March 1, 2004
| TO: | Cla Members/ Systems/ Network Contacts |
| FROM: | Mike Dillon, Lobbyist Christina Dillon, Lobbyist |
| RE: | News From The Capitol |
I. LEGISLATIVE EFFORTS TO PROVIDE FUNDS FOR CALIFORNIA TELECONNECT FUND
The California Teleconnect Fund (CTF) was created in 1997 for the purpose of providing telecommunications service discounts to schools, libraries, and municipal, county and hospital district-owned hospitals and health clinics, and Community Based Organizations (CBOs). The Public Utilities Commission prepared a briefing report for the Legislature in January, which states, "Since the CTF program's inception, schools and libraries have been the predominant recipients of program benefits with over 6000 current participants. This is not surprising since schools and libraries previously enjoyed a higher discount on a greater range and quantity of services than any other category of participant and were also the beneficiaries of efficient marketing of the program by the California Department of Education."
In 2003-04, the CTF contained an unanticipated surplus due to the "grossly overestimated budget for fiscal year 2001/2002. Commission staff overestimated program funding requirements by over $100 million. The $100 million was earmarked to pay claims for earlier years that had not yet been filed, but were expected to come in the following fiscal year." (PUC "Report to the Legislature," January 12, 2004, pg. 16.) Noting the sizeable surplus, the joint Budget Conference Committee recommended that the California Teleconnect Fund "loan" the state General Fund $150 million during last year's Budget deliberations. Now, approximately $33 million needs to be returned to the CTF program in order to manage the program. The other option the PUC has is to raise the surcharge rate to backfill the program. The PUC has requested that the Department of Finance either return the "borrowed funds" to the CTF, or allow the PUC to raise the surcharge rates. Both requests were denied by the DOF.
In response to the DOF's decision, a meeting was called by the Chief Consultant to Senator Debra Bowen's Senate Energy, Utilities, and Communications Committee, to discuss funding for the California Teleconnect Fund. Included in the meeting were representatives from the California Public Utilities Commission, Department of Education, SBC and Verizon, and various affected parties. We attended on behalf of CLA. At the meeting, the stakeholders and legislative staff strategized over ways to lobby the Administration and gain assistance from the legislature and others to restore necessary funding to the CTF. Later that week, Senator Bowen sent a letter to the PUC "urging them to fully fund the California Teleconnect Fund by raising the CTF surcharge pursuant to their existing authority." The PUC currently has the authority to increase the surcharge, however the surcharge was suspended in 2003 when the "significant surplus" was noted in the fund. If the PUC can be compelled to increase the surcharge, the legislature and Administration will still need to provide some supplemental funding for the program for this year.
We have been provided with a list of library participants in the CTF, and were surprised to see how many of you benefit from this program. If you are interested in maintaining the CTF, please take a moment to write and encourage the PUC to increase the surcharge.
California Public Utilities Commission
President, Michael Peevey
505 Van Ness Avenue
San Francisco, CA. 94102-3298
II. LEGISLATIVE ANALYST HAS CONCERNS ABOUT CTF PROGRAM
When the Legislative Analyst released its annual analysis of the Governor's January Budget last month, their office noted that they have concerns with the operation of the CTF program as it is currently configured and made several recommendations on "how to improve the oversight and effectiveness of this program." The LAO notes that the CTF seems to have had "difficulty in projecting its budgetary requirements for this program" and have recommended that the CTF provide more accurate data closer to May Revision time, "after the Commission has received a greater number of its current year claims." In responding to the $150 million "loan" to the General Fund, the LAO suggests that the Legislature either direct the CPUC to raise the surcharge applied to telephone charges which would "yield approximately $20 million, which would generate enough revenues to cover the same level of expenditures in the Budget year," or "repay a portion of the General Fund loan."
The LAO report also contains a few proposals relative to the CTF that some of our CLA members might find controversial. They include:
Mandatory participation in E-Rate program as a condition for participating in the CTF program: "The CTF discount is applied to the cost of the telecommunications service after the E-Rate discount is applied, thereby reducing the amount of the discount paid to the state. Despite this, current commission policy does not require participation in the E-Rate program as a condition of eligibility for the CTF program. Furthermore, lack of participation in the E-Rate program reduces federal funds available to schools and libraries in the state... We recommend the enactment of legislation that requires schools and libraries to participate in the federal E-Rate program as a condition of eligibility for the CTF program. This change will encourage schools and libraries to maximize available federal funds. In addition, because the CTF discount is applied to the cost of the telecommunications service after the E-Rate discount has been applied, greater participation in the E-Rate program will lower payments from the CTF for the same level of telecommunications service. This will allow the CPUC to stretch the state's funds to provide more discounts with the same level of funds."
Recommend enactment of legislation to direct the CPUC to adopt criteria for targeting discounts in the CTF to help address the digital divide: "Given that we find that the current process for allocating discounts does not target populations that are most likely to need expanded telecommunications services, we recommend the enactment of legislation directing CPUC to target CTF discounts based on a criteria that will target the populations that currently have limited access to advanced telecommunications services. These criteria should target the discounts to those in inner cities and rural areas, as well as persons in low-income communities, since these populations have been found to have the lowest level of access to advanced telecommunications services. In addition, we think the Legislature should consider how this program is coordinated with other state and local investments made in advanced telecommunications technologies for K-12 education."
The LAO's recommendations will likely be part of this year's Budget discussions when the Budget subcommittees begin meeting later this month.
III. LIBRARY BOND BILL -- HEARING SET -- LETTERS NEEDED
SB 1161 by Senator Dede Alpert (D-San Diego), is sponsored by CLA, and will enact the California Reading and Literacy Improvement and Public Library Construction and Renovation Bond Act of 2004 (for submission to the voters on the November 2004 ballot). Today we received a call from Senator Alpert's office, informing us that the bill has been set for its first hearing in the Senate Education Committee on Wednesday, March 24. The bill currently contains a $2 billion price tag, and the Senator is prepared to move it forward with that amount in tact. She will negotiate the amount with legislative leaders, legislators, and the Administration as the bill moves through the process. Important features of SB 1161 include: the same 35 percent local match requirement as is currently found in the existing (Proposition 14) library bond, the bill provides up to $25 million to encourage the development of joint use projects between libraries and school districts or higher education, and lastly, would allow unfunded Cycle 3 applications to get "first call" on new bond act funds without having to complete a new application. Remaining funds would be available to any additional applicants.
Please take a moment today to write the members of the Senate Education Committee and urge their strong support of SB 1161. The State Library and CLA have estimated the needs for library construction and renovation to be in excess of $3.1 billion. The members of the Senate Education Committee are:
SENATE EDUCATION COMMITTEE
Senator John Vasconcellos (Chair)
Senator Bruce McPherson (Vice Chair)
Senator Richard Alarcon
Senator Dede Alpert (author)
Senator Wes Chesbro
Senator Jeff Denham
Senator Betty Karnette
Sneator Pete Knight
Senator Gloria Romero
Senator Jack Scott
Senator Byron Sher
Senator Jackie Speier
Senator Ed Vincent
Sample Address:
The Honorable John Vasconcellos
Senate Education Committee, Chair
State Capitol
Sacramento, CA. 95814