 So, I'm Tim Berglund, the chair of the committee, and if you all want to introduce yourselves for the record, we record each of our hearings, and we've got about a half an hour with you folks. Thank you. And you provided the testimony, which I've seen previously, and we've had this conversation before, but I'm glad that we are able to schedule you all to come in this morning. So welcome, and if you could introduce yourselves for the record. Thank you. Well, we appreciate it because we know it's a busy day, and we appreciate the opportunity. I'm Lauren Glendavidian. I'm the executive director of CCTV Center for Media and Democracy and a member of the Vermont Access Network. I'm Mike Wassonar. I'm the president and CEO of the Alliance for Community Media. Based in Washington, D.C., I work with access organizations around the country, and we have about 13 members of our organization that are here in Vermont. I'm Kevin Christopher. I am the director of Lake Champlain Access TV in Colchester, and also the president of the Vermont Access Network. Great. And just before we get started, just for my clarification, because I'm somewhat new to this issue, I live in the upper valley, and we have a community access station in White River Junction. Are all of you affiliated, kind of, as an industry association, and I just, yeah, okay, it wasn't clear how everybody was connected. So we have about 400 member organizations, we're a 501C3, with basically representation across the country, and each state operates differently, and then, for example, the White River Junction facility, I think, is one of our members as well. Yeah. And Kevin can speak. Yeah. And within Vermont, the Vermont Access Network is the membership organization for our 25 centers around the state, including CATV and White River Junction. So we represent all of the Peg Access centers in Vermont. And we started this statewide association in the mid-80s, when there were seven access centers in the state. So over that time, and we're going to speak to it, the state's regulatory authority to require public educational government that access has enabled us to grow this media ecosystem across the state. Yeah. Great. Thank you. I'm just going to start with an introduction on that. Yeah. Just if you don't know what we do, and what that gentleman in the corner there is doing, we exist to, we are Peg centers, public educational and government access television centers. We exist to not only give the public the means in the form of equipment and training to produce their own content, but also to go out and cover those select board meetings of city council meetings, of school board meetings, creating a link between residents and their local governments, promoting government transparency. We also do a lot of work with our schools, our libraries, our parks department. We provide video classes, training workshops, library partnerships that provide training to youth and adults. As I mentioned, 25 of us across the state, which is a pretty robust ecosystem in terms of the national picture, and we exist just very briefly thanks to the Cable Act of 1984, but the broad stroke is that our cable operators use our public rights of way to run their lines to do their business, and in exchange for that, there are certain public benefits that they have to provide to communities across Vermont and across the nation. And we are one of those public benefits, and I think we believe probably the most vital of those public benefits in a lot of neighborhoods. And Lauren Glenn is going to talk a little bit about some challenges and some threats that we're now facing that not only could affect the future of access to television in Vermont and across the country, but also really our threats to municipalities and states' abilities to control those public rights of way. And some deregulation that we find is pretty alarming across the country, and especially in Vermont, where we value localism so much. Thank you. Thank you. So once again, for those who've just joined us, I'm Lauren Glenn-Dividean, the Executive Director of the Center for Media and Democracy in the Brompton, and the founder of Public Access in Vermont. So as Kevin said, the 25 community media centers that operate 80-plus channels in the state of Vermont are creasing the wheels of democracy, so you're seeing your select boards on those meetings, on those channels. You are appearing in election forums, I'm not sure, I know some of you have been on election forums. We also supplement public education through our educational access channels, so we provide educational resources that public schools can't or are not able to for one reason or another, and we provide a free speech forum, which is, you know, we hold that truth to be self-evident, especially in Vermont, but more diverse ideas make for a more robust community. So we really are an important part of the fabric of the state. And the state of Vermont recognized this in, even before the federal government recognized this in 1984, when it required Ben Cox Cable to provide public access channels. It wasn't until later in 1984 that the federal government wrote the Cable Communications Act of 1984. So Vermont has always thought that this was an important public good, that in exchange, as Kevin said, through the use of the public rights away, that channels and funds should be set aside for this public purpose. And the way that the state has achieved this public benefit for the past 35 years is through the Public Utility Commission, formerly known as the Public Service Board. And the Public Service Board has, in decision after decision, required the Cable Operators in the state. In the 1980s, there were 50 of them, if you can believe it, and now there are six, I think. But that, as a condition of them doing business in Vermont, to provide