

For our cities, it's jaw dropping. For the city of San Mateo, they would either have to cut 23 police officers or 26 firefighters. 19 firefighters in Redwood City, 7.5 police officers in Belmont. You you can see where this is going. Imagine if this was happening in your districts.

Through no fault of your own. You didn't mess up the budget. You're doing your job, and this was a commitment made by the state. And they're just saying, oops. We're not gonna do it anymore.

I mean, it's just fundamentally unfair and wrong. So, without this fix, this county, San Mateo County, will lose a billion dollars over the next five to seven years. It is it's untenable. So I respectfully ask for your support of this effort to recognize if it was happening in your county, what would you do? In terms of the issue of litigation, what do you do when you're just told, nope.

We gave you money last year. We're not gonna give it this to you this year. We're not gonna give you what we owe you this year. It means that, you know, we we filed a lawsuit because we wanted to engage in negotiations, and we have been attempting to negotiate with the Department of Finance, and we're still awaiting some compromise. But meanwhile, it's desperate.

Thank you.

Thank you for your presentation. Do we have any questions from committee members? Okay. Senator Small with Cuevas.

Well, I just wanna thank you for your comments and your work and your service. It's always good to to be in your presence. We as one of the first black women to serve in the California State legislature and to have parity in the state Senate now, you are one of our heroes. And so notwithstanding this issue and certainly support San Mateo and getting what San Mateo, deserves, just wanna say thank you for your leadership and for joining us today.

Thank you, Madam Chair. So the this issue has been overcomplicated repeatedly, but teeing off of the the staff analysis of of the issue. I went back to look at look at the act what was actually said in 1999. Because remember, in 1986, the voters passed proposition forty seven nineteen eighty six, which constitutionally guaranteed that VLF revenues be sent to local governments.

This wasn't some sort of, you know, side agreements or, you know, people you know, something that people thought, you know, might be a good idea or this will just get us from this year to next year.

The voters of California passed Proposition 47 constitutionally guaranteeing that VLF revenues would be sent to local governments. But then in 1999, the legislature was considering the first round of cuts to the vehicle license fee. And at the time, here's what LAO said. The VLF is local government's third largest source of general purpose revenues. It's, you know, it's it's not it's not a parks fee.

It's not a yoga in the park fee that folks are paying. It's the third largest source of general purpose tax revenues after property and sales taxes. So LA said recognizing that VLF revenues represent an important source of general purpose revenues in cities and counties, both the governor and the the the VLF tax cut bill proposed to backfill local governments for any lost VLF revenues. The governor's proposal is to continuously appropriate general fund revenues in order to repay local governments for lost revenues.

Continuous appropriation for for those of us for those visiting from San Mateo County is the is what is the term that we use here to say we aren't having this year by year conversation that you that San Mateo County, Napa County, Alpine County, Monroe County absolute by law do not have to come and beg every year as though this is a discretionary choice.

A continuous appropriation says it will automatically be appropriated every single year. So the notion that there was no agreement that this and that it's just a discretionary choice for us each year, even if that were legally true and that's to be determined potentially through litigation, if not here, through a deal.

Even if that were legally true, it's certainly not consistent at all with every public statement with the actual legislation that was passed, and with the intent of both the legislature and the governor when they made those cuts and the intent of the voters of California when they passed Proposition 47. Voters then passed after what Supervisor Speer referenced in 2004, they then passed an update to that language, which continued to commit to continue the arrangement that local governments would have access to the VLF revenues.

And that at a certain threshold, which we just happen to be right at that threshold today, anything below that threshold, if we cut the VLF by $0.01 or by one percentage point tomorrow, then the constitutional provision would kick in that requires would require constitutionally that every every dollar be backfilled to the to the counties.

So this was all anticipated, that that this might be an issue going forward. And so as the as both the Senator, Senator Becker, and the supervisor have indicated, the mechanism was happening later was just a that was a purely internal state government, like how do we what's the most effective, most flexible way for us to make our payments? It wasn't a the ERAF VLF linkage was not intended to be a substitution for the longstanding decades long constitutional commitment that VLF is a local government funding source.

And if we're going to mess with it here in the capital for whatever reason, that it is our obligation to assure that local governments are not and the communities that they serve are not the ones that are hit. So we held this exact same hearing last year, but instead of all the folks from San Mateo being with us, some of them were here, but there were even more folks from Napa County here last year.

And the commitment was made at the time by everyone, including the Department of Finance that we would continue to work on it. We're still here. After that commitment was made, then no money was that we didn't get a solution and we didn't get the appropriation at the level that was appropriate or necessary in order to do the backfill. And we're here still here today without a meaningful, permanent or or midterm solution to this problem. We have to solve it.

There's nothing in here. San Mateo could have done nothing differently. There's nothing it could have done in order to avert avert this. The voters, the the governor, and the legislature when they when they decided to cut the fee on in the face of political pressure, made that commitment. They put it in writing.

It's very clear. We owe it to this. And as as a supervisor, it said, we would not allow this to happen anywhere else in California either. This is not a it's not special to San Mateo. San Mateo doesn't earn this because San Mateo generates so much of our income tax revenue.

San Mateo earned this because it is our commitment to them as it would be to Larry, to Kings, to YOLO, to the rest of Los Angeles County as well. And it's absolutely imperative that we take that we that this this house, this this subcommittee get to a solution this year. So thanks, Madam Chair.

Thank you. I want to thank the two of you for coming and presenting. I appreciate the passion and, and fighting for your community, for your district. And again, I wanna thank you for your service and for being here and fighting on their behalf. With that said, I will, we'll hold this item open.

And I don't think we have any other further questions, at this moment. Thank you.

Thank you.

Thank you.

We will now move to the secretary of State. Will representatives of the department please come forward? And before we get into this the specific budget proposals, we ask that the, department provided a a brief status report, and, you can proceed when you are ready.

Okay. Thank you. Good morning, Committee Chair and Members. My name is Kristen Dagscher. I am the interim chief financial officer for the [unintelligible] and on behalf of Secretary Weber, I'd like to thank you for the opportunity to present our proposals to you this morning.

Should I start with the first one, the elect the elections law enforcement?

What we're asking for a brief report on the status of of the department before we proceed with the item. That's what we can move to the item. That's fine.

Thank you. Okay. Perfect. So SB851 adds additional duties to the secretary of State's office. It requires the SOS to obtain notice within three days after the State or local agency or political subdivision files or is served with a court action relating to elections that contains a claim arising under federal law, and at least fourteen days before a State or local agency or political subdivision enters into a settlement to provide the SOS with an opportunity to ensure compliance with California law and regulations.

It expands the Secretary of State's authority to adopt and publish voting system standards and regulations that meet minimum requirements of the Help America Vote Act of 2002 that incorporates best practices in election technology. It also expands notice requirements for vendors of voting systems that have been certified or conditionally approved by the Secretary of State to require notification of any deficit or failure of any voting system or part of any voting voting system created or manufactured by that vendor in any jurisdiction.

This request would provide 1,100,000 in general fund for fiscal year twenty twenty six, twenty seven, and $807,000 in general fund annually thereafter to support four permanent positions and litigation tracking software licensing costs necessary to implement the statutory requirements prescribed by SB851. I have, with me today subject matter experts on this, and we're happy to answer any questions.

Thank you. Do we have any comment from the Department of Finance?

Paulina Petrichka, Department of Finance. No comment.

Okay. Do we have any comment from the LAO's office?

Drew Soderborg from the LAO. We have no comment on this item.

Okay. Now we turn to questions from committee members.

Thank you, Madam Chair. Good morning, and thank you for that overview of the item. I wanted I have I have just some general questions and comments, and then we'll get get to the item. I just wanna say that, you know, this issue comes up at a time when California cannot underestimate the power and the importance of the secretary of State's office and particularly the election protection.

Thank you.

Grown more concerning in the recent Supreme Court decision that was just levied Louisiana against Kalis, which raises serious questions about how states can protect communities of color, particularly their right to vote, their right to be protected against discriminatory practices and the dilution of their of their vote.

So as we look at this proposal, I just want to say it is incredibly important that this office has what it needs to do the job, given the circumstances. And, you know, also trying to understand how has that decision really impacted what and how you are thinking about this work is we are looking at one of the most important elections that California will face under incredible duress and pressure from our from our national government.

This federal administration has shown just straight up hostility toward equity, toward civil rights, and particularly the focus on fair access to the ballot. So, you know, I wanna just start with that general question. I know we don't have a often a chance to sit and, and get briefings.

I know the secretary has done quite a few public sort of explanations of of what's happened, but I wanna hear from the department directly about this decision and, and what are the steps that you now have to consider and take, and then I'll I'll move to my question, about the item.

I'd like to request Nikisha Robinson and Janelle Callahan to come.

Thank you for the questions and comments. My name is Janelle Callahan. I'm with our legal affairs department. I just wanted to say that we take your comments very seriously, and I don't have a specific response to that case, at the moment, but we are working closely with our AG counterparts, and county election officials and all of our local partners to make sure that we're apprised of everything going on and any threats that may be happening at the state or local level.

We're constantly coming up with information that we can provide to county election offices so that they're prepared for things that might come.

We don't know what's gonna be on the horizon, as you said, like, there's a lot of things that are unprecedented right now, and we're have all hands on deck to ensure that we're putting out the information that we need, communicating with our partners, and responding as quickly and as we can and appropriately as we can with all of our resources. So thank you for that.

So my my question then is on on the item itself. You know, and we have as we're going through this time of great hostility and pressure, we also have to ensure that there's accountability for for the system and to make sure that there's transparency around our campaign finance and lobbying activity, particularly as there are incredible, I would say, unsubstantiated and erroneous attention to, you know, how well we conduct our elections and, you know, whether we are being very mindful about, any violations or or erroneous activities.

So can is is there a way to understand, that as we're looking at the the access to the need to replace Cal Access, and I'm understanding that that is that's necessary, where is how do we ensure the accountability and a clear communication effort within that system so that filers and watchdogs, journalists, advocates, voters all know that the system is it's being implemented, and it's being implemented in a time where we can trust the data and the outcomes and the and the success of that system.

Do we have a subject matter for you for Cal Access? Are they in the hallway?

Senator Smallwood-Cuevas, that's under agenda item number three, which is the next one.

Okay. I thought we were doing them all together. Okay.

Sorry about

We can hold that question and Yes.

Thank you.

Any other do you have any additional questions? Okay. And do you have any other additional questions from committee members? I have a few. The first one, though we only have so though they are only on the vote only calendar, can you discuss the out year HAVA funding and how the secretary of State might plan to address the end of federal funds for the program?

Absolutely. Good morning, members. My name is Nakesha Robinson, and I'm the deputy secretary of state over the Help America Vote Act in the Office of Voting Systems Technology Assessment. And thank you for that question. So as it stands right now, we are forecasting that the HAVA funds that we currently have will run out in the fiscal year 2728.

As of last year, the Federal Government, allocated $647,000 to the state of California, to be used for election security. This year, we were awarded $1,900,000 However, we never know how much exactly we're going to get until the Federal Government passes their budget. So typically, in the spring of each year is when we are notified of how much money the state of California will receive. Currently, right now, last check, there was $15,000,000 allocated for next federal budget year to be divided amongst all 50 states and territories.

So not a lot of money to spread around, if you will, to tackle the topics of election security or any of the Help America Vote Act mandates. So

Thank you for that, answer. Definitely disturbing, to hear that that that's something that we're we're gonna have to deal with. The other question couple more. What is the time line for the implementation of SB851? How quickly do you believe you can hire staff?

So as you may be aware, this was an urgency legislation, so we're currently having to try to implement portions of it, with existing staff, and we're already working at capacity. So we would envision, trying to hire as soon as possible, hopefully within a matter of months once we obtain funding.

Okay. And will the expansion of voting system standards or current time for the primary or midterm elections, or will those changes mostly affect later elections?

I'm sorry. Please repeat the question.

Will the expansion of the voting system standards occur in time for the primary or midterm elections, or will those changes mostly affect later elections?

It will be later elections. Later elections. Okay.

