BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1503


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          Date of Hearing:  April 27, 2015


                    ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE


                                Anthony Rendon, Chair


          AB 1503  
          (Perea) - As Introduced February 27, 2015


          SUBJECT:  Telecommunications universal service programs:   
          teleconnect fund


          SUMMARY:  This bill would include auxiliary organizations of the  
          California State University (CSU) in the program funded by the  
          California Teleconnect Fund (CTF) Administrative Committee Fund.  
           Specifically, this bill:  


          a)Requires the California Public Utilities Commission (CPUC) to  
            include auxiliary organizations of the CSU in the program  
            funded by the California Teleconnect Fund Administrative  
            Committee Fund.


          EXISTING LAW:  


          1)Establishes the CTF under the CPUC to advance universal  
            service by providing discounted rates to qualifying schools  
            maintaining kindergarten or any grades 1 to 12, inclusive,  
            community colleges, libraries, hospitals, health clinics, and  
            community organizations.   (Public Utilities Code Section 280)

          2)Establishes the CTF Administrative Committee, to advise the  








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            CPUC regarding the development, implementation, and admiration  
            of the program to advance universal service to qualifying  
            entities.  (Public Utilities Code Section 280)

          FISCAL EFFECT:  Unknown.


          COMMENTS:  


           1)Author's Statement:   "Ensuring auxiliary organizations that  
            serve our CSU system have access to affordable and reliable  
            communication services care are critically important.  Their  
            success ensures students receive the services and experiences  
            they deserve in their college careers.  My Alma Matter's  
            auxiliary association, CSU Fresno Association, Inc., applied  
            for a CA Teleconnect Fund program discount last year as a  
            non-profit community organization.   They provide services  
            essential to the college experience such as operating the  
            college bookstore, campus housing and the athletic facility.   
            Unfortunately, they were deemed ineligible and will have to  
            pay an additional $217,000 for communications services.  When  
            these small non-profit auxiliaries need to spend more  
            financial resources on these services, they have fewer  
            financial resources available to give back to other student  
            programs or they cannot offer communications services at the  
            same or sufficient level."  
           2)Background:   The CTF was created by the CPUC in 1996, under  
            Decision 96-10-066, to foster the development of a  
            telecommunications infrastructure for California and reduce  
            the digital divide.  The program provides a 50% discount on  
            select telecommunications and Internet access services to  
            qualifying entities.  Qualifying entities include K-12  
            schools, libraries, municipal, county government,  
            district-owned and operated hospitals and health clinics, and  
            non-profit community based organizations.  The program is  
            funded by a surcharge on all end users of intrastate  
            telecommunications services.  Communication services eligible  
            for the 50% discount include T1 and T3 lines, cable internet,  








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            digital subscriber lines (DSL), wireless internet, and  
            dial-up.

            In 2006, the CPUC issued Decision 08-06-020, which further  
            expanded the CTF to include, among other things, the  
            California community colleges and California Telehealth  
            Network as qualifying entities that may apply for the  
            discount.  The CPUC believed that extending the CTF to  
            community colleges meets the statutory goals of CTF as  
            increasing access to advanced telecommunications technology  
            will help community colleges to better train and service their  
            students and bridge the digital divide in communities' service  
            by such community colleges, especially for low income  
            students.  In January 2013, the CPUC issued a Rulemaking  
            (13-01-010) to determine whether the CTF is meeting its  
            statutory goals, and whether the CTF's current structure and  
            administrative processes are adequate to further the program's  
            goals.  Among other things, the rulemaking seeks to regularly  
            review the CTF to ensure that the programs subsidies flow to  
            its intended recipients.  

           3)CSU Auxiliary Organizations:   CSU auxiliary organizations are  
            non-profit organizations that operate pursuant to written  
            agreements with the CSU Board of Trustees.  They have separate  
            governing boards with close campus linkages and follow all  
            legal and policy rules established by the CSU system and  
            campus administration.  Auxiliary organizations perform  
            essential functions associated with the institution that  
            complement the core academic programs at each campus.  CSU  
            auxiliary organizations are generally classified into one or  
            more of the following functions, student self-governance,  
            student body center/union/recreation center,  
            externally-supported research and sponsored programs,  
            including workshops, institutes or conferences, commercial  
            services, such as book stores or food service, or  
            Philanthropic activities, including acceptance of donor gifts.  
             This bill would include CSU auxiliary organizations as  
            qualifying entities that may apply for the discount under the  
            CTF. 








