BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 720
                                                                  Page  1

          Date of Hearing:   August 20, 2003

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                              Darrell Steinberg, Chair

                    SB 720 (Bowen) - As Amended:  August 18, 2003 

          Policy Committee:                               
          UtilitiesVote:11-2

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:               

           SUMMARY  

          This bill authorizes the Public Utilities Commission-using any  
          unencumbered California Teleconnect Funds (CTF) from the 2003-04  
          and 2004-05 Budget Act appropriations-to make one-time  
          expenditures of up to $3 million to cover up to an additional 40  
          percent of the installation costs of advanced telecommunications  
          service (such as DSL) for schools, libraries, or non-profit  
          community technology programs without access to such service.

           FISCAL EFFECT  

          Potential one-time special fund cost of up to $3 million over  
          two years for increased subsidies for installation of advanced  
          telecommunications.

           COMMENTS  

           Background and Purpose  .  The CTF, which derives revenues from a  
          0.31 percent surcharge on telephone bills, provides a discount  
          on telephone service to schools, libraries, community-based  
          organizations, and hospitals, including a 50 percent discount  
          for installation costs.  SB 1863 (Bowen)-Chapter 308/Statutes of  
          2002 codified the language upon which the CTF is based. There is  
          a currently a balance in the CTF exceeding $200 million. The  
          2003-04 budget appropriates $40 million from the CTF and  
          transfers $150 million from the fund into to the General Fund as  
          a loan.  

          The author indicates that 16 percent of schools and 21 percent  
          of school district offices do not have high speed access to the  
          internet, and that a primary reason for this is the installation  








                                                                  SB 720
                                                                  Page  2

          cost.  The author argues that, while the CTF provides a 50  
          discount for installation costs, this is insufficient for some  
          less well-to-do schools.  The author believes that authorizing  
          the PUC to provide an additional, incremental discount of up to  
          40 percent of installation costs (up to a 90 percent total  
          discount), using up to $3 million of unencumbered CTF funds over  
          the next two years, will make a difference for such  
          institutions.

           Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081