BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 493 (Padilla)
Hearing Date: 5/26/2011 Amended: 4/26/2011
Consultant: Bob Franzoia Policy Vote: G O 9-3
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BILL SUMMARY: SB 493, an urgency measure, would revise
requirements on the Department of General Services (DGS)
regarding disposal of state surplus computers, laptops,
monitors, and related computer equipment, as provided.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
State surplus computer sales Unknown, potentially up to $50
or more General*
in lost revenue annually, potentially
negligible
* Service Revolving Fund (a combination of General Funds and
special funds) plus minor other General Fund and special fund
losses
** Service Revolving Fund
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STAFF COMMENTS: SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
The state received federal ARRA funds which were distributed in
2010 as grants by the Public Utilities Commission for broadband
infrastructure projects and public computer centers. Of the
grant recipients, preliminary information indicates three (of
six) have a school district affiliation.
Under current law, DGS shall first offer appropriate state
surplus personal property to school districts prior to offering
that property to the public, except for property with public
safety uses. DGS may offer school districts state surplus
personal property at less than fair market value, if it is
determined to be in the best interests of the state pursuant to
DGS policies and procedures. When it is not cost effective for
state agencies to transport surplus property to Sacramento for
auction, or the property is not suitable for sale, authority can
be requested to dispose of that property. One disposition
method is to donate computers to school programs.
The number of state surplus computers may be sold to the grant
recipients and at what amount less than fair market value is
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unknown. If these grant recipients can now purchase retail a
new desktop (estimated $500) or laptop (estimated $300) computer
with software and warranty, state surplus computers would have
to be price competitive before this bill has a fiscal impact.
DGS surplus property auctions which were scheduled on a monthly
basis are now being scheduled bi-monthly. The following is data
from the January 2011 auction:
------------------------------------------------------------------
|Hardware type |Number sold |Total sales |Average price per |
| | | |unit |
|----------------+-------------+----------------+------------------|
|CPUs |390 |$15,235.00 |$39.06 |
|----------------+-------------+----------------+------------------|
|Laptops |29 |$4,125.00 |$142.24 |
|----------------+-------------+----------------+------------------|
|Monitors |83 |$4,145.00 |$49.94 |
------------------------------------------------------------------
For CPUs (central processing units) and laptops, the hard drives
have been wiped clean to erase any sensitive data and are no
longer equipped with any software, including a basic operating
system. Each CPU or laptop has been tested for function and
each one will boot up to the C prompt.
If a state surplus computer (desktop and monitor) had a fair
market value of $100, for every 100 computers sold pursuant to
this bill, at 10 percent, 50 percent or 90 percent less than
fair market value, the loss of revenue would be $1,000 ($100 x
100 = $10,000 x 0.10), $5,000, or $9,000. Assuming surplus
sales were made at 50 percent of fair market value, sale of
1,000 computers at this price and configuration would be needed
to incur a revenue loss of $50,000 (assuming all computers were
purchased by the same fund). As noted, this estimate would be
affected by demand from non-school district bidders, retail and
wholesale options, and disposition of computers directly to
school districts.
DGS would be required to report on its implementation of this
bill and recommend whether other nonprofit organizations working
to close the digital divide among low income populations, as
specified, should be eligible for state surplus computers at
less than fair market value. This report does not appear to be
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cost effective.
The proposed amendment strikes the requirement that DGS
coordinate the disposition of state surplus computers with the
Federal Surplus Property Program (page 3, lines 20-21).