BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                   SB 493|
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                                 THIRD READING


          Bill No:  SB 493
          Author:   Padilla (D), et al.
          Amended:  4/26/11
          Vote:     27 - Urgency

           
           SENATE GOVERNMENTAL ORG. COMMITTEE  :  9-3, 3/22/11
          AYES:  Wright, Calderon, Cannella, Corbett, De León, Evans, 
            Padilla, Wyland, Yee
          NOES:  Anderson, Berryhill, Strickland
          NO VOTE RECORDED:  Hernandez

           SENATE APPROPRIATIONS COMMITTEE  :  6-2, 5/26/11
          AYES:  Kehoe, Alquist, Lieu, Pavley, Price, Steinberg
          NOES:  Walters, Runner
          NO VOTE RECORDED:  Emmerson


           SUBJECT  :    State surplus property

           SOURCE  :     Author


           DIGEST  :    This bill specifies that Department of General 
          Services policies and procedures regarding the disposition 
          of state surplus computers, laptops, monitors, and related 
          computer equipment shall do all of the following:  (1) 
          facilitate the disposition of state surplus computers to 
          further the state policy of bridging the digital divide, as 
          described in subdivision (d) of Section 709 of the Public 
          Utilities Code (PUC); (2) authorize nonprofit entities 
          that, in partnership with a school district, operate a 
          public computer center to further the state policy of 
                                                           CONTINUED





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          bridging the digital divide, as described in subdivision 
          (d) of Section 709 of the PUC, to be eligible for receipt 
          of state surplus computers under Section 10389.1 and 
          through approved disposition directly from a state agency; 
          (3) include a procedure enabling state agencies with 
          surplus computers to ascertain whether the nonprofit 
          entities described in #2 are interested in receiving those 
          surplus computers;  the procedure shall include a 
          preference for nonprofit entities within the same 
          geographic region as the state agency in order to minimize 
          transportation and disposition costs; (4) require that 
          state agency documentation of the disposition of surplus 
          computers include a certification that all confidential, 
          sensitive, and personal information was removed from the 
          computers prior to disposition; and (5) require DGS, in 
          collaboration with the California Technology Agency, to 
          promote increased awareness among state agency officials of 
          the requirement to remove from all state surplus computers 
          all confidential, sensitive, and personal information prior 
          of any disposition of those computers.

           ANALYSIS  :    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 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 







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          monthly basis are now being scheduled bi-monthly.  The 
          following is data from the January 2011 auction:

           ---------------------------------------------------------- 
          |            |           |          |                      |
          |Hardware    |Number     |Total     |Average price per     |
          |type        |sold       |sales     |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.

          This bill specifies that DGS policies and procedures 







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          regarding the disposition of state surplus computers, 
          laptops, monitors, and related computer equipment shall do 
          all of the following:  

          1. Facilitate the disposition of state surplus computers to 
             further the state policy of bridging the digital divide, 
             as described in subdivision (d) of Section 709 of the 
             Public Utilities Code (PUC); 

          2. Authorize nonprofit entities that, in partnership with a 
             school district, operate a public computer center to 
             further the state policy of bridging the digital divide, 
             as described in subdivision (d) of Section 709 of the 
             PUC, to be eligible for receipt of state surplus 
             computers under Section 10389.1 and through approved 
             disposition directly from a state agency; 

          3. Include a procedure enabling state agencies with surplus 
             computers to ascertain whether the nonprofit entities 
             described in #2 are interested in receiving those 
             surplus computers;  the procedure shall include a 
             preference for nonprofit entities within the same 
             geographic region as the state agency in order to 
             minimize transportation and disposition costs;
          4. Require that state agency documentation of the 
             disposition of surplus computers include a certification 
             that all confidential, sensitive, and personal 
             information was removed from the computers prior to 
             disposition; and 

          5. Require DGS, in collaboration with the California 
             Technology Agency, to promote increased awareness among 
             state agency officials of the requirement to remove from 
             all state surplus computers all confidential, sensitive, 
             and personal information prior of any disposition of 
             those computers.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes   
          Local:  No

          According to the Senate Appropriations Committee:

                         Fiscal Impact (in thousands)








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           Major Provisions     2011-12      2012-13     2013-14     Fund  

          State surplus computer                            Unknown, 
          potentially up to $50 or more                     General* 
          sales              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

           SUPPORT  :   (Verified  5/31/11)

          California State Library
          Computers for Youth
          ReliaTech
          The Stride Center
          Youth Policy Institute


          PQ:kc  5/31/11   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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