these channels and to set aside revenue, which, of course, is passed on to Cable subscribers. So the Cable companies aren't actually paying anything. They are passing this on to Cable subscribers. For various reasons over time, the cable industry has said that they feel that peg access, that's the short term that we use, is an important offering for their subscribers. But in reality, the dominant provider in Vermont, which at one time was Cox, and then it was Green Mountain Cable, and then it was Adelphia Cable, and now it's Comcast Cable, have more so than the smaller systems, have actively tried to make it as difficult as possible for the access centers to be part of the mainstream of the cable offering. So there are four or five issues that we wanted you to be aware of, because the state's ability to require peg access and to move this public benefit forward into the future is being compromised by these threats. And so the question that we want you to be aware of and thinking about is how, is A, does the state still believe this is an important public benefit? And if so, if our regulatory authority is being eroded in the ways I will describe, are there other ways that we can advance this? So that's really the question that we find to be pressing. There are four or five things for you to be aware of. The first is that there is just a general erosion of cable viewership, and that because people are cutting the cord, right? And it is more cost effective for them to choose the kinds of programming that they want, the a la carte option, by going to the internet, which of course the cable operators are using the same public rights of way without any public conditions, public good conditions, to provide internet service to their customers. So that's just an industry erosion of revenue, and we're aware of that. And that we have known this was going to happen since 1990. So this is just a slow decline in cable revenue. But that's not actually what we're talking about. That's not what's really threatening the state's regulatory authority. Comcast sought a renewal of their 11 year contract. And two years ago, actually January 2017, the Public Utility Commission said you can continue doing business in Vermont, but there are a few things that you're going to have to do. And that included making sure the public access channels could be found on the electronic program guide. Now this seems like kind of a funny arcane small thing, but actually public access channels are not listed on the program guides because of the lack of upgrades that the cable industry has made in their plant. And they estimated that it would cost $3 million in order to upgrade these interactive program guides, which is really the heart and soul of the cable system. And the public service board at that time, the PUC, now said you have to spend this money and you need to move these access centers channels into the mainstream of where people who watch cable find their content. Comcast felt so strongly that they didn't want to do this and they took this state to federal court. And for the past two years, this and four other issues have been an issue in a federal court proceeding in front of Judge Crawford in Maryland. I just want to say parenthetically that the cost for the access community to be involved in even the public service board docket at that time was $150,000. And the cost for us to be part of this federal case is estimated to be $150,000. So collectively, these are cable subscriber dollars. They're not being used to provide service. They're being used to litigate with the cable, the Dominic cable operator. That's just a PS. So the federal court is one area. Michael is going to talk a little bit more about the FCC, but essentially the FCC, which is the FCC right now could be considered a deregulatory FCC. And they essentially have proposed a rule that could go into effect this year, which would allow cable operators to subtract the cost of channels and other services from the dollars that are allocated for public access, programming and content and operations. So this franchise fee that's collected on everybody's bill is one public benefit, and then there are these other public benefits like channels or additional franchise fees that other municipalities may collect, or even the cost of an HD channel. These are things that the FCC is inclined to have the cable operator subtract from the operating access. That could devastate White River Junction if that was the case. We don't know what value Comcast will put on those channels, but they've already indicated that if the FCC lets them do it, they will do that. So that's another threat. And then the final threat I just want you to be aware of is that on the Supreme Court, is a Supreme Court level threat, and that has to do with currently there's a case before the Supreme Court between two entities in New York State, and the National Cable TV Association has weighed in on that case. And basically tipped their hand and said, we don't want the Supreme Court in this case to say that public access is unconstitutional, but the indication is that they will pursue that argument in subsequent cases. So there is the Supreme Court threat, there's the FCC threat, there's the federal court case here in Vermont, and then there is the general erosion of Peg Access. All of those things have our knickers in its west. We are very concerned about those questions because we think that they will affect the long-term viability of this very important service that Vermont holds, kind of takes for granted because it's been there for 35 years. Just a quick question, Lauren Ellenette, and we don't have to go deep into it because it's probably more of a federal issue. I didn't even understand the thumbnail sketch of what the Supreme Court case was about. So this, well, Michael's