BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Kevin de León, Chair AB 1299 (Bradford) - Telecommunications: universal service programs: California Advanced Services Fund. Amended: July 10, 2013 Policy Vote: EU&C 8-2 Urgency: No Mandate: No Hearing Date: August 12, 2013 Consultant: Marie Liu This bill meets the criteria for referral to the Suspense File. Bill Summary: AB 1299 would create a new grant and loan program for public housing agencies or nonprofits to fund broadband connections and services for publically supported housing communities. Fiscal Impact: On-going costs of $150,000 from the Broadband Public Housing Account within the California Advanced Services Fund (special) for administrative costs to the California Public Utilities Commission (CPUC) to administer the program. Cost pressures of up to $25 million California Advanced Services Fund for the redirection of funds. Background: Existing law establishes the California Advanced Services Fund (CASF), administered by the CPUC, to help fund deployment of broadband infrastructure and bring high-speed Internet access to all areas of the state. The CASF is funded from a customer surcharge on intrastate communication services. Section 821 of the Public Utilities Code authorizes the collection of $125 million from 2011 to 2015 through surcharges on customers (for a total of $225 over the life of the fund). Generally no more than $25 million may be collected in each year during this time period. Of this amount $100 million is deposited in the Broadband Infrastructure Grant Account, $10 million to the Rural and Urban Regional Broadband Consortia Grant Account, and $15 million into the Broadband Infrastructure Revolving Loan Account. CASF funding is available only to a "telephone corporation" regulated by the CPUC. AB 1299 (Bradford) Page 1 Proposed Law: This bill would create a new account in the CASF, the Broadband Public Housing Account (account), that would be available to the CPUC to award up to $20 million in grants and loans to a public housing agency or certain nonprofits to connect broadband networks to publically supported housing communities and $5 million in grants and loans for broadband adoption programs for residents of publically supported housing communities. To fund this program, the CPUC would be required to transfer $20 million from the Broadband Infrastructure Grant Account and $5 million from the Broadband Revolving Loan Account. This transfer would only occur if the CPUC is authorized to collect additional funding for the CASF. Any funds that have not been awarded by December 31, 2016 in the account would revert to the original accounts. Related Legislation: SB 740 (Padilla) would allow Wireless Internet Service Providers to be eligible for funding from the CASF and would authorize the collection of additional surcharges to further fund the CASF. AB 1555 (Perez) Chapter 24/2009 expanded CASF eligibility to other entities only for the purpose of providing matching funds made available through the American Reinvestment and Recovery Act of 2009. SB 1040 (Padilla) Chapter 317/2010 authorized collection of an additional $125 million through 2015 (for a total of $225 million). Staff Comments: This bill would create a new grant and loan program, which would result in new administrative costs to the CPUC to develop and implement the program. Administrative costs for this program would be influenced by both the level of potential participation in the program and the fact that the eligible entities may need additional technical assistance for their participation as they are likely to have limited experience with the CPU. Given that that there are approximately 113 public housing agencies in the state with approximately 3,300 active housing projects, the CPUC anticipates having to potentially administer hundreds of grants and loans. Therefore, the CPUC estimates that one Public Utility Regulatory Analyst II would be needed and half a Public Utilities Counsel I would be AB 1299 (Bradford) Page 2 necessary for a total on-going cost of approximately $150,000 per year. Staff notes that the CPUC is currently reviewing the estimated costs of reaching the state broadband goals, and therefore the future needs of the CASF. Although this process has not been completed, it is likely that the CASF will need additional funding. Staff notes that the CPUC received $240.6 million in applications for CASF funding in February for the latest round of available funding. This bill would only divert $25 million from the CASF if additional funding is authorized by the Legislature. Staff notes that SB 740 proposes an additional $90 million through 2020 (with no more than $25 million per year) while also expanding eligibility for CASF funding. Staff notes that if and when the CASF receives additional funding, it will not necessarily include $25 million for the new grant program under this bill.