BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Kevin de León, Chair SB 1211 (Padilla) - Emergency services: Next Generation 911. Amended: April 29, 2014 Policy Vote: EU&C 9-0, G&F 6-0 Urgency: No Mandate: No Hearing Date: May 23, 2014 Consultant: Marie Liu SUSPENSE FILE. AS AMENDED. Bill Summary: SB 1211 would require the Office of Emergency Services (OES) to develop a plan, including a timeline of target dates, for the development of a Next Generation 911(Next Gen 911) emergency communication system. This bill would also establish requirements for OES in determining the 911 surcharge rate. Fiscal Impact (as approved on May 23, 2014): One-time costs of approximately $250,000 from the State Emergency Telephone Number Account (special)/General Fund for two years to develop a plan and timeline for the deployment of a Next Gen 911 system. Background: Warren-911-Emergency Assistance Act (GC §53100 et seq.) requires OES to administer the state's 911 emergency telephone system, including local dispatch centers known as Public Safety Answering Points (PSAPs). The state's 911 program costs are paid from the State Emergency Telephone Number Account (SETNA), which is funded by a customer surcharge on intrastate communication service, including landline, wireless, and Voice over Internet Protocol services (Rev and Tax Code §41030). The surcharge is determined annually, on or before October 1, by OES in order to fund the subsequent year's costs of the state 911 system. The surcharge is required to be between half and three-quarters of one percent. Next Gen 911 is an Internet Protocol (IP) based two-way communication system that will enable real time transmission of voice, text, data, photos, and videos. Specifically, Next Gen 911 will enable a person to text 911. Next Gen 911 will build upon, and eventually replace, the existing 911 voice system that operates on the legacy switched telephone network. SB 1211 (Padilla) Page 1 Proposed Law: This bill would require OES to develop a plan to transition to a Next Gen 911 system throughout California. The plan would be required to include target dates for the testing, implementation, and operation of the system. This bill would require the Next Gen 911 system to incorporate shared infrastructures and other elements of other public safety and emergency communication networks to the extent feasible. This bill would also require OES, when determining the necessary 911 surcharge rate, to include costs to implement the Next Gen 911 system according to the transition plan. The calculation to determine the surcharge rate would be required to be reported on the OES website, to the Legislature, and to the 911 Advisory Board at least 30 days before finalizing the surcharge rate. Staff Comments: In December 2010, the California Technology Agency (predecessor to OES), published the "Proposed NG 9-1-1 Roadmap." The roadmap broadly laid out activities that need to occur through 2015 to deploy Next Gen 911. OES has undertaken a number of actions listed in the roadmap, including conducting pilot projects, assessing the condition of the SETNA fund, and assessing available technology. Before the end of the year, OES intends to release and award a request for proposal (RFP) for system needs and for the development of a transition plan. The transition plan will provide a more detailed list of requirements and timelines necessary to establish the Next Gen 911 system. The contract will also likely require an update of the roadmap. The roadmap and the transition plan should satisfy the requirements of this bill. Staff estimates that this RFP, and thus the cost of this bill, is likely to be approximately $250,000 annually for two years. Staff notes that these activities are occurring absent any statutory obligations. However, passage of this bill would make these activities mandatory. This bill does not require the implementation of the Next Gen 911 system per se, but actions taken pursuant to this bill will increase the likelihood that Next Gen 911 will be implemented, thus increasing the likelihood that the state will incur implementation costs, which are anticipated to be substantial. When Next Gen 911 starts to be deployed, OES will need to maintain and operate both the existing system and the Next Gen 911 system until the Next Gen 911 system is complete in order to avoid any gaps in coverage. During these transition years, which SB 1211 (Padilla) Page 2 may last five years, OES will have an additional $375 million in costs in addition to the $510 million needed to operate the current system. Additionally, operating costs for Next Gen 911 are anticipated to be higher than the current system because of its increased complexity. These cost figures are early estimates from OES that have a 50% margin of error. Current pilot projects will help inform a refined cost estimate, which is anticipated in mid-2015. Staff notes that the Federal Communication Commission (FCC) may ultimately require Next Gen 911 systems. The FCC will be requiring large wireless service providers, beginning May 15, 2014, to enable customers to text 911 to any PSAP that is "technically ready" and requires carriers to send a bounce-back message if the PSAP is not ready to receive tests. Federal law designates up to $7 billion from FCC spectrum auctions to fund a first responder network, known as FirstNet, which must be integrated with 911 PSAPs. This integration requires infrastructure that could also be used by Next Gen 911. In 2013, OES received a $5.6 million planning grant from FirstNet for governance planning, education and outreach, and data collection on infrastructure and equipment that can be used by FirstNet. To the extent that FirstNet and Next Gen 911 are coordinated by using shared infrastructure, federal FirstNet funds could help reduce the state's cost for Next Gen 911 implementation. This bill requires Next Gen 911 to share infrastructure and elements of other emergency communication networks where feasible. This bill would explicitly allow OES to use SETNA for the costs associated with the Next Gen 911 system (including the planning required in this bill). However, SETNA revenues have been on a steep decline for the last eight years because texting and other communication technologies have been replacing intrastate voice service, whether that service is landline, wireless, or VoIP. This revenue decline is continuing despite OES raising the surcharge to the statutory cap of 0.75 percent this fall. Program costs have exceed revenues for years, relying on a reserve and a General Fund loan repayment to keep the account whole. OES anticipates the reserve to be depleted in FY 2017-18. The cost of developing a plan under this bill, and ultimate deployment of Next Gen 911, will put severe additional pressures on the SETNA. If the SETNA account has insufficient funds, General Fund monies may be needed to cover the costs of the 911 system. For this reason, this bill creates a cost pressure on SB 1211 (Padilla) Page 3 the General Fund. To prevent impacts to the General Fund or impacts to the 911 system, the structural imbalance of the SETNA will need to be addressed in the near future. Simply raising the maximum surcharge amount is unlikely to provide a long-term solution because of the on-going decline in use of intrastate phone calls. Staff notes that while this bill puts new pressures on the SETNA, addressing the larger structural deficit issues with SETNA is outside the existing scope of this bill. Staff notes that there are also many outdated references in the Warren-911-Emergency Assistance Act, one of which is contained in this bill. The existing authority for OES to establish the surcharge rate is in RTC§41030 and is based on the costs of "911 plans approved pursuant to §53115 of the Government Code?" However, Section 53113 does not explicitly deal with plans, but rather monitoring of 911 systems. Given this seemingly incorrect reference, it is unclear whether OES can properly recover all 911 costs, especially in respect to Next Gen 911 costs. While this bill would amend RTC§41030 to explicitly include Next Gen 911 costs when calculating the surcharge rate, staff recommends that this section be further updated to ensure OES is able to recover all appropriate costs associated with operating the state's 911 system. Author Amendments: Clarify that OES is able to set the surcharge rate at a level that is sufficient to cover all activities under the Warren-911-Emergency Assistance Act.