going to talk a little bit about it. Okay, I can speak to that. Yeah, I just get up very quick, drive by. If I may, sir. Basically it was a dispute between a public access provider and the private operator of a channel in Manhattan, and the question became whether or not the First Amendment rights of that producer were being violated by having them censured and taken off the channel for a period of time. The case went to federal court and was adjudicated both in the district court and then in an appeals court. The appeals court found that the private operator of that channel was a state actor for the purposes of First Amendment jurisprudence. And that non-profit operator, similar to what happens here in Vermont, where the access management organizations are 501C3s, typically I think, disputed the idea that they were a state body, that they were a state actor for the purposes of First Amendment adjudication. The Supreme Court took the appeal. And I think with the current status of the court, the majority of the court, is very concerned about speech rights, public speech rights on private property. There have actually been a series of cases in terms of public forad doctrine that have been popping up at both federal courts as well as this current Supreme Court are concerned about. So the question at hand that NCTA brings up is that the Supreme Court never said that the 1984 act of cable act was constitutional, that the channels themselves are the cable company's property. They're a publisher like a newspaper. And there's a taking going on in that the state of Vermont or any other state of the union that requires a public set aside of channels for the governmental purpose or educational purpose or non-profit purposes we're talking about. These civic purposes that we value is a taking rather than an exchange that's codified within the cable act. And I think our organization just filed an amicus brief in this case. We dispute the claim because there's an exchange of both money as well as capacity codified within the cable act. So it's not a taking that the ability of a company to be able to use public property and public rights of way happens in an exchange. And the contract is formed between the state of Vermont, between the state and the company rather than an exaction that's been taken from the company at gunpoint. I would, I think most people would say that that's not what happens when there's a negotiation that occurs between a public entity and a private company. So now that I've opened this box, I want to make sure that we spend the majority of our last 12 minutes on kind of what's going on here and what we can affect as opposed to at the federal level, as interested as I am in that. But so go ahead, Ron. No, I was going to go down that route. Okay, well, I want you to because I'm interested in it. The only reason we bring this up is that there may be an undue, there may be an undue circumstance that affects all the communities in Vermont that benefit from these channels. So then the question at hand for the communities across Vermont will be how do you ensure that there's local information, local government information, local civic information that's available, that these information goods are available for the citizens of Vermont in what could be a very different world? So I think that was Lauren Glenn's intention for bringing that case up. And I think that once that Supreme Court case is over, there's an indication that the Campbell industry will bring up this question again. I'm just wondering if we have any, do you have any data about viewership, about how many people take advantage of the programming that's available on public access channels? We don't have ready access to channel data. We all run our websites and we get our analytics there. We haven't yet done a good compilation of what those analytics look like over a year's time, but that's on the to-do list. Well, and also could I just say we've never measured access by the typical Nielsen standard. We're not really seeking thousands of viewers for a program. What we find is that particular programs have uses for particular groups of people. So you'll find in the Essex Select Board, for example, on our YouTube numbers that on a regular basis maybe 85 people will watch a live Essex Select Board meeting, but when there's gun control being discussed, you will have 1,000 people watching. So that's what we really find is that it serves a purpose for particular constituencies as a way of, okay. Well, we've been keeping that kind of data. So, and for just a very brief nationwide context, the Campbell industry guards that data as industry secret. And they will not share it with local governments typically unless it's under seal. However, local governments as well as nonprofit organizations do contract with survey research firms to do scientific polling. And those cases, so there hasn't been a significant nationwide study. But depending upon the community and the uses of the channels, we find that an individual program won't get high individual ratings. It's not like America's got talent. But the broad cumulative use is high, 70 to 80% of cable subscribers in many communities actually use the channels or value them at some point. And then support the idea of investing those channels with the cable fee. And I'll just quickly, all of your programming is available to stream on my internet as well. It varies from access center to access center. Some of it's 24, 7 streams of the channel, some of it's on demand. Thank you. And a lot depends upon the technical capacity and the size of the organization that's operating those channels. So very, very small operations where you may only have like say one staff member serving a rural community, the technical limitations may pertain. Okay, thanks. So my understanding