And are are the resources requested under SB851 sufficient for the creation of voting standards and implementation of the notice requirements? And can finance or the department explain how these numbers and positions were arrived at?

So regarding the first part of your question, please repeat it.

Are are the resources sorry. Are the resources requested under this legislation sufficient for the creation of voting standards and implementation of the notice requirements?

So California already has, existing voting systems. Those were implemented in, 2014. We are currently in the process of revising those standards. And by having these additional positions, that will help to further, updating those standards and, as you pointed out earlier, to advance those for use in future elections. Okay.

And can finance or the department explain how these numbers and positions were arrived at?

Did did you want us to enter that? Or so, I'll let you speak to the specifics of the OVSTA, positions. There's four positions that we're requesting. Three of them would be housed in the OVSTA department. One of them would be housed within legal affairs, which is the attorney four position.

With respect to the attorney position, they would be sort of a specialist relating to voting technology, which we currently don't have anyone that's kind of a specialist in that manner. And they would also be in charge of handling more complex litigation and consultation with the attorney general's office and acting as a liaison for that, as we're required to stay apprised of local and state federal election claims and possibly weigh in on potential settlements regarding this.

And for the three remaining positions, the information technology specialist would, augment our existing staff. So currently, we have three full time staff that are responsible for the testing and certification of voting technology in addition to an information technology supervisor. So that would bring us to a total staff of five responsible for carrying out that mission. Addition to that, the other positions we're asking for, an analyst two and a supervisor one would be responsible for more of the policy and financial side of things.

One of the, duties that we are tasked with under the Help America Vote Act is the administration of funds to the counties in the form of contracts.

Okay. Well, I, I have no other questions unless there's okay. Thank you so much for your presentation here today, and we'll hold this item open. Thank you. Thank you.

Moving on to agenda item number three, which relates to CARS, a Calaxis replacement project. And, when you're ready, please proceed with your presentation on the item. Thank you.

Thank you. The objective of the CARS project is to replace the outdated Cal Access for electronic reporting of campaign finance and lobbying activities mandated by the Political Reform Act. The request before you is for one time funding of 11,800,000 general fund to support the continuation of the CARS project.

Specifically, the request would provide funding to support the final months of project execution and the first few months of maintenance and operation, continued funding for the 33 prior approved positions and backfill staffs to support ongoing program activities, and contracted services including the prime vendor, CDT project oversight services, and technology costs. Happy to answer any questions.

Does the Department of Finance wish to comment? Aliyah. No? Okay. We'll go ahead and, move it to center Smallwood Cuevas

to continue your your your question. Thank you, Madam Chair, and glad we're on the right item now. You know, this this Cal Access process has been a a tough one, and I understand that there have there's been a history over time of different stakeholders engaging, some of it meeting the state's, political reform division, some of it not, and some of it paused and then restarted. And so, you know, I just totally support and understand that this is an outdated technology. It needs to be replaced.

I guess, how are we ensuring that moving forward, especially given our time of transition and all that is is happening here at the state? How are we ensuring that, that Californians can trust in this process and making sure that we're delivering, on a technology that does what we need it to do, which is to

make sure that we have an accountable process around around our our elections and, and delivering a system that works. So can you share what what steps have been put into place to to address that?

Sure. My name is John Heinlein. I'm the assistant CARS Project director. This iteration of the CARS Project, you know, we we began a we had a very robust replanning effort to ensure to ensure this project is successful. And part of that process was to engage external stakeholders as well as, you know, our internal stakeholders to ensure to understand all their needs, all their business needs, and they assisted in developing the requirements for the solution.

We had requirements that that ensured that the solution was easy to easy, efficiently, updated in response to legislation, which was a concern. We also have much more robust data integrity and standardization of data this time around. So we've taken all those considerations into account to develop the system we're developing now.

Moving forward, just in terms of the implementation, is there a way to evaluate that process?

Yeah. We're we're planning to go live in November 2026. And part of that, there's a after we go live, there's a three month sort of stabilization period where where we will be monitoring, you know, the the system and, and obtaining feedback from stakeholders and making adjustments as needed. Sure.

We'll be we'll be taking and just so you're aware, we've been meeting with the external stakeholder community since the planning phase, and they've been involved in reviewing the requirements, the design of the system, the development of the system.

We've done system previews for them months and over the over the proceedings. They're very aware of the system. We've been even in in in last last, April and May, we brought them in to do some hands on training with CARS. So we've done we've done what we can to ensure that they're they understand the car system and how it works and, and taking their feedback into account.

Alden?

Yes. Thank you, Madam Chair. So can you refresh? What was when the project maybe not when it was originally authorized, a decade plus ago, but, we're seeing an $11,000,000 augmentation request in the final moment. What the last time that this was before us, what was the anticipated total spend on the project?

The total spend on the two the projects that did not succeed?

Yes, not sorry. To be clear, maybe a year ago, what was the forecasted final appropriation that we're anticipating prior to the addition of this $11,000,000

Sure. When this project was let you know, it was a it was a huge planning effort. We did a, you know, a competitive procurement to acquire a vendor. And after which, we developed the full project development life cycle cost by fiscal year, including one full fiscal year year of MNO. And, and we are abiding by those those fiscal year estimates.

So So this this amount that we're asking for now has been was we've provided a financial analysis worksheet to DOF back, you know, years ago. I think in 2024 was the last time we updated it. So we're not asking for any new money. This isn't a different ask from what we we proposed back then.

Okay. So the $11,000,000 was in the original Yes. In the forecasted information. Okay. All right.

That's good to hear. I mean, the when this platform was first put in place a generation or two ago, it was kind of industry leading. It was very and changed the obviously, the public's relationship to its democracy and the role of campaign spending in really profound ways. So very, very important, as my colleague has said. And even when the Hertzberg legislation was passed, this is still a pretty complicated project to undertake.

Now I have to say in 2026, it's I mean, it's the sort of the fundamental like large scale database with instant access and uploads and what have you is complicated, but it's not in the top 10 of complex projects that we're undertaking today given the technologies, given the tools that are available to develop these kinds of systems. And I'm glad we're getting to the end of the project and having it released.

I do think there are some important lessons here around what has already been identified in sort of more fundamental problems with our overall state approach to technology and our obsession with requirements and our obsession with stakeholder input, that then leads to budget requests that we have to pay for that we had nothing to no input in determining in the first place.

And I think particularly, we've even seen this here in the legislature where for some of the stakeholders, the requirements that they insist on are often for commercial monetization of their own services, and they want so they want the best API access or other they want the system to be designed around their ability to sort of mass access systems and what have you at a single time.

And I don't know whether that's been embedded in this or not, but that's a very common challenge that we're facing today is that requirements, they're not free, and they are trade offs. And it isn't our job to make some of these commercial platforms or commercial journalism platforms or whatever viable by the activities. And so lots and lots of planning followed by lots and lots of requirements.

I think we're we are learning more and more is not the ideal way for us to deploy technology in state government. Luckily, this one's not another twenty years behind, and it's not 10 times what its original budget was.

So congrats. I hope this we are actually able to turn this on in November because we'll definitely be needing it in the twenty twenty eight election cycle in order for folks to be able to see the influence of money and its pervasiveness in their democracy. So Madam Chair, thank you.

Thank you. I just echo the comments of my colleague, Senator Cabaldon. Wish that the implementation had gone into place, you know, earlier on, but because I think that that that it's playing a I know the importance of of getting and making sure that it's done and completed by 2028, but I think that it you know, money is playing such a huge and significant role in politics and today that, I think we needed this yesterday. Right?

But we're here, and we appreciate you being present, and, and providing us with your presentation and updates.

We're gonna go ahead and hold, this item open. And, again, appreciate your your presentation today.

Thank you.

Okay. Moving on to agenda item four, which relates to the notary automation program replacement project. When ready, please proceed with, your presentation.

Thank you. The current system is approximately 30 old. It was developed utilizing an application that in present day is running on obsolete and unsupported technology. The application itself is in a programming language that has been deprecated. This combination presents high risk and security issues to the department and challenges the ability to find qualified information technology staff and vendors to support the application.

Current technology has evolved significantly since the system was created, thus integration of the legacy system with current and future technology and possibly third party systems is impractical and near impossible. Only migration of existing data to a new system is a viable solution.

This request will provide one time funding of 9,795,000 in business fees fund for the continuation of the NAP two point o program, which will continue funding for the 15 positions previously approved, funding for temporary staff to backfill program positions redirected to the project, funding for interdepartmental services provided by DGS and CDT, and continued planning resources. Happy to answer any questions.

Department of Finance have any comments? Aliyo? Committee members? Okay. I, I just have a few.

The prop the project timeline seem to have shifted significantly, in some cases, several years from the budget proposal put forward last year. Can you explain why there has been such a significant shift?

Thank you for the question, Madam Chair. I'm Shannon Delgado, assistant chief of the business programs division of the California Secretary of State's office. So we and given lessons learned from our previously successful project, California Business Connect that implemented in 2022, we learned that with this project, we wanted to focus more on planning and perform better planning to make sure that we didn't have to continually push out a go live date.

And so with those lessons learned, we wanted to make sure, again, we put in proper planning resources and timelines and steps. And with that, we've extended the time in which we've had to plan and come up with requirements, make sure those requirements were where we needed them to be.

Additionally, one of the delays was caused because of the twenty twenty five special election. We have, you know, a very small agency. We have folks that are dedicated to different pieces, but the special election did divert some of those resources, which took them away from planning, and so it did push out a bit. As of right now, we have been operating on an estimated time line of our go live just because we don't yet have a system contractor in place.

Fortunately, we did get the pre solicit teaching out just last month, a couple weeks ago.

So we are still tracking to 2029.

Is there a possibility that the department will see further implementation plan changes? And if so, will the department likely need to request additional funding down the road?

That's a great question. So as I said, we've been operating on estimates at this point in terms of timelines and what we know and the scope of the project. Once we have a system contractor on board, which will be next fiscal year, we will then have a firm and concrete schedule that we can work towards. So we can't really answer for certain right now.

Well, thank you for your presentation. We're gonna hold this item open, and we are going to move to the next agenda item. So we will now move to the Department of Veteran Affairs. Will representatives of department please come forward? And thank you to Secretary Sen for joining us in committee today.

Before we get into the specific budget proposals, we ask that, Calvet provide a brief status report on the department. You may proceed when, you are ready.

Okay. Good morning, Chair Hurtado and Committee Members. Thank you for having us here today. I'm Lindsey Sin, secretary of the California Department of Veterans Affairs. I appreciate the opportunity to be here with you today, and to share some important ongoing work of our department, and I am also happy to discuss and take questions on today's agenda items as well.

But first, I'd like to acknowledge some of the achievements that, we've been able to, enact over the last few years in the department. And really, it's a testament to the commitment of our staff. Because of our staff's commitment to the veterans that they serve, and with the ongoing support of the administration and the legislature, we do many things at Cal Vet very well, including achieving high, consistent, high quality care throughout our eight veterans homes.

As reflected in today's agenda, we're making excellent progress on the new skilled nursing facility at our Yountville home. We've also implemented the new Cal Vet electronic health record project throughout our six of our eight homes to date.

We maintain strong lending performance and excellent customer service in our one hundred and five year old home loans program. That includes exceeding annual lending goals, offering competitive rates, and a robust full coverage homeowners insurance plan. We've also increased the number of permanent supportive housing units for homeless veterans through the VHHP and Homekey Plus programs.

And we've adopted innovative pilot programs such as the California Veterans Health Initiative, which is providing thousands of free mental health appointments to veterans and their family members throughout California, as well as the veteran service to self reliance program, which is helping aged veterans achieve greater housing stability and permanent supportive housing in short we're meeting veterans where they are with the resources they need sometimes that means administering a program or benefit directly and other times it means building partnerships with our community based system of care.

So thank you for your continued dedication to the department's work, and, the support for all California veterans and their families, and I look forward to answering any questions you may have.

Thank you. Are are you seeing any areas of, increased risk for veterans in general, or any particular demographic within CalVet?