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             The author may wish to consider an amendment to limit the  
            types of facilities to ensure that eligible organizations are  
            limited to those which provide on-campus, student related  
            services.

              4)   Suggested Amendments:  
           

            280. (a) For purposes of this section,  "auxiliary  
            organization" means non-profit organizations, physically  
            located on a California State University campus, that  
            administers bookstores, housing or dining.   

             (b)   The commission shall develop, implement, and administer a  
            program to advance universal service by providing discounted  
            rates to qualifying schools maintaining kindergarten or any of  
            grades 1 to 12, inclusive, community colleges, libraries,  
            hospitals, health clinics, community organizations, and  
            auxiliary organizations of the California State University,   
            consistent with Chapter 278 of the Statutes of 1994.
             (b  )   (c)  There is hereby created the California Teleconnect  
            Fund Administrative Committee, which is an advisory board to  
            advise the commission regarding the development,  
            implementation, and administration of a program to advance  
            universal service by providing discounted rates to qualifying  
            schools maintaining kindergarten or any of grades 1 to 12,  
            inclusive, community colleges, libraries, hospitals, health  
            clinics, community organizations, and auxiliary organizations  
            of the California State University,  consistent with Chapter  
            278 of the Statutes of 1994, and to carry out the program  
            pursuant to the commission's direction, control, and approval.
             (c)   (d) All revenues collected by telephone corporations in  
            rates authorized by the commission to fund the program  
            specified in subdivision (a) shall be submitted to the  
            commission pursuant to a schedule established by the  
            commission. The commission shall transfer the moneys received  
            to the Controller for deposit in the California Teleconnect  
            Fund Administrative Committee Fund. All interest earned by  








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            moneys in the fund shall be deposited in the fund.
             (d)   (e)  Moneys appropriated from the California Teleconnect  
            Fund Administrative Committee Fund to the commission shall be  
            utilized exclusively by the commission for the program  
            specified in subdivision (a), including all costs of the board  
            and the commission associated with the administration and  
            oversight of the program and the fund.
             (e)   (f)  Moneys loaned from the California Teleconnect Fund  
            Administrative Committee Fund in the Budget Act of 2003 are  
            subject to Section 16320 of the Government Code. If the  
            commission determines a need for moneys in the California  
            Teleconnect Fund Administrative Committee Fund, the commission  
            shall notify the Director of Finance of the need, as specified  
            in Section 16320 of the Government Code. The commission shall   
            not increase the rates authorized by the commission to fund  
            the program specified in subdivision (b) while moneys loaned  
            from the California Teleconnect Fund Administrative Committee  
            Fund in the Budget Act of 2003 are outstanding unless both of  
            the following conditions are satisfied:
            (1) The Director of Finance, after making a determination  
            pursuant to subdivision (b) of Section 16320 of the Government  
            Code, does not order repayment of all or a portion of any loan  
            from the California Teleconnect Fund Administrative Committee  
            Fund within 30 days of notification by the commission of the  
            need for the moneys.
            (2) The commission notifies the Director of Finance and the  
            Chairperson of the Joint Legislative Budget Committee in  
            writing that it intends to increase the rates authorized by  
            the commission to fund the program specified in subdivision  
            (a). The notification required pursuant to this paragraph  
            shall be made 30 days in advance of the intended rate  
            increase.
            (f) Subdivision (e) shall become inoperative upon full  
            repayment or discharge of all moneys loaned from the  
            California Teleconnect Fund Administrative Committee Fund in  
            the Budget Act of 2003.

           5)Arguments in Opposition:   According to The Utility and Reform  
            Network (TURN), "TURN is [?] concerned that expanding CTF to  








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            include all CSU campuses will necessitate an increase on the  
            surcharge for ratepayers.  The CTF budget grew from $60  
            million in FY 2009-10 to approximately $108 million in FY  
            2014-15 and the FY 2015-16 budget increased to $148 million,  
            37% above the previous year.  The CTF program has been an  
            important tool for helping bridge the digital divide.  Given  
            that the funding for CTF is from ratepayers, it is imperative  
            that the Commission and legislature takes steps to ensure  
            these funds are well-managed, well spent and achieve the goals  
            for which they were intended."

          REGISTERED SUPPORT / OPPOSITION:




          Support


          None on file.




          









          Opposition


          The Utility Reform Network (TURN)









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          Analysis Prepared by:Edmond Cheung / U. & C. / (916) 319-2083