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.









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          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  








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          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  








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          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.