That's a great question. I think every generation of veterans, and depending on how veterans, kind of identify themselves, or where they come from, and who they are, have various levels of, kind of interest or challenges or issues, and then, of course, some successes.

Right now, of course, when we look at the veterans that we serve in our long term care facilities, in particular our Vietnam era veterans, we do see them presenting with higher acuity, more comorbidities, sometimes that may mean behavioral health services are needed, sometimes that may mean, multiple diseases or, you know, physiological challenges that they may have, so we see the continued need among that population to elevate our levels of care, specifically through skilled nursing, whereas with our younger veterans we certainly see presentations of continued need to engage their communities, to engage with their families and making their families a concerted kind of part of their support system, which is why with the California Veterans Health Initiative, we're offering mental health appointments to both families and the veterans.

So among that population, we see, a real need and want for engagement but also continued behavioral health support as well. I think all of these things in California are being met through our department and community providers but of course we also know the dynamics at the federal VA are changing right now.

They are shifting some of their emphasis, and that may have impact on specific populations of veterans. Unfortunately, we continue to see veterans who would, I would call, otherwise, underserved are transgender service members, for example, not being able to stay in the military. And when they return to California, that's gonna have direct impact on their lives.

So there are ways that we are trying to continue to wrap our arms around and support various populations that may be underserved at the federal level, and that's through concerted engagement, continued look at our programs and how we can make sure those are meeting their needs, as well as just continued conversation that we can have with our community partners and how to support those folks.

Thank you, for your answer. And do we have any questions on the overview by committee members? Seeing none? Okay. Well, thank you for your, presentation on the overview.

We'll move to agenda item five, which, relates to the Yountville skilled nursing facility at the veteran's home. And when ready, please proceed with the presentation on that item.

Sure. With me today, I also have two colleagues that I may point to. Deputy secretary for veterans homes, Coby Peterson, as well as our deputy secretary for legislative affairs, John Spangler. So the skilled nursing facility at Yountville is now the newest building that we will have had on that campus in a number of decades. This is a two forty bed skilled nursing facility, all one building that will replace the aging Holderman Hospital building that was, I think first built in the nineteen thirties.

So this represents state of the art skilled nursing care, memory care as well, with a number of great amenities inside of the building. That includes kitchens on every floor, a larger kitchen on the bottom floor, various living and community spaces, including some controlled outdoor spaces as well. It really is gonna be an incredible achievement for this campus because the outside of the building also supports the general look and feel of the other buildings that have been created.

At this point, we are nearing the end of construction, so we expect to see construction complete sometime, you know, around fall. We are working through a few items with our contractor right now, the construction contractor, as well as, with DGS, who's our, project partners in this, to complete the end of construction.

And then thereafter, our next steps will be pursuing licensing, that's required by the state and Federal Governments.

Thank you for your presentation. Do we have any comments from the Department of Finance? Okay. Comments from the LAO? Comments from committee members?

Senator Cabaldon, you're recognized.

Thank you. Thank you, Madam Chair. So thank you. Thanks for being here. And a couple of questions.

First, about some of the construction and maintenance projects and related to the skilled nursing and memory care facility. So what given the opening of that of that building, what's the future of the of Holderman Hospital then?

Right. Holderman Hospital will still be useful for some time because not all of the services that we provide in that building currently will be migrated over to the skilled nursing facility. So we do see continued use potentially of that building. Kobe, would you care to elaborate on that?

So as far as the Holdemann Building goes, we're gonna continue to maintain the clinic, which is in the corner of the building. We've got some administrative functions that will continue to operate out of that building. And then the plan ultimately for the Eisenhower Roosevelt facilities, which includes our memory care and our ICF will ultimately transition to RCF, which will be assisted living. So that's our plan for those three facilities.

Okay. And is there a live RFP out on the streets on the Holdren, or is that there was one a few years ago, as I understood, but has that been sort of withdrawn? It's not

Nothing now.

There's nothing pending at the moment? Correct. Okay. For like the roofing projects at the theater and the chapel and the independent living projects, where and I apologize if I was rushing back if you already covered those specifically, but where do those stand? We've been appropriating funds for them and then we haven't got the completion.

And so I'm curious if you can share with us where we're at when we might anticipate those getting done.

Yes, absolutely. We are in the process of, I think, finalizing contracts for those and expect that to be happening this year.

So as far as roofs go, we're like 90% drawings complete. So we're anticipating getting that construction started soon. We also have the steam project, which is gonna be started this summer fall, which is gonna be a huge project to renovate the steam system on that campus and a number of other things. But I think we're on track with both of those projects. We feel pretty good about where they're at at the heels of the new SNF being open.

We'll start right into another project.

Do you anticipate that it will be done in the upcoming fiscal year or completed?

The roofs, no. That's a two or three year construction project in total because there's five roofs. They will not all be done at the same time. The steam project, I think, takes two years.

I do want to acknowledge we understand that we did receive the money to do those projects a number of years ago. We are trying to push this along, and we do want to see those roofs get completed. So I understand that, sir. Yeah.

And then my last question is actually not related to the construction, but as I understand that at the home that Calvet had to amend a dozen W-2s for current and former employees and those amendments had to go back, reach back years into the past in order to redefine the housing as a fringe benefit that was now that perhaps should have been or was now taxable and about $400,000 in total tax obligations.

And so those current and former employees are receiving or dealing with 5 figure tax bills of up to 5 figures. But it was not their error if there was a mistake. So can you share with us kind of your view of the status of that situation and why the employees what what Calabets expectations about how an employee is going to cover a cost like that that was not due to their own to their own own error or omission.

Right. So the state auditor found that we had, not been reporting fringe benefits for those employees, to the SCO, and when they found that information and brought it to the department, we took a look at it and fully concurred with their findings.

So of the 12 employees that were impacted, we have worked with those employees to, let them know, obviously, we've met with them a number of times that these fringe benefits, that were not being reported, and I believe that was for three years specifically, '23, '24, and, and part of '25, that that has since been reported to SCO. Those employees, have rectified, I think, with SCO, those, those, fringe benefits, as well as what became a tax liability.

And what we've done really is going forward, ensuring that this is not gonna be the case in the future.

So we have completed the SCO or the state auditor's findings in this. That includes, developing an SOP in a process by which we will be reporting this information. We've retained the employee at the veteran's home who's responsible for working with our HR office and SCO. We're also redirecting that employee to work directly with headquarters, so that we have full oversight of this issue.

We've talked to the employees in terms of some of the any any resources that we can bring to bear, such as EAP, if they needed that.

We have also worked with new leases and are in the process of looking at new leases with them right now, so that we continue to get those leases up to what is closer to fair market value. And so far, those conversations with the employees have been positive. Although, I know a couple of employees, you know, had brought some concerns to us as well.

So we are looking at this as, we don't expect to see this going forward again, because we're really focused on the process by which this needs to be reported. We are also continuing to look at employee housing in those leases so that the employees understand upfront and in the lease what those fringe benefits really are and how they need to be considering that and their annual tax filing.

And then we'll continue to have a dialogue with them if necessary as well.

I appreciate that. But for the for that look back for that three year period, I'm trying to imagine it's not hard to imagine. It was me and, and suddenly I had an dealt with that at this point or and we don't have there's no there's been no help for even though they it was they they it would have been it had the error not occurred, they would have been obligated to pay that.

But, you know, for any of us, if you take a look back at our lives and said, hey, you know, five five for five years, you should have been doing this thing. It was our mistake, but now you have to come up with the cap with all that cash right now to the state and the federal tax agencies that would that is potentially, you know, economically devastating.

And so do have we in addition to to counseling and other assistance, is is there any other have been any other activities undertaken to try to meet the actual economic impact on on these folks?

SCO did, address this immediately, which meant they withheld part of the paycheck of some of the employees, so we actually, advanced their salaries, and we'll expect to get, a repayment of those salaries, but we extended that to up to twenty four months, and we're not starting, that repayment collection process until July.

So we are trying to work with the employees to make them as whole as we can, understanding that this is a tax liability for these individuals, so there's little we can do, in terms of correcting the mistake going forward.

And then I think you quickly mentioned that you're looking at adjustments to updating leases to and it sounded like updating them in raising the rents. So we talked about those issues here before as well. But I mean as these two intersect, I mean and folks are having to deal with repaying their SEO functionally equivalent to a loan.

I mean, is this the I mean, is it appropriate to continue with those rent increases as quickly as I mean, I know you've been working on this for a while, but as quickly given that obligation that some of the some of these employees are are grappling with from the from the tax issue.

For that reason, we've looked at what would be a feasible and appropriate amount of rent increase, and that's gonna be about two point or 7.25%, which is in line with the county of Napa, rather than something exorbitant like 25%.

So we are considering what a modest rent increase would look like for this next lease year, but we do need to get into new leases with these employees and begin to address some of the audit findings, which include getting these leases up to a more equitable fair market value. And from what we're hearing from employees, this is pretty reasonable given what the cost of living is out in the community around the area. So so far, those talks seem to be going well.

Alright. I look forward to to continuing the for the the updates and, and some perhaps some more details on this on this specific here, but appreciate the secretary and Madam Chair. Thank you as well.

Thank you, sir.

Any other additional questions or comments from committee members? Okay. I, I just have one question. It is the department facing any staffing problems for the S and F, and do you anticipate do you anticipate it being fully staffed and operational?

We don't anticipate any staffing issues at this time with the new skilled nursing facility as a number of the positions that are currently, staffed in Holderman Building will be transferring over to the new nursing facility. We also have, I think, made requests of a few positions as well.

Yeah. Additional positions, food service, custodial, like laundry. We're we're seeing some some success in those areas as well. And so we'll move the current existing staff over and then and then any new hires into the new facility

and we'll we should be fine.

Thank you so much for that answer, and, we'll just go ahead and, hold that item open. We'll move on to agenda item number six. And item six relates to elimination of vacant positions pursuant to control section 4.12 of the 2025 budget act. So when you're ready, please please begin your presentation.

So when the department went through the exercise of looking at what positions could be eliminated, we took a close and careful look at what positions had been vacant for some time across the department. And we wanted to be able to meet this exercise in a responsible way that meant that we could give positions back that were not being currently utilized.

And so the bulk of those came from the Yountville and West LA homes and were, the bulk of which were also, certified nursing assistants or CNA positions. Because of, the aftereffects of the pandemic, of course, you know, we had experienced higher rates of vacancy within our kind of medical type, positions across all of our homes. And so we knew it would take time to be able to, backfill vacancies, and we needed to make some adjustments in order to do so.

So I'm confident now that even with giving these positions back, we still have enough of a margin to hire what are still vacant positions, and to continue to grow our facility to backfill, vacancies within, empty beds for, the veterans we're taking care of, and we're doing so at the, appropriately licensed, patient hour per day or the HPPD that we're required to maintain within skilled nursing and RCFE.

So because we're also able to achieve a number of efficiencies throughout the department right now as we look at a number of kind of new ways of doing things, whether that's centralizing certain processes into headquarters or really evaluating what positions are where within our homes, who's providing care on the floor, who's off the floor, who could we who, you know, how can we change duty statements, how can we change shift hours.

Those things have allowed us to continue to find some efficiencies in our budget, as well as some efficiencies within these positions themselves.

Thank you so much for for your presentation. Do we have any comments from Department of Finance? No? No? No?

Okay. LAO?

Drew Soderborg, with LAO. As noted in your agenda, the legislature did not con concur with the elimination of these positions. However, the elimination was reflected in the budget. So to the extent the legislature wants to maintain these positions, that would increase general fund costs, and that's just something that the legislature will have to weigh against its other general fund priorities.

Thank you. Do we have questions or comments from committee members? Senator Cabaldon?

I mean, the these are the positions are I mean, we need these folks. I mean, as is noted in the staff background that we've gotten, we have wait list between the two facilities of three at least at the time of the staff report, three hundred and three hundred and thirty six veterans on the on the wait list. And we so we absolutely need need need these folks and to meet our staffing ratios and to make sure that we're we're doing right by by our veterans.