is that cable viewership overall is declining as landline use is declining and so I'm wondering if we need, is the system that we're operating in and trying to maintain archaic? And does this need to be totally be thought in terms of internet access rather than cable access? I think that's a key question that many states are grappling with and it's unfortunately a question that the federal government is not able to deal with. And no small part because of sort of the inability of Washington to do things. It's my editorial opinion there, but I think you could probably gauge that on a whole host of issues. Since a landmark decision that happened in 2005 regarding internet regulation called the Brand X decision, we've known this for 14 years. The same cable that goes into a household is not regulated in the same way if you're getting broadband on that cable. So the public property use is still the same. Some states do enable the ability to be able to capture revenue, to be able to invest in public goods. Other states ban that practice for broadband regulation. So it's really a case by case, state by state basis. And I'm not sure where Vermont is on this issue. When you say capture revenue, would that be through something like the universal service charge? Yes, or some type of equalized telecommunications tax. The thing that I think is useful to remember, while cable subscription is dwindling, broadband description on those same lines is rising. And video, yeah, and VoIP. And then that's going to be used as a base for Wi-Fi use as well. So you'll see wireless use running on top of that. So it's an ecosystem of communication that will happen in communities, particularly urban communities, less probably so in rural communities. Video use is what's driving the hunger that we have and for more broadband in America. So the irony is that while there's less cable subscription and the regulatory structure that you set up prior to 1984 still holds to invest in localism, all of the growth does not support localism. Right. And I think that's the policy challenge for a state like Vermont, where you value local information, local democracy, diversity of opinion. And to be really blunt, there is not another mechanism right now, at the federal level, to be able to provide you with those local goods. It just will not come. And so I think this ends up being a question that communities across the country are grappling with as they see the need to be able to understand local issues, but the federal apparatus is broken. So there are a couple of things we've recommended that I'm happy to defer. So the first is that- That's exactly my question. Yep, so we asked and we're very happy that the Department of Public Services put in a request to the PUC for a workshop on these issues with the cable companies. So that's number one, so I think that that is underway. The second is that we are floating a study committee proposal to take this up and be able to discuss it in more depth because there are examples from other states and there are models for us to look at to restructure how this public benefit is funded and supported. So those are the tubes who rose that we're currently going on. So do you have language? I do, yeah. I can send that to you. Yeah, just finished training yesterday. Yeah, okay, go ahead. Thank you. And then my other question, besides do you have any specific recommendations? Just we're taking testimony on our omnibus telecom bill. The cable companies will be testifying immediately after you. Do you have any thoughts on that? I don't because I haven't looked at it. So I realized today, actually yesterday, we needed to look at that, so we are. So on your last comment in terms of some of the asks that you have, if you will, can you give us a sneak preview, if you will, on how this issue has been addressed in other states, maybe successfully or maybe with less efficacy? So some states are looking at that, particularly enabling local communities to have what is essentially an equal fee on broadband to be able to support both content creation at the local level and digital literacy instruction. Because very often, one of the key questions that pops up is making sure that communities have the ability to be able to fully access the internet and take advantage of being a part of the internet economy, right? And you need to have educational resources to be able to do that. So typically that's been, I mean, the key example that I look at here is the state of Oregon, which has done that in a number of communities. That's actually something that the cable industry opposes, just to be clear. And can I just say the reason it's looked at in communities is because cable franchising is often municipal, not state level. Right. Vermont is an exception to the rural. In that instance, actually that's not fair. There are about 25 states that are state franchises, 25 states that are local franchises across the country. I think the thing that's an exception to the rural is you're similar in many respects to the state of Hawaii. And the fact that you're a smaller population state, we're probably rural that cares about local communities. So the state, it works in the interest of those communities in that cable franchising process. That's not the case in other states where state franchising reform happened something like 10 years ago. So that's the thing I think it's just to be noted. So you act like a local franchising state in terms of your interest in supporting local communities, but the state acts as in the interest of those communities in the state franchising. I think so. So that question of how video and broadband use supports localism and local education needs is a key question that many states are looking at. Some states actually don't ban those types of telecommunication taxes or because