BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
SB 129 (Wright) - Deaf and disabled telecommunications program.
Amended: April 30, 2013 Policy Vote: EU&C 11-0
Urgency: Yes Mandate: Yes
Hearing Date: April 29, 2013 Consultant:
Marie Liu
This bill does not meet the criteria for referral to the
Suspense File.
Bill Summary: SB 129 would extend the sunset on the California
Public Utilities Commission's (CPUC) authority to collect a
surcharge on intrastate telephone service to fund the Deaf and
Disabled Telecommunications Program (DDTP) until January 1,
2020.
Fiscal Impact: Annual revenues of $35 million to $55 million to
the DDTP Administrative Committee Fund (special fund) from rate
surcharges.
Background: Existing law requires the CPUC to design and
implement a universal service program to provide a
telecommunications device, dual-party relay system, and
specialized equipment to enable persons who are deaf, hearing
impaired or disabled, to use the telecommunications network at
no charge. The CPUC is required to establish a surcharge on
intrastate telephone service until January 1, 2014, not to
exceed 0.5%, to pay for the program. The surcharge is currently
at 0.2%.
The CPUC is also required to annually report to the Legislature
on December 31 on the fiscal status of the programs. The
reporting requirement also sunsets on January 1, 2014.
Proposed Law: This bill would extend the sunset date on the
CPUC's authority to collect a surcharge to fund the DDTP and the
associated required report to the Legislature to January 1,
2020. This bill would also make the report due on March 1 of
each year instead of December 31. This bill also makes several
technical clean-up amendments.
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Staff Comments: Staff notes that the sunset only applies to the
CPUC's authority to charge a surcharge to pay for the DDPT and
annual reporting for the program, but not the actual
requirements to design and implement the services. These
services would need to be provided regardless of the
availability of surcharge revenues and will likely required
General Fund support if CPUC's authority to collect a surcharge
is not extended.
On January 10, 2013, the Department of Finance Office of State
Audits and Evaluations released a performance audit of the CPUC
that identified significant weaknesses with the CPUC's budget
operation which negatively affect the CPUC's ability to prepare
and present reliable and accurate budget information. The DDTP
Administrative Fund was one of the funds highlighted by the
audit and its budget numbers continue to be reviewed and
adjusted.
Staff notes that expenditures for the DDTP are currently
exceeding revenues. Based on numbers in the FY 2011-12 report
(which have not been adjusted in reaction to the DOF audit),
expenditures have varied between $60 and 70 million between FY
08-09 and FY 11-12 and revenues have varied between $30 and $50
million. Despite this imbalance, an increase in the surcharge
rate has not been necessary because there is a substantial
reserve. However, the CPUC has indicated that once all the
budget information has been reconciled in response to the audit,
a rate increase is possible.
Understanding that past budget data may not be accurate, the
individual components of expenditures such as equipment program,
relay program, program contracts, and administrative fees,
according to a CPUC annual report seem to have some natural, but
mostly reasonable fluctuations that could reasonably assumed to
be reflective of varying demand, with the exception of
administrative fees. The CPUC's administrative fees for this
program increased dramatically from approximately $230,000 in FY
08-09 to over $1.1 million in FY 11-12. The CPUC reports that
this increase was due to historic accounting errors as staff was
not correctly billing their time to the program. However, as the
number of staff working on the program remained constant, the
CPUC does not expect significant changes to the CPUC
administrative charge going forward. Staff notes that the CPUC
contracts out the administration of the DDTP, so it is unclear
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what services beyond contract oversight is being provided with
the CPUC's administrative fee.