At the same time, and I recognize that, you know, having been a the state department deputy director, like, position authorization is not a nurse assistant, it's just a thing on a piece of paper. If and when, as I hope we will, we'll find resources in order to increase funding to be able to provide those services at both facilities that adding back in positions when there's money is not complicated.

But holding out having hundreds of positions that we're not filling is an empty promise anyway. So I don't have an objection to moving forward with this proposal. And very much also want to say appreciation to the staff of the budget committee and the Senate overall for for for highlighting these, for raising them through the JLBC process because they have they do deserve the the additional scrutiny that they have received.

But I think after after taking a look at that and putting in the context of the vacancies that will remain, and the the core issue, which is making sure that we have adequate funding to fill the vacancies that will still be there, that's that's the more important priority. And so, Madam Chair, I have no objections to this one.

Any additional comments? Okay.

Any additional comments? Okay.

We appreciate your presentation here today. Thank you so much, and we will hold this item open. And we will move on to Agenda Item Number Seven, which is an information-only item on the California Arts Council. So when ready, please proceed with your presentation on the current status of the Arts Council.

Okay. Great. Will do, Senator. Good afternoon, Madam Chair.

Good afternoon.

My name is Danielle Brazell, and I get to be the director of the California Arts Council. It's kind of amazing. For 50 years, we have been leading arts, culture, and creativity for the State of California. That's five decades championing the incredible transformation power of the arts. We exist to strengthen arts, culture, and creative expression as the tools to create a better California for all, and we support over 16,000 varied nonprofit arts and cultural organizations, and we are the state's only, only public arts agency solely dedicated to providing funding in each of our 58 counties.

We provide an array of services, technical assistance, grant making, Cultural Districts. Our grant programs include: Arts and Youth, General Operating Support, Administrating Organizations for Folk in Traditional Arts, Artist Fellowships, Impact Projects. We support state, local partners and literary programs. And I wanna just give you a few examples of our impact.

In Sacramento, Sacramento CAC supported Celebration Arts, which is a local theater organization engaged in high-quality, extraordinary artistic practices advancing educational equity, workforce sustainability, while reinforcing the role of culturally relevant theater as a vital economic resource for the students.

In the Central Valley, in your district, Senator Hurtado, we provide General Operating Support for El Teatro de la Tierra to deliver free arts education and instruction to children, teens, adults, providing 96 classes and reaching approximately 5,000 individuals.

They develop skills in music, and in some cases, advance into teaching roles themselves, while working artists are compensated to deliver their programming. In South LA, we support Kid City Hope Place to provide free music education to first-generation teens and young adults living in South LA. For teens in high school, CityKid provides music instruction, performance groups, guidance, performances, workshops.

We're all about access. And, Senator Cabaldon, in your district, Napa Valley Youth Symphony, we're building a regional creative youth pipeline supporting student musicians from beginner through advanced, and these are in areas where many students just don't have access to the tools, the training, the possibility that allows them to grow into their creative lives. I know that you have some questions for us. I wanted just to share some of the good work that we think we're doing.

I also want to acknowledge and introduce our extraordinary Deputy Director, Ms. Sylmia Britt here, and she's going to answer all of our technical questions for you, but we're here to provide any questions and answers, hopefully. Hopefully answers.

Okay. Does the Department of Finance wish to comment?

Jessie Romine, Department of Finance. No further comment at this time.

Does the department of-- the LAO wish to comment?

Heather Gonzalez with the LAO. No further comment.

Okay. We'll take it to subcommittee members, and we'll start with Senator Smallwood-Cuevas.

Thank you, Madam Chair, and thank you so much for that overview, and thank you for what you do. We just heard from our veterans and, of course, we support our veterans. There's a narrative and a public understanding of the significance and contributions of veterans, and then we move to art. And when you look at some of the-- the report summary, you see all those dash marks. The question is, do we believe and support our arts?

And we know, in this moment, the attack on arts and culture is a real one. So someone understands the importance and significance of the arts, whether it's, you know, this defunding our museums, whether it's defunding programs that targets and lift up specialized communities and culture, whether it's, you know, looking at the future of our country and making sure that newly arrived residents understand the significance of American art and culture.

We face tremendous attack, and so I really am appreciative of you bringing this forward. I wanna say art is not just a fun, you know, activity, although it is, but it's about preservation of history. It's about understanding our stories.

It's about being able to appreciate difference, right, and realize how important it is to our common good in building common ground. So I represent South Central Los Angeles, along with Downtown LA and Culver City and many other places, and one of the things that I've appreciated about the work that you do is allowing communities to really tell their own stories through their culture.

South Central Los Angeles has a rich history and work-- we work very closely with you on making sure that we were able to allow South Central to tell their Black historic story, whether it's, you know, Exposition Park, Sugar Hill, West Adams area, the Black Beverly Hills, and the Baldwin Hills. Tremendous story to tell, but not just for art and culture's sake, but because of the economic engines that these institutions provide.

Cultural assets provide jobs, sales tax, not to mention the almost invaluable history of just what the story of South LA is. So I just wanna say how important this is, and to have the first state-designated Black Cultural District be in my district is quite an honor, and we are very, very proud to carry that moniker. But I wanna say, without resources, it's really meaningless, right?

Because we know the story, but how do we project that? And right now, I am pushing for and supporting a $50 million General Fund investment for the California Arts Council because I just believe that strongly that in this moment, when the federal government is criminalizing diversity, is viciously attacking people's culture and history, California has to stand up, and 10 million of that has to be a carve-out for our cultural districts across the state, including Los Angeles.

But I wanted to also point out that, you know, as we're looking at these kinds of investments that, as I say, we can calculate from an economic perspective, from a social and psychological perspective, we know that also the Governor's Budget has stated that there has been identified 229 million in total savings, including 45 million in General Funds from budgeted office equipment and expenditures alone, right?

And so that means we are tightening, and we are finding ways to be able to identify where there are resources, and so, when we're talking about a $10 million carve-out for cultural districts, you know, given what we are saving, it's a modest investment, but it pays dividends in terms of the return to local economies, to our small businesses, to our artists, and to tourism. And I wanna lift up that there are many of these cultural districts that are in close proximity across the state to where our Olympics and World Games will be held.

It is incredibly important now because next year's budget might not be in time for organizations to have resources to be able to scale up, to be able to welcome 15 million additional visitors into our state to participate in these games. And we know that you don't-- you can't manufacture the arts and culture. I don't care how many stages you build. You're not gonna build a South Central Los Angeles. It's already our built environment, the cultural powerhouse that we are.

We need the resources in these cultural districts to be able to show up and show out as we welcome the world. So I just wanted to say how important, with the May Revision around the corner, that the Administration reevaluate how we're making this investment, and that this is a multiplier investment.

This is an investment that is-- will be part of making sure that these organizations can participate in the expanse of humanity that will come to the state and be able to scale in this moment, but they need some on-the-ground resources to do that.

I do have some questions in my comments, but-- and I know my comments are long, but I'm passionate about the issue and how important it is in this moment that we don't do Trump's work for him, that we be very clear that we're gonna lift up DEI and we're gonna lean into our cultural identity here in California. So, quick sort of overview that you gave: the state originally invested 30 million, if I remember--because we were here when this happened--of General Fund to support the expansion of Cultural Districts, but then 20 million was later reverted.

What has been the impact of that reduction? Can you talk a little bit about that, particularly for the existing districts but also on the council's ability to grow new districts and to seed others.

First of all, let me just say, thank you for your passion. You're-- you would say everything that I would say if I could-- you know, you just said it so beautifully and eloquently, and we appreciate that. The reversion happened before money hit the ground, so nothing-- so basically, it was initially-- and it was before my time, so it was, I think, a budget solution that was pulled back. So the 10 million was essentially divided up, 671 across 10 districts at the time.

The Cultural District Program started in 2017. We had an initial cohort of 10 districts across the state. Those districts received a modest two-year grant of $10,000 each. The influx of those resources over two years actually really did a phenomenal job at helping the Cultural Districts scale up, hire employees, build out their partnerships, engage in robust marketing campaigns, and the challenge is is that that money was a one-time, right?

And so, we just added 10 new districts. So we initial--excuse me--we initially had 14 districts. We now have 24 districts across the state. And those new districts now have a two-year grant of $10,000. So the program is currently unfunded without dedicated staff and without dedicated funding.

Without those two things, it's very difficult to reach scale and to address the urgent needs on the ground for these--and I'm gonna call them organizations--small businesses to grow. Can you give also a little bit-- a few examples, too? Because I know sort of anecdotally the impact of the Cultural District funding on local artists, on the small businesses, on neighborhood revitalization, but can you help me to quantify that a little bit? Can you give me a little more meat on the bones in terms of what that looks like in the role that the council is playing in terms of providing that core funding?

I can take that with one example. So we're very grateful that council actually recognized the importance of Cultural Districts. What they were able to do was to actually look at our local assistance grant as a whole, and they took it from that. So that was a diversion of funds that they elected to make this last year in order to fund Cultural Districts, but we have folks that we're going to penalize in that way.

So it's an economic exchange that we're making, and they understand that it did come at a hurt to the overall artistic area. So funding Cultural Districts on its own is important. I wanna bring up one of our great Cultural Districts, Calle Veinticuatro. It's in San Francisco. This is a hub for the community, but not just a hub in a regular way. They're doing health work.

So during Covid, they opened up this Cultural District to be a hub for Covid vaccines, flu vaccines, and they're still doing that work. They're doing work around neighborhood abatement to keep safety measures going on. And currently, right now, in our political climate, they're actually working very diligently with the workforce in Sacramento that--excuse me--San Francisco that's undocumented in order to help them with immigration supports and to navigate the complexities of immigration in California.

Our Cultural Districts are not, I think, what we would think of as art. I'm not an artist, so I can say that. I'm a bureaucrat. Our Cultural Districts are financial stimulus for us. They're ways for us to keep our organizations safe and growing, and that collective body is able to really work within their local governments to get additional rent controls and other local legislation that enables them to increase funding and to support the local community.

And I appreciate that. So it's not just-- these resources aren't just going for one program. This is about an ecosystem and helping to strengthen and fortify an ecosystem of support that serves the cultural communities that rely on them and helping to strengthen and build that network. Thank you for that. Can you also share a little bit about to what extent Cultural Districts are focusing on preservation?

Because I know in my district, for example, part of the strategy for the Cultural District is to make sure that those places that have been cultivated intended to by the community that they are preserved from, you know, being displaced, being-- some of them torn down. So can you talk a little bit about what evidence that has the council seen that our investments have also helped these communities preserve space but also generate some revenue for communities over time through that preservation?

Neighborhood identity and vitality is where people wanna be, and when people wanna be in a neighborhood, we start to see, if you don't own your property and--your commercial rent property--those rents can go up pretty quickly and displace historic cultural spaces. It could be a dance studio, but it could also be a beauty salon or a barbershop because culture happens everywhere.

And so one of the-- I think the brilliance of this program in the way it was designed is that it is using state designation to help reinforce cultural preservation at the local level because local municipality and local government has control over land use and so that gives local government more of a tool.

And what I am so excited about in your district is the way in which the lead Cultural District organization, LA Commons, has worked with LA Planning on historic overlay zones and HistoricPlacesLA to make sure that those historic brick-and-mortar small businesses stay in Los Angeles and stay in the community because the other thing that we know is is that culture is a currency, right? It's a-- it's what we put into circulation, and that circulation is monetary.

It's about the circulation of a dollar and how long you can keep that dollar in a community, but it's also about the circulation of an idea and of a way of being, and the Cultural District is that three-legged stool that's a partnership between an arts and cultural organization, local government, and business to build out and retain and to create the future through a lens of self-determination so that it's not just about getting displaced after South LA was, you know, redlined and, you know, had so many barriers to economic opportunity.

Now all of a sudden, those barriers are being eliminated by the great work of our leaders, and now, how do we make sure we retain the soul of a community through the Cultural District designation?

And I so appreciate that, because that happens also through employment and jobs, and that's the other sort of side of the coin of Cultural Districts is economic engine and employing, and oftentimes, folks who wouldn't traditionally be employed in other places. And so can you talk a little bit about the data that you all have in terms of how-- and I know we have been fighting for payroll for artists.

