BILL ANALYSIS Ó
AB 1503
Page 1
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
AB 1503
Page 2
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,
AB 1503
Page 3
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.
AB 1503
Page 4
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
AB 1503
Page 5
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
AB 1503
Page 6
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)
AB 1503
Page 7
Analysis Prepared by:Edmond Cheung / U. & C. / (916) 319-2083