of recent state bills have exempted certain broadband providers so many states don't have the ability to do that capture. But there's nothing in Vermont I don't think that breaks that. I think a number of states are looking at making sure that those channels can be seen by viewers. So this entire question of HD use is popping up in a number of states. Actually, the state bill, I think it's coming up in, it's just come up and it asks that the channels themselves that local communities benefit from are in HD. And it's curious is that that camera is an HD camera. You can't buy an SD camera in America anymore. They haven't been manufactured probably since, I don't know, probably since 2000. Every TV that you buy in America is an HD TV. All TV use is HD use. And yet transmission by the companies is a standard definition. So it provides competitive disadvantage for local communities to have their programming seen. And it's quite clear that that's a need that communities to simply want to change. Massachusetts as well as local administration. Last question, in looking at the framework that you operate in for clarity. My understanding is that. Frequencies like television broadcast and telephone frequencies are considered to be public assets, which the federal government auctions off the use of. But you talk about cable access as a private property. Correct. So that's a fundamental difference in the way that cable and other telecommunications are. That's correct. And under federal law, they're regulated under different titles of the Cable Act. But that cable plant that goes to someone's home or business as a private property, that has to be allowed to almost have an easement to get on to someone else's property, right? Or to cross public rights in a way. So that's right. That's the fundamental difference. We often talk about public airwaves as a euphemism for me for media. But it's not the case in the cable realm. That's private property that's doing the transmission. Yeah, it's an interesting, I'll send you some information about that. They're different, as you said, different titles under the 1934 Communications Act and different silos. And all of these are treated different. They all have their public interest requirements, just like the phone, the broadcast, the cable, the satellite, and that makes this a little more difficult to navigate. But for us, it's the Cable Communications Act of 84 is the controlling legislation. So we really appreciate your time. Yeah, no, thank you for joining us. I really appreciate it. We'll follow up with some data for you and the December study committee and some background. Thank you very much. Great. Thank you, thank you. Thanks for finding us. It was tough. Yeah, no? We like our new digs. Maybe we can get comfortable. A little bit more spacious than you're in the room. So if you want to introduce yourself to the record and take it from there. Of course. For the record, Dylan's wiki with Lee and I'm public affairs. I'm here this morning on behalf of the New England Cable Telecommunications Association, or NECTA. NECTA is a five state regional trade association representing predominantly all private cable telecommunications companies in Vermont, Massachusetts, New Hampshire, Rhode Island, and Connecticut. So I'm here this morning to speak specifically on the language in H94 and H145. I understand those have been rolled into a larger on them, but I'll spill at this point. Those are the two best address the increase the universal service funds from two to two and a half percent and the collection of USF pre-paid telecom sales. I'll get H145 right out of the way. NECTA does not have any concerns with a collection of USF pre-paid retail locations. It's not our business, so we might have that position there. With respect to H94, we certainly appreciate that the legislature and the administration have both identified broadband deployment expansion as a top priority for this session. It's obviously not the first time that an increase to the universal service fund has been proposed since my time in the legislature. I think it's been on the table each session. So just as a point of reference, NECTA and its number of companies bring more than $50 million per year into the Vermont economy between network upgrades and expansion, salaries and training, taxes, and community investment. We firmly believe that the decision about whether or not to increase the USF from two to two and a half percent is a policy decision that should be made by the legislature. And so we are not going to make a recommendation for or against the proposal that's on the table. We do feel like it's worthwhile to point out that the USF is a consumer tax imposed on the consumers of communications service providers. This increase will have an impact on the cost of living and the cost of business for those in Vermont. The more voice lines family or business have, the greater that impact will be. And we do think that the committee should consider an increase or enhance transparency on how those USF funds are expanded. There's very little transparency at this point or accountability as to how the USF funds designated for high cost service actually go and where those funds are spent. If the state collects a fee on telecommunications service customers in Vermont, I feel like there's reasonable expectation that they have an understanding of how those funds are spent. And appreciate that the intent is to really demonstrate that broadband is a priority for policy priority for the state of Vermont. And so perhaps the committee could consider directing more of the USF dollars into the connectivity initiative so that those dollars are spent on increased broadband service. And then finally, we do feel like the USF funds should go to infrastructure rather than personnel costs guarantees