We've been-- you know, we understand the significance of the economic contributions, but what are we seeing in terms of job creation, cultural workers, small business creation?

Because it's not just the, for example, in our Cultural District, you have the Barbara Morrison Theater, but there's also Ackee Bamboo that's next door. It's, like, it's Caribbean food, and so after the performance, then the food, right? So there's this sort of circular economy that is happening in these communities. But can you share a little bit about what the impact is on job creation and small-business sustainability?

And that leads me to a question because we have GO-Biz and other entities that come before us that have resources that we question in terms of, you know, how are these resources allocated? Is there partnerships in terms of the economic development small business support network that converges with the work that you do at the council? So talk a little bit about the economic impacts but also talk about, is there partnership? Is there a way of sort of doing more to integrate support?

Well, I thank you so much for that question, and the reason why I'm smiling is because the California Arts Council just released the Creative Economy Plan for the State of California. There are six action priority areas, and we crisscrossed across the state, doing about, you know, 30 town halls after this report was released to to really get the feedback of are these six action priorities right?

We are the California Arts Council, and we have a slice of the creative economy, a really important slice of it. But we are small by state standards, and so, it is about partnerships, and it is about partnerships with OSBA and GO-Biz, which GO-Biz, by the way, did include the creative economy as a pillar in their Jobs First initiative. We're also looking at labor and workforce development.

But because we also know that every community--not just Los Angeles, not just the big cities--but in our small towns up in Chico and down in Imperial Valley, there's actually a creative economy there that actually needs to get supported and it manifests through creative workers because, of course, we know that, you know, arts work is real work.

And that means that we have to build up on those partnerships with state agencies, specifically around access to capital, specifically around access to financing and technical assistance, and that's the work that's gonna be happening over the next couple years with the partnership of our other state agencies. But we still have a lot of work to do in that.

So if I could mention, and thank you, Danielle, for that. It was a good tee up, so I'm quoting with some factoids for you. So, we've actually been working with Stanford, and we were able to have a fellow join us, so we have a fellow that will be assisting us this summer. We also were able to secure a couple of interns.

So we've been pulling all over to try to get resources to help support our data evaluation manager and our recent equity manager in understanding the workforce element. That's the undercurrent and developing key ROIs. We've been looking at some of our national partners in order to do some of that work. We're seeing the anecdotal pieces, but we need to put pen to paper and start to put out that California model for Cultural Districts.

I also wanna mention that there is very much we're noticing--and again, this is anecdotally at this point in time because we're still kind of new and that it's only been around 10 years since this has been up and running--we're hearing the extra work, that work of the dishwasher who works at your favorite restaurant, the person who is doing the valet.

They are a part of that Cultural District. They are being sustained in the creative economy and through this. So when we're looking at that designation, we are looking at this piece of society that everyone just walks around and doesn't recognize. It's a workforce, it's an industry, and I think you made a really good point around how funding is deployed for business supports through GO-Biz and other organizations.

The reason why arts funding and cultural districts funding is more appropriately paced here at the Arts Council is because artists work with artists. So when artists work with GO-Biz, it dilutes the culture, and I don't mean any digs at GO-Biz.

They're a great organization, but arts funding held by a cultural barrier is different than when it's held by a business organization, and ensuring that we allow for these arts organizations, small businesses, and nonprofits to be able to stay in the vein of where they can create and do that big work and just allow them to do that, and that's what we have and the benefit of the funding coming to this organization.

I wanna get back to your point about the number of jobs, and I think that this is an important piece, and I'd like to get back to you with the actual reports of the actual numbers of jobs that the Cultural District and the $10 million helped to create. But on average, every grant dollar that the state puts out generates an additional 6 to $9. Every grant is essentially matched multiple times, so we we really see that that gets matched.

And then, you as you pointed out, there's this other multiplier and accelerant that happens within culture. We know that it's that binding agent for a connected community. And when that connected community starts to thrive, it just gets accelerated in ways that we're really seeing in South LA, but it has taken some time, right? It's not--as you mentioned, it's not quick work. It's the long, long work that has a tremendous amount of sweat equity by the leaders of that community, and we have to go at their pace.

I absolutely appreciate that, and particularly the point about, you know, ways in which the Administration can think about the complexity of arts and culture work and, you know, figure out ways to bring some of those traditional business resources into this arts and culture economy because, absolutely right. Business plans look different, the jargon looks different, how you spend the resources, the cycling of dollars looks different.

But, certainly, the fourth largest economy in the world should have a world-class arts and culture investment that matches the dynamism and the beauty of California, and you name some of the places across the state where we know we have the best cultural experience that anyone will have in the world.

So appreciate that. My last question is that we don't have time, though, because the World Cup is June next month and the Olympics is, you know, 18 months away. And so, what are the partnerships that are being built between the Arts Council, local governments, our state tourism, our, you know, local tourism entities around neighbor vitalization programs?

What are the partnerships that-- is the state helping to build as those Cultural Districts that are in very close proximity to Olympic venues? How do they get the support? Because we don't have two or three years to develop. But certainly, we know we have resources in a number of different places as you were saying.

It's like, how do we-- is there-- are there partnerships and is there a way to pilot some of this in the short-term with some of these districts that stand to see tremendous investment where you can really look at workforce development, where you can really look at technical assistance, small business specialized technical assistance, where you can also think about ways that they can scale so that part of our investment is helping them to capture more resources and to accelerate--and I like that term--to accelerate some of the outcomes and stabilization that we wanna see?

What do those partnerships look like? Are we being very intentional about the timeline and how we're rolling those out with the World Cup and Olympics in mind?

You hit the nail on the head. It is about scale, and in order to reach scale, you have to have capacity, and that means you have to have capacity at all layers of the system. And I will say that just knowing what the Cultural Districts in Los Angeles are doing right now-- we have three in the Los Angeles area, and, of course, those organizations are taking it upon themselves to organize new Cultural Districts in the Los Angeles area.

So what we see in our sector is we see an extraordinary group of partners working across regions, counties, the entire state to learn from each other, to leverage every bit of resource that they have at the state and at the local level. And I think that we're doing the same, but we also run into those same challenges around capacity, right?

And so we've been-- we rolled out this next round of Cultural Districts. We just launched this new cultural plan for the State of California. There is an ongoing working group that has participants from GO-Biz and labor and education and workforce all pushing this notion of, how do we accelerate the creative economy for every community in California?

And I will just mention, you're right. We're in-- we're already in the midst and the stream of very big events for our state, and if we do not seize the opportunity, then we'll leave money on the table. We've got all these folks coming into our beautiful state and we've got to have it happen. We're very lucky.

One of our grantees, Silicon Valley Creates, was actually awarded some federal funds because we don't have access to state funds to award them to them, but they were able to secure some federal foreign funds to help out with the World Cup in 2026.

We've started to meet with them to make sure that we're wrapping around them and that we're engaging and providing whatever support that they need. We're gonna do that organically because that's what the organization's mission is to do and we're mission-driven. However, what we could provide to the overall arching community is going--

I will tell you from a staffing perspective, we are fully staffed and we like every we're fully staffed.

Yay. Except for we're understaffed. And so there's always going to be, the threat of taking on more, but ambitiously so, we have still dipped our toe in the water, have continued to do the work. Any additional funding that we do, we will accelerate it. We will multiply it and make sure that California gets the recognition that it deserves during this time.

I appreciate that. And, wow, Federal Government gave some arts and culture money to Silicon Valley. So, I will say we definitely know that this administration likes to pick and choose, and we can't afford losers in the cultural game, and so I, you know, will continue to push for the $50,000,000 investment. I fully intend to see that we get that $10,000,000 to our cultural districts, and we'll fight for that.

And I think it's that is a very important point that we have to make it very clear that every single Cultural District deserves to have investment.

We can't allow the Federal Government to pick and choose. This is California, and all of our cultural expressions need to be uplifted and supported, at this time. And I think that's what we've done on the sub four and hope we have the continued to support to do it this year and make sure that we have California shine. So, thank you for answering my questions, and thank you, Madam chair, for allowing the time.

Any additional questions, Senator Cabaldon?

Yeah. I was very excited about the Cultural Districts last year. I still believe in everything that Senator my colleague said. But all of California is not in this program. There's not there isn't a single cultural district in my district despite our best efforts.

There's not a Cultural District designated in most of the Senate districts that adjoin my Senate district. There the designations that were made in December, there's not a single one North of San Francisco. There's no there were none made in the North Coast, none made in the North State, none made in the Sacramento Valley, none made in the Southern San Joaquin Valley, none made in the High Desert.

The first round had none in my part of the state, none in the Southern San Joaquin Valley. So, either the capacity is not there or we're not or and I recognize the Arts Council and their like, fantastic California leaders that serve there.

They're not bringing the perspectives of the whole state. I mean, there's no one on the arts council from, North of the Dehaspie's other than San Francisco and San Jose. Inland Northern California is not there. So, it's incumbent on the agency, I think to really be looking because there are no places in California where culture doesn't exist. It's what we're valuing, what we're measuring, what we're supporting.

And so I agree with the promise and also with the results that we've seen for the Cultural Districts that have been designated.

But I certainly hope that we reach more of California and lift up culture and particularly in in the kind of the noncoastal urban areas of the state that are that are authentic representations of culture, not from the lens of people from the urban areas of the state, who are, you know who often, you know, the you know, their they their archetype of what culture in rural or Suburban California looks like isn't necessarily what people in rural and Suburban California see for themselves.

So it's just you know, for now two round a couple of these rounds, and I know for the Chair of Senate district and my own, I just its but many, many others that obviously this takes resources. But we need to assure that culture everywhere is being uplifted and translated to the sort of community economic outcomes that have been so eloquently described by Senator Smallwood Cuevas.

Senator Cabaldon, if I may. I so appreciate and I'm hearing I'm hearing your I'm hearing the energy in your voice because I know that this is something you care about. And I wanna just say I care about it too. And we had the authority to designate 10 new districts with a $100,000. We received over 70 applications.

Only 20 made it to the next round, and we only have the authority to designate 10 for the fourth largest economy in the world. I agree with you that this is such an important program. I'm pleased that we were able to designate Fresno and Merced and Watsonville, but it's not enough. It's not enough because virtuosity and culture exist everywhere and it is our job as a state agency to be able to fill that need, and we are struggling to do that.

I would love to provide you with the list of our current Cultural Districts. One point I wanna make is that in total, we had 150 applications since 2017, and we have only been able to designate under 25%. So, you can see we have 58 counties, and in every county, that need is great. I am born and bred in Sacramento, California. I can tell you where I like to go for culture.

And I know that there's probably five or six places that need designation in the city that I was raised in. And so what we're really looking at is understanding that there's a need, but knowing that, again, that financial support to go provide that capacity building to those neighborhoods, to get them to submit applications that are at that cream of the crop, We need to be able to do that work now to get them ready for the next round.

We do not have any funding to do so. And so that's why we're continuing as we can. And we're very fortunate to have our council, who has still championed this program despite the fact that it's not funded.

So, they took it upon themselves in their various districts to say, we still have to get behind this. We know that this is not in our wheelhouse fully because we got people over here in tourism and go biz, but this is important to us, and it's important to holding, culture in the area. I will also mention in Nevada City, correct? We have, a Cultural District and it is very engaged, and it's an economic stimulus for that Northern Region.

We know our rural partners do not get a lot of support, and there's often a bit of an equity issue in the distribution of resources. So, for Nevada City to have that designation is a great economic impact.

And I'm going to make a little plug. Next week, we'll be there for our council meeting if you'd like to come on a tour. We're happy to have you.

Yeah. Just to follow-up, I mean, Nevada City, Truckee, these are beautiful historic districts. They've been there for a long time. There and others that have been designated, some of which you've mentioned, they're parts of communities with storied histories in the subject of you know, Great American Literature and that was covered in my ethnic studies class. All things that people from the outside can see very clearly.

And if they happen to be from San Jose or from LA, that oh, that's really great. Atta boy rural California. That's not the same as Fairfield or Valeo or Avenal that it's just like, okay, just regular places that are trying to mount this. And so, when our definitions of the cream of the crop consistently produce large holes in the coverage area that California is facing, the Southern California, Joaquin Valley and you know, my region is two examples.

When that is consistently the case, it's either incumbent on us to do something about it or to reexamine what our definitions of what cream of the crop really means.

So, I know you want you get this. I just think it's important that we deliver with you know, with some within these parts of California so that nobody's being left behind. Anyway, thank you, Madam chair.

Thank you. Senator Cabaldon does an amazing job at capturing the questions and comments that I'd like to state. So thank you, Senator Cabaldon. You've done it again.

But I actually have a a few more. Again, thank you for bringing and mentioning you know, the lack of districts in rural parts of California. That's definitely something that I noticed as well, representing the Southern San Joaquin Valley.

And looking at the document that shows where the new designated, districts are located, there at least from what I saw on the document, there's a gap of 200 miles from, you know, you went north to south from the City of Merced all the way down to the Community of Auburn. That's 200 miles and that, you know, also expand east and west that don't get to be part of this at all.

That's a major problem for me, and I know that there's more that needs to be covered that is not part of it. So just what how do you come to designate districts? Can you explain that a little bit to me, please?

So and thank you so much for the question. So Council decides which programs to open annually, and we'll do that again this year at our September meeting. They will decide which one of our grant programs get opened and then we move forward with opening those programs. In terms of setting up the criteria, it is a competitive process. But the competitive process is not to exclude small towns, suburban areas, or rural areas.

It is actually created so that every community can speak to what makes their community special. There's an outside panel that scores and ranks those, and then that gets processed independently of the Council. That Council then reviews the process and will approve the slate as recommended or not. Right? But Council has the authority statutorily to decide which programs, and then they decide how much funding from our Local Assistance Budget comes in and then which ones actually are designated.

I also wanna mention that every grant maker's Achilles' heel is the grant applicant's ability to tell their story properly. So in terms of you asking the question what is needed, when we looked at all of the applications, all of the Cultural Districts showed extreme promise, the ability to generate economic revenue, but really the differentials were in how they describe their funding strategies and how they describe their networks of engagement with local government.

When we looked at some of the applications because I've physically went through them myself, so I can tell you this for a fact.

Yeah.

When I went through the applications, that was the differential, was the storytelling aspect. And so, when we talk about the broad State of California, this is a grant maker's nightmare, is that when we go into the rural areas and often in the urban areas, folks don't know how to put together grant packages. They don't know how to tell the story. They don't have their fiscal pieces together.

And so as we prepare to continue to highlight this as an opportunity for the state, we do need support in order to do that technical assistance and capacity building, so that we can go out and say, hey. Well, this is a way you can tell it, and when you come up for the application, it'll be great.

But also, the amount of applications that we approve. So again, we're looking at ten years, almost ten years and only twenty-four. So, the funding and the designation have really hampered our ability to designate more.

I think those are really important points. I would also add, we did a tremendous amount of robust technical assistance on this. I would like to see this program offered bi-annually. And I am really wondering so we had a outside consultant do a GAP Analysis and we're happy to share this GAP Analysis with you. They looked at we had we had 14 Cultural Districts in the initial cohort.

We didn't have one African American District. Right? We didn't have one district in the Central Valley. We didn't have; we had two- one district north two districts North of San Francisco. So we really needed to say, okay.

How are we gonna cover the entire state of California? So, we had an outside consultant, did an incredible job, and the GAP Analysis informed our approach this year. But, again, we only had approval to do 10 districts. I think that we need to rethink designation from funding. And if we can run designation on an ongoing basis and then funding goes with our annual programs, that might help us catch up to where California needs to be.

There was a pandemic in between. There was some staffing changes with the agency. So we are definitely behind the curve of where we could be in California, and it's gonna take us a couple years to catch up.

You mentioned that there's an outside panel that's part of the process of determining, you know, the council did can you can you elaborate a little bit more on that?

So very similar to science, science uses outside a panel of experts. So so

Who are these these experts?

Yeah. They're community practitioners. They're folks that work in the cultural space. They are people from local government. They are people that reside in rural parts of the state.

They are people who are and this is for all of our panels. Every one of our grant programs is adjudicated through an expert peer panel review process. We have that. And, again, that is consistent with the science community and it's consistent with every public agency that does arts grants across the country. That is the way in which we have done it.

This particular panel had a pretty robust group of people from all across the State of California and some outside of the state.

So member Hurtado, I just wanna mention that our staff are heavily involved in it too. So as we talk about the panel and council and all these other folks touching it, there's very much a tee up and a hand off through different parties in evaluating the standards of the application from the cultural district.

So the panel process is a key step but prior to getting to that panel process, it went through the agency and went through a lot of reviews, and analysis, and making recommendations to council as, Danielle had mentioned. We're happy to provide you with a list of the panel members for cultural districts for the last round. I think it would help to tell the story a little bit better about you know, how these folks are looking at the applications.

I also want to mention we did site visits, and the site visits were helpful as well for, the Cultural Districts to talk about, the nuance of the neighborhoods, to talk about the safety issues, the funding issues, any challenges that they feel that they have in organizing. Because really and truly, our Cultural Districts are it's really organizers. Right? It's a that ecosystem of businesses that are coming together, and they all kind of work in that way.

So the panels that we have do support that from a cross section of individuals.

But typically, how many people did sit on that panel? Do you have you know, do you every year, do you go through a new panel?

Every year.

Where is the where are these members from? How long do they serve? Can you

Every year, we go out. So essentially, a grant is basically a contract. Right? It's an RFP. And so we go out for peer reviews.

We have a pool of panelists that go and score and rank based on an established set of criteria. We take great pride in not in making plain language for our grant programs, having very clear technical assistance and opportunities for office hours for all of our applicants. As a matter of fact, we've just finishing up our annual round. For the Cultural District Program, this was a little bit more of a high touch.

And this this panel in particular, was extremely seasoned, well thought out, cultural experts who are specifically working in place and culture.

It is different than, let's say, working for an arts organization because remember, this is an this is a three-legged stool. So we have somebody from Visit California. We have somebody from you know, the City- Former City of Oakland. We had somebody from Los Angeles. We had somebody from the Central Valley.

We had somebody from Upstate. Right? So these are all you know, we're trying to make sure that we have a panel of experts that can be impartial, that can focus on the criteria of what the program is and put forward a set of recommendations based on that.

And Member Hurtado, if I could add, around our panel process. So we have a Race and Equity Manager, a racial equity action plan, and we use something called a decision support tool. So, as we're making these decisions and going through, we're documenting the impacts and the issues that we see and really discussing them as a whole. So with our panel process, I, we also have a Data Manager that I mentioned and she's gone through and reviewed our panels.

And we're about at about a under a 50% turn.

So every year, we're getting about half of the panel being new folks, which is very good because we still have our panels, anchored by seasoned members of our communities and the arts leaders but we have new people that are coming in with fresh perspectives and joining those panels.

So, it's a highly complicated algorithm that we end up using in order to set all of the panels and to have holistic panels where they're kind of balanced by their number of years of experience in a specific industry or discipline.

Okay. I won't continue to ask questions on that particular one, but just based on what you told me, you said that there is you know, someone that was selected from Visit California, someone from the Central Valley, someone from Los Angeles, someone from I think you said, the Bay Area as well. And in terms of designating these new Art Council Cultural Council Cultural Districts, I mean, it seems to me that the new designations kinda seem to fall within those areas.

And so I understand that they're experts, and that's I think that's a very important piece. I also you know, it's again, the Northern part of the Central Valley was covered but there was a 200-mile gap that wasn't considered or thought, and you know, put any consideration in there.

And so it seems to me like there's some bias in this designation process that really needs to be reviewed and considered. The next question that I have goes it's in regard to the breakdown of the support and operations. And can you break down what the that the six at least the 6,200,000 that was allocated in the '25-'26 fiscal year?

Sure. Our operations budget?

Yes. Yes.

So we have Jessie, it's okay to take this or you go.

Okay. We have 31.5 staff members. We're located in Natomas, so our budget really is about staffing. This year, our salaries and wages and benefits cost went up significantly a little under 1,000,000.

So we've adjusted for that. But really, our budget is salaries and wages and then some contracts to support the lack of staffing. So IT contracts, a shared services contract with the Department of General Services, and I think that amount also includes staffing support for arts and corrections programming contract with the department of CDCR. Excuse me.

And how much of that is the in terms of the position for the contracting piece with CDCR?

We're allowed to keep 800,000, and we're funding two full FTEs, and then we are apportioning additional supports around, you know, the contracting, the other consulting needs that come up.

So the parts in correction budget is about 7.2, wherein every one of the correctional facilities, we put artists to work directly in those facilities, through long term contracts.

And $8,000,000, CDCR.

Okay. Right. So that's what I see, 7,200,000, and it's ongoing. So can you elaborate a little bit about that you know that program, what it looks like, what type of work? I and I have probably the majority of prisons in my district quite a bit, so I'm just I know just curious to understand what that covers, that contract, because it seems to me like it's a very significant and important piece to, the Arts Council because it's, it's quite a bit of money.

I mean, more money than the Cultural Districts. What it looks like.

Yes. Arts in Corrections, we need. We need it desperately. The things that are happening with our Arts in Corrections funding are remarkable. One of our contractors' creative acts led by Sabra Williams is going into maximum security prisons in solitary and providing VR programming to those incarcerated Californians and helping them to reduce their send outs to solitary, as well as improve their ability to receive credits and release early.

So we're seeing this Arts in Corrections Program, the way we have it structured, it's managed at the California Arts Council. As we onboard these contractors, their programming enables, our incarcerated friends to have rack credit, which is credit that takes, time off their sentence. So as they're going through these programming and doing Shakespeare or, you know, doing these very interesting things, they're actually moving closer to releasing. Another interesting thing about our Arts in Corrections Program is similar to what you're doing with SB 1012.

We have a workforce development component, and we're really trying to wrap our arms around it.

So what's happening is folks are going through programming, learning these amazing skills, and then our providers are actually hiring them back in, and they're going back into the institution sharing their wisdom and experience in order to change the thread there. The Arts in Corrections Program is it's very lean. I run it super lean, so that we can get the bang for our buck.

And recently, we were just tapped by CDCR to help them to support a restoration of the Greystone Chapel and Folsom Prison, so that we can help them to keep these historic pieces in play, and we'll be using one of our grantees to help consult and support that. So, we very much try to keep the thread there, but we're in arts and culture there, and it has helped, I think a great deal in terms of safety.

And again, we're working this year. We have a contract with San Diego State University in order to do some research and evaluation on, our Arts in Corrections programming so that we can publish some more data on the impacts, specifically around the health component of arts therapy in incarcerated settings.

I don't have any additional questions or comments at this point. Do you would you like to add some?

I appreciate that we know that Arts Inside is about safety. Safety of the state workers and safety of the residents who are there. I think it's important, and I think this is the part you were getting at Madam chair. We also can reduce risk and increase safety and increase revenue outside of our communities. When folks come home, when there are cultural programs that are funded, when there are arts jobs and careers that are available, when we have arts programs.

And so, you know, I think it's important for us to recognize the benefits of making significant investments inside, but we also need to make those significant investments in our communities too. So I think that's the point, and I'm glad to see that we are making that investment because we know at the end of the day that saves taxpayers money, and it keeps everyone safe.

Thank you so much, Senator Smallwood Cuevas. That's exactly I didn't wanna you know? That's essentially what I was trying to get at right, is that you know for me, there's a lot of children that you know, could benefit from additional funds. So to me, it's just seven- you know, it's a lot of money.

It's a lot of money that could be going to our kids that desperately need it right now. Our kids that our communities where you know, and especially in this time with AI that we want to have them to be more hands on and do the arts and provide all the benefits that it does. I just, you know, I that's all I'm gonna say on the on the matter. It's just I think there's a lot more we could do a lot better.

We're in very tough budget times. You all have a job that I do not envy. We appreciate the support and the engagement and know that you'll have to make very hard decisions for all of California. So thank you. Okay.

Thank you so much for your presentation. We appreciate your time. And we will go ahead and move on to the next item, which is we're moving on to the Military Department.

And before we get into, specific budget proposals, we're going to ask for an overview, a report from our Military Department.

What's going on, brother? Yeah. How are you?

You may proceed when you're ready.

Madam chair, members, after hearing that Arts Council pitch, I think I'm gonna stay after and get in the public comment line to advocate for their funding. So just share you with that. But anyway, it's amazing. Right? Yeah.

So I'm Matt Beevers, and I run the Military Department in the State of California. Budget item 9, I'm gonna talk about today very briefly is $15,000,000 for FY '26-'27, another $15,000,000 for FY '27-'28. And that's to fund the ongoing state portion of our counter narcotics program. As you well know about $40,000,000 is federally funded each year.

The state puts in another $15,000,000 We primarily use that $15,000,000 to fund our operations in support of Customs and Border Protections, Office of Field Operation on our five ports of entry along our Southern Border with Mexico.

We also fund that in a variety of other ways. Our support to CDCR and we do some work there on counter drone operations to make sure that folks don't fly fentanyl and other dangerous drugs into the yards using or using drones. We also use that money to help a variety of States or States Cities within our state. And I'll give you a great example of that a year or so ago.

We helped the City of San Francisco develop their Counter Narcotics Counter Fentanyl Task Force, built a strategy with them and we're able to implement that.

On top of that, also are able to fund Military Attorneys to work in Brooke Jenkins District Attorney's Office in San Francisco. So that's the type of resource, the type of operations that we can execute with state funding. Generally, we cannot do that with our federal funding. And with that, I'll take your questions.

Okay. We'll just move on to agenda item number eight. And Department of Finance, do you wish to comment?

Here you go, brother.

Matthew Perkey, Department of Finance. Nothing further.

LAO?

Heather Gonzales with LAO. No particular comments on the substance but we would remind you that this is general fund, so we would encourage you to consider it in light of your other priorities for general fund.

Committee members? No? Okay. My first question, could the state funds appropriated in this item be used for immigration enforcement purposes?

Absolutely not.

Okay.

I'm gonna be super clear on that, Madam chair. It never happened.

Okay. Thank you. That that your answer was very clear to me. Thank you. And then number two, besides the weight and street value of drugs seized by CalGuard, how do you measure the success of the program?

So a couple of measures. I'd offer fentanyl deaths across state have gone down and I'm not here to say correlation equals causation, but it's one metric. What we generally use the success or failure is the return on investment. So for every dollar appropriated that $15,000,000 we're supporting the seizures of about $3,000 so that's an extraordinarily high return on investment, right? And on top of that, it's not just fentanyl coming across our borders from South to North.

We also use this money to enter that gut into money going South into Mexico, and we're able to do that with this 15,000,000 supporting a variety of Federal, State, Local, and Tribal law enforcement agencies.

And if this appropriation is rejected by the legislature, will CalGuard still receive federal funding?

We will.

Okay. Do you know more or less

So about we expect about $40,000,000 in federal funding across supporting the four high intensity drug trafficking areas. If we don't get the 15,000,000, what will happen is we'll have to dramatically degrade our support to the high intensity drug traffic areas during the California Central Valley, LA, San Diego Imperial. And we'll lose support there. The folks that rely on our analyst support in those high intensity drug trafficking areas absolutely rely on these kids that do the work for us.

We need to keep them in those seats working with our Federal, State, Local, and Tribal partners catching bad guys.

And we have to stay on the border. Customs Border Protection Office of Field Operations so shorthanded that if we don't support them, they won't be able to do the work. They won't be able to do the secondary vehicle inspections. They won't be able to do x-raying the vehicles that come across and they'll be 50% degraded on that. So we need we need to keep going.

Do you expect any changes in the way that you currently are, you know, running this program with federal funds that come down?

No. It's working extraordinarily well in my opinion. This will be the just the fourth year now that we've had it. And I'll give you a great example. So when we first started the program, about 26 or 27% in the aggregate of the fentanyl that we supported the seizures of was directly attributed to that $15,000,000. Today, it's almost ninety percent.

So we are applying that 15,000,000 directly to get after the fentanyl challenge along our Southern border.

So your counter drug activities plan won't defer or will still refer to our plan instead of whatever the National plan.

Absolutely. We'll be they'll be executed in parallel.

Okay. Alright. I don't have any other questions and none from committee members. Okay. We'll hold this item open.

Thank you so much for your presentation.

It was a pleasure. Thank you. Cheers.

Thank you. And at this moment, we'll begin public comment on all items. If you wish to comment, please make your way to the microphone now.

Please state your name and your affiliation, and we ask that you please keep your comments to no more than one minute. Thank you.

Madam Chair and Members, Paul Yoder on behalf of the San Mateo City and County Association Governments and SamTrans in support of the VLF Backfill for San Mateo. And I also wanna thank Senator Cabaldon on behalf of the Napa County Board of Supervisors for his continued vigilance on the VLF issue. Thank you.

Good afternoon, Chair and Members of the Committee. Julie Baker with California Arts Advocates. We urge support for Senator Smallwood Cuevas request to increase the California Arts Council's grant making appropriation from 24,000,000 to 50,000,000 with 10,000,000 earmarked for cultural Districts Program. This modest high impact investment supports all California communities. They have a program called State Local Partners that is in every County in California addressing issues like isolation and loneliness, public safety, health and economic development.

Despite overdelivering, the agency's funding remains below twenty five year old levels. This request has bipartisan support and is backed by nearly 350 organizations, including unions, businesses, nonprofits, and Mayors Lee and McCarty. I just wanna also say it would move us from thirty fifth in The United States for per capita funding to twentieth in the top 20 if we did that. And directing the temporary AI boom surplus to human creativity is a fitting affirmation for arts workers.

Also, with the 10,000,000 carve out for Cultural Districts, thank you for that long conversation, we thought it was really interesting.

I think it was really important to also recognize what Director Brazell said that, going forward, designation and funding could be separated. For example, designation could be criteria based while funding could be competitive. That would actually allow for many more districts in the State of California and then with an appropriation, you could have that be competitive. Thank you for your time.

Good afternoon, Madam chair, members of the committee. Mike Calgary, the County Executive of San Mateo County. Thank you for looking at this issue in regard to VLS. Senator Cabaldon, you articulated in a way that I have never heard articulated before. It was so clear and concise.

Thank you for that. This is the greatest taking from a County probably in the history of this great state. I would ask you to support the backfill. Give us time to work on a long term resolution with DOF so that we can find a permanent fix that is equitable to the residents of our county and other counties around the state. Thank you very much.

Thank you Madam chair, members. 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 and the League of California Cities. We are here today in support of the VLF backfill to San Mateo, Alpine, and Mono Counties. I also wanna extend our appreciation to Senator Cabaldon for elevating the disparate impacts of this issue.

Since 2012, this has been an unintended consequence of the 2004 agreement, and we stand committed to an equitable solution for these communities. Thank you.

Good afternoon. Audrey Retajczyk on behalf of the City of South San Francisco in support of the VLF Backfill. Thank you.

Good afternoon, Chair Hurtado and Members of the Committee. My name is Jenny Darlington-Person, and I'm the Executive Director of the Arts Council of Placer County. I'm also here representing the Coalition of County Arts Agencies and as a Board Member for the Association of California Symphony Orchestras.

I want I you've heard the I mean, the California Arts Council and Julie Baker both gave great information about the impact and the statistics and the facts around arts funding and how important it is to the California economy and arts and culture. I wanna put a human face, to this funding, though.

Last week, I received an email from Sarah, a resident of Placer County. Sarah told me she was a recipient of a scholarship for an art retreat made possible by CAC funds. In her email, Sarah shared with me that she had been the victim of a violent robbery and SA. And that afterwards she checked out.

She experienced addiction and severe PTSD. Sarah said her shame made it difficult to accept the scholarship, but she was grateful she did because the program created program created specifically for survivors of violence was, as Sarah put it magical. By funding the CAC, you became a part of Sarah's healing journey. I think we all know the statistics. There are millions of Sarah's across this great state.

And now imagine how many Sarah's you would help if twice as many grants could be given out. That's the impact you could have with what some have described as a bit of budget dust. I urge you for all of the Sarahs out there and the kids who need art and the artists who need jobs and the communities that need innovation to support the $50,000,000 budget request for the California Arts Council. Thank you for your leadership and support.

Good afternoon. My name is Rachel Mueller. I'm with, CalCCI, a coalition of more than 60 CDFIs here today asking for your support of a $50,000,000 request over three years to support the California Investment and Innovation Program or CalIP. CalIP is administered by the state or under the State Treasurer's Office under CPCFA. This request is being championed by Senator Grayson and by 90 organizations across California.

CDFIs are the financial sector for the public good. We finance affordable housing, small businesses, entrepreneurs, health clinics, and other childcare centers, and other essential community services in places where traditional financing is hard to reach or come by. When we talk about affordability, these are the types of priorities that we talk about, and these are the exact projects that we finance. But affordability needs financing to work. CalIP does that by providing CDFIs the ability to leverage every dollar of funding with $8 of private and philanthropic capital.

That's dollars that would otherwise not be invested in underserved communities. CDFIs have a tremendous impact in every district in California. In Kings County, for instance, a local CDFI access plus capital provided much needed technical assistance and financing to Menjivar De Amor Preschool and Childcare helping expand their access to families who needed expanded childcare and family services. CalIP ensures that great organizations like access plus capital can continue to do that work.

Failing to renew this program means less capital reaching underserved communities and fewer opportunities to strengthen those local economies.

CALEP is a proven tool that advances California's affordability and economic development goals, and we respectfully urge your support. Thank you.

Good afternoon, Madam chair Hurtado and Committee members. My name is Charisse Ma Lebron here on behalf of the Office of Kat Taylor. We enthusiastically support full funding for the Treasurer's California investment and innovation program because CDFIs deliver critical financing to under resourced communities, and they're not just lifting up individuals. They're lifting up entire generations. We respectfully urge you to support this program. Thank you.

Good afternoon, madam chair and members. My name is Faith J. McKinnie, and I am the Founding Director of Black Artist Foundry, a 501 C3 nonprofit organization that supports black artists across California through funding, professional development, and public programming. I'm here today in strong support of the request for $50,000,000 in ongoing general fund support for the California Arts Council, as well as continued investment in programs like the Performing Arts Equitable Payroll Fund. Public investment is in the arts is not optional.

It's a matter of equity infrastructure, workforce development, and long term community sustainability.

In a sector where black led organizations continue to receive less than 1% of philanthropic funding, state support plays a critical role in ensuring artists and cultural organizations can survive, grow, and contribute to the cultural and economic life of California. The California Arts Council supports more than programming. It supports jobs, small organizations like mine, cultural workers, public access to the arts, and pathway for historically under under invested communities to participate in California's creative economy. California has an opportunity to lead. Thank you for your leadership.

Thank you to the artists and advocates who continue showing up, and I respectfully urge you to support this investment in California's cultural future. Thank you.

Good afternoon. My name is Analia Kelly, and I'm a Social Practitioner at Aspire House in San Mateo County. We're a mental health nonprofit focusing on psychosocial rehabilitation. San Mateo County is owed over a $114,000,000. This isn't charity.

This is our money. Money that Sacramento is withholding while our constituents die. Every day you wait, someone doesn't wake up. I've lived this. I know the sharp ache of hunger fangs that won't stop.

The isolation of living on the outskirts of society, what it means to be seen yet unseen because of mental illness. I've stood on that edge where a therapist, a case manager, a doctor means the difference between life and death. Every day you wait, someone doesn't wake up. I've witnessed firsthand what programs like Aspire House can do for people with serious mental health challenges. They don't just help, they transform lives.

Aspire House improves well-being through higher employment rates, better physical and mental health, and decrease in mental health hospitalization. A year of Aspire House services cost the same as two weeks in the hospital. These services are free to members because of county resources provided through VLF funding. Right now, loneliness is an epidemic in San Mateo County.

The VLF funds we're owed, not requesting but demanding will ease the gnawing hunger of families choosing between rent and groceries, shelter, the unhoused freezing on our streets, create jobs, and build communities where children, seniors, and the differently abled can thrive.

Provides addiction treatment that keeps people alive and out of jail. It funds the social safety net of psychiatrists, counselors, and case managers that literally saves lives. This funding breaks the cycle of poverty. It restores self worth. It gives people back their dignity, their futures.

55 counties get their full share. Why not us? We won't stop fighting because every day you wait, someone doesn't wake up. Lastly, I would like to say, for those who continue to withhold the funding that legally belongs to the constituents of San Mateo County, the blood of those who die while waiting for housing, treatment, and care is on your hands. Thank you.

Good afternoon, Madam chair and members. Jasmine Valle on behalf of the Low Income Investment Fund. Access to child care is essential for working families and for a functioning economy, but child care providers often struggle to access the financing they need to expand or even sustain their operations. CalIP is critical because it allows us to finance childcare facilities, helping providers expand capacity, improve their spaces, and remain financially viable. These investments directly support working families by making it possible for parents to participate in the workforce.

They also support local economies by stabilizing businesses and creating jobs in the care sector. Without tools like CalHIP, many childcare providers would not be able to access the capital needed to grow or continue serving their communities. At a time when California is working to expand childcare access, financing is a key piece of making that goal a reality. We respectfully urge you to renew funding for CalIP to support childcare providers and working families across the state. Thank you.

Good morning. My name is Jaya King, and I am an artist and muralist here in Sacramento. I've experienced firsthand support from the California Art Council's Impact Grant. I created a mural in Sacramento focused on domestic violence awareness in partnership with Weave. That prod that project also included a series of trauma informed creative workshops led by my collaborator, as well as a community paint day at the local farmer's market.

As a muralist, I want to emphasize that public art is more powerful than just beautifying a space. This work created access, it created paid artist opportunities, community engagement, increased foot traffic benefiting local business, and awareness to the nonprofit supporting survivors of domestic violence and sex trafficking. Projects like through grants like these help sustain a creative ecosystem that is essential to California's identity, public health, and economic well-being.

I respectfully request your support to, to support the $50,000,000 budget request for the California Art Council, including 10 millions for $10,000,000 for cultural districts authored by Senator Lola Smallwood Cuevas and seven other bipartisan members of the Senate. Thank you.

Good afternoon, chair and members. My name is Colton Dennis, Executive Director of the Merced County Arts Council, a State local partner of the CAC, and part of the Coalition of County Arts agencies that represents everyone in California. I'm here to urge you to support the $50,000,000 budget request to the California Arts Council, including $10,000,000 for cultural districts, authored by Senator Smallwood Cuevas, and seven bipartisan co authors. This investment is vital in the Central Valley.

Downtown Merced is a newly designated cultural district, one of only two in our region, and this will help us become sustainable.

The CAC also funds supports funds and supports organizations like the Vatanthemum Lao Foundation, whose Lao New Year celebration, which is in our downtown cultural district, is among the largest in the state, showing how arts and culture bring together people of all ages, viewpoints, and backgrounds, from our, immigrant community, communities to longtime residents. This funding sustains our creative economy, jobs, and small businesses, and keeps communities connected across generations and differences.

I respectfully urge you to fully fund the California Arts Council's $50,000,000 budget request, and I invite you all to come to our allow New Year celebration on May 16 in Reseda. Thank you.

Good afternoon, madam chair Hurtado and committee members. I have a stutter, so I will make this as fast as I can. My name is Amanda Sanchez and I am here as the Co Founding Director of Capital Creative Alliance, a local creative nonprofit in support of Senator Smallwood Cuevas' request for $50,000,000 in grant making appropriation for the California Arts Council.

CCA was founded with a grant from the California Arts Council in 2021, and last year was the first year we did not get the general operating, support grant. Our programming did not change nor did we lessen our impact.

It was just over subscribed by a lot. While the 25,000 a year was not enough to run, our org did allow us to pay our co directors so we could, deliver programming while trying to secure additional funding. Without this, I have reduced, my hours and have found full time work, which allows me to be here to speak with you today. But there are so many other arts leaders who have had to close their doors and change careers just to make a life.

Increasing the budget for the CAC not only allows our only state arts agency to fund more small and large arts nonprofits, it also impacts people like me.

I respectfully urge you to increase public investment in the arts with this 50,000,000 budget request. Thank you.

Good afternoon, Chair and Members of the Committee. My name is Dominique Johnson. I have the honor of serving as the Executive Director of the Stanislaus Arts Council, a state local partner of the California Arts Council. I also stand here before you today, representing the over 550,000 residents in Stanislaus County and as the resident as the representative for the Modesto's newly designated arts and cultural district titled Dos Rios Arts And Cultural District.

I respectfully urge your support for the $50,000,000 budget request for the California Arts Council, including the $10,000,000 dedicated to cultural districts authored by Senator Smallwood and supported by bipartisan members of the Senate.

In communities like ours, rural communities, cultural districts are far more than placemaking initiatives. We've seen that they are catalysts for economic growth, tourism, small business development, and workforce opportunity. They activate corridors, increase community investment, and create sustainable opportunities for artists, non profits, entrepreneurs, and working families. But the return on this investment extends beyond economics alone, and we're witnessing firsthand arts and culture strengthen belonging, improve community well-being, cultivate civic pride, and create spaces where people feel seen, connected, and and inspired.

The arts generate not only revenue, but they create imagination, ingenuity, and human connection, assets that are essential to thriving communities and California's future.

This investment, that we're requesting from you in for the California Arts Council and our Cultural Districts is an investment in California's people, our identity, economy, and collective future. Thank you so much for your consideration.

Good afternoon, chair and subcommittee members. My name is JDiana Arbex, and I'm a Program Manager with Nevada County Arts Council. We also administer two manager with Nevada County Arts Council. We also administer two cultural districts, Truckee and Nevada City Cultural District. We also have partnered with 19 county arts agencies in Northern California to redistribute funding into our rural region more more recently from the CAC.

I'm here in support of the $50,000,000 budget request for California Arts Council, including $10,000,000 for California Cultural District. In our Rural Region Cultural District funding has given us the opportunity for meaningful cross sector, collaboration, including efforts with our local tribes, chambers of commerce, tourism partners, and local government. The Cultural District Program has provided us a critical strategy for directing investment into rural communities like ours. However sustained funding is essential to expanding the reach and impact of cultural districts across the state, particularly in underserved rural regions. Thank you.

Good afternoon. My name is Sean Fenton. I'm the Executive Director of Theater Bay Area and also serve as President of the Board of California Arts Advocates. I'm also here today as an arts worker myself. I'm a working performer and singer, a member of Actors Equity Association and SAG AFTRA, and a proud member of the San Francisco Gay Men's Chorus.

So the arts are not abstract to me. They are my profession, they are my community, they're my life. So I'm here in the strongest possible support of increasing the CAC local assistance grant funding to $50,000,000 in the agency's 50th year. The California Arts Council truly is the backbone of arts infrastructure in California. These grants, they reach communities that often do not have access to other sources of funding, especially rural communities, small budget companies, cultural organizations, and BIPOC led organizations.

So when the arts council is underfunded, these are the communities that feel it first. The Theater Bay Area community has benefited from CAC support in many previous years, and I've seen firsthand what that investment can make possible. CAC funding has supported our workforce development programs, professional training, and programs that serve wide ranging parts of the arts ecosystem. But right now, in the arts and culture sectors, need far exceeds available funding.

So while this $50,000,000 ask aligns elegantly with the Arts Council's 50th anniversary, this is not just a symbolic number.

This ask reflects the real need we're seeing across California and begins to move us closer to national norms in per capita arts funding. So in this, the California Arts Council's 50th year, we urge you to increase local assistance grant funding to $50,000,000. Thank you so much for your support.

Hi. My name is Stephen de Silva. I am also a staff member of Aspire House in San Mateo County. We run an evidence-based program for mental health recovery. I want to start by thanking Lalia for her comments earlier, and I'm here to second them.

If San Mateo County doesn't receive the VLF funding in full, programs like ours are at risk. We provide vital services for our county's most vulnerable residents. For our members, serious mental illness is a daily reality, and this funding is the difference between recovery and crisis, hospitalization, incarceration, or end of life. This funding was promised to our county, and us and our members are counting on you to make it right. Thank you.

Good afternoon, Madam Chair and members. Brian Augusta on behalf of the Rural Community Assistance Corporation and Self Help Enterprises. You heard a moment ago from the advocates from CalCCI and from the office of Kat Taylor about the importance of renewing the funding for the CalIIP program.

And we see CDFIs as critical to that work and Cal IIP as an essential funding source to continue delivering safe drinking water to disadvantaged communities. So for all those reasons, we would urge support for the $50,000,000 addition to the Cal I IP program to continue that important work. Thank you, madam chair.

Thank you, madam chair and members. Keith Dunn here on behalf of the State Building Construction Trades Council in support of the committee's position in leaving the VLF issue open for San Mateo County. Thank you for your stop.

Please speak up. We have about 50 people waiting outside, waiting to comment. So I'm going to ask, if we can, limit our comments to less than one minute. Thank you.

Good afternoon, Chair and members. Sarah Brennan with the Weideman Group testifying on behalf of the California Democracy Partnership, including SEIU State Council, the Institute for Responsive Government, the League of Women Voters, ACLU, CalAction, Asian Law Caucus, Common Cause, and Catalyst California. We're urging both houses and the governor to jointly include one-time election protection investments in the final budget to ensure election integrity and a timely vote tabulation.

We believe this investment should be focused on voter education, trusted messenger outreach, ballot curing, including immediate funding for the Office of Community Partnerships and Strategic Communications operational, competitive grants to counties for ballot processing equipment and workforce to expedite the count, vote centers and drop boxes to protect access, cybersecurity, AG election monitors, and election litigation fund. California cannot afford delayed results or interference in a cycle where the balance of power in this country may be at stake. The window to act is now. Thank you.

Thank you. If you're here for a me too, we're encouraging that. Thank you.

Christine Bowles. I'm the mayor of the city of Pacifica, and I'm here to speak in support of the VLF funding. Our city is facing a critical deficit that we can't afford as it is. And with the $2,400,000 in addition that we would lose from the VLF would put us at a 10% loss. We're at the forefront of sea level rise, ground zero.

We've already lost three apartment buildings, 15 homes. We have so many infrastructure needs. For a city of 38,000, we only have two police officers on duty at night. We cannot afford any more cuts. We would not survive as a city.

So please care for us so we can care for our people. Thank you.

Thank you.

Hello. My name is Diane Howard, and I am a council member and past mayor for the city of Redwood City, and I'm here to ask for your help. Redwood City is about to lose five and a half million in VLF funding. That's the service equivalent of 19 firefighters with the entire budget of our downtown library. Not receiving our funding is a problem even though San Mateo County residents contribute billions to state revenues annually, and this is due to an obsolete funding mechanism.

Please restore our VLF funding. Find a legislative fix to ensure this never happens to us again. Thank you for your time, and thank you for your service.

Thank you. And if you're here to do a me too, we're encouraging that. We have about 50 people outside. Thank you so much.

Hello. Thank you, Chair and subcommittee members. I'm here in support of VLF funding. My name is Marya Ouro-Gbeleou. I'm the senior director at Daly City Partnership, a multigenerational nonprofit serving over 16,000 unduplicated individuals with over half a million service points annually across Daly City in Northern San Mateo County.

We provide services like food assistance, emergency rental assistance, and homeless services, youth programming, mental health services, and older adult programs. The VLF shortfall threatens critical county safety net funding at a time when the community need is already rising and has been for many years. For Daly City and North County residents, this means increased pressure on food assistance, mental health crisis counseling, older adult support, library services, and basic emergency services that families rely on to remain stable.

Northern San Mateo County already experiences significant disparities in resources and investment, and further reductions will disproportionately impact low-income families, immigrant seniors, and working households struggling with the region's high cost of living. We urge the state to fully restore these funds and establish a permanent solution moving forward.

Thank you for your time.