that there's a clear return on investment for those funds. Great. I just want to be clear. You know, I think initially you referred to USF as a tax on consumers and later you referred to it as a fee. For what it's worth, I look at it as a fee. We're kind of hedging around. No, I'm glad you're here. Laura, do you have a question? Can you tell us how much USF, how your companies, their companies, their cable companies play on any of these assets? Well, so the cable companies play nothing because it's assessed on a customer, and I don't have that information. How much the customers pay? I don't have that number, but I can get that to you. Okay. And I'd be really interested in that as well, just, you know, where that stream is. The revenue going into that fund in recent years has been steadily declining, and there are various reasons for that. And if you can, I would particularly be interested in that. I know Representative Chestnut-Tangerman has been interested in, and I am also interested in understanding the possibility, I believe, in the USF being applied for internet, it seems like most telecom providers are paying into the USF, and only some are not paying into it. And we're kind of all moving into the same type of services here, accessing, so with different technologies and just kind of grappling with that whole question. So understanding what, if any, cable offerings, your company's offerings are going to assess the USF would be helpful. I'm presuming that would only be a void, I believe so. Although I might understand that that's also the void decision that Stavromance is currently being mitigated. Yes. So I'm not really clear on what the local access TV folks are talking about, as far as were they talking about another fee of some sort on cable providers to supplement that program? Was it am I correct in assuming that? Well, I can lay it out how I see it, but maybe Dylan's more of an expert than- Brad, I'd just like to ask what your thoughts are. I think my understanding is that their ask was for a study committee and then also, well, that was one of their ask, and we're getting off the top of my head with the other one, unless it's my notes. I think generally speaking that there's concern as to how the cable industry broadly is accounting for what they do and how it supports community access. I think historically that has been an accounting function that has led to literally money supporting, and now I think the cable industry is taking a position that some of the things that they do are in fact in-kind support for community access, generally speaking, and that that should be taken into consideration as they support community access. So it's no longer simply just a transfer of funds. We do these other things that support as well, and those should be taken into account. I think where the community access is concerned is suddenly their budgets, which are largely supported by cable folks, are shrinking because of, you know, so I think that's essentially the monetary issue. That's true. I believe that there's a fee assessed on cable TV to help fund that 5% of offices. It's roughly $8 million a year in the market. $8 million a year. That the cable companies provide to the community access channels in addition to the in-kind support. Is that the latest? I think that's within the last year or two. And historically, has it been clear? I could get you the numbers. I'm presuming it has just because of the trajectory of, you know, where some of those revenues are going. I'm sorry. Dylan, I don't know if you can answer this or not, but it's a question about the, not the high-cost fund, but the connectivity initiatives and prioritization of that money. And do your members have a position on whether that should be directed to unserved or underserved areas or upgrading, you know, or going from 10 to 25, you know, 10-1 to 25-3, or even wirelessly in fill in metropolitan areas such as they are in Vermont. But, you know, there are a lot of options on how to spend that money. And this, do your members have a priority on how that money should be spent? Sure. You know, our belief is that the USF dollars should be spent first and foremost on areas that are underserved currently. And then the next tier would be underserved. Certainly some of the stories that I've heard in this committee over the last several weeks really address those reminders that have no connectivity today. And so if there are additional investments that are being made in broadband expansion and connectivity, it should go to those individuals who need it and have nothing today. And then you can prioritize from there. I will say, without getting too much into some of the other proposals that are on the table, that are other than on the bus bill at this point, that has been the model in states like New Hampshire and Massachusetts that have, and actually here under Governor Shumlin's administration, that focus on the unserved areas in Massachusetts through the Mass Broadband Institute. They went from 44 communities that were totally unserved to 10 communities today in a relatively short period of time. And the New Hampshire model for municipal bonding that you're looking at a version of here did focus explicitly on unserved. But that is agnostic for the medium. I mean it can be, service can be copper, fiber, table. Service should provide at least the FCC definition of 25.5.3. You should not be investing in networks that are providing less than that. And kind of a follow-up on this, and I don't expect you to have this today, but I would love it if it's information you have. Considering the high-cost portion of the connectivity fund or the connectivity initiative, I'm certainly technology agnostic as to who uses those funds as long as they're used well. Are there cable companies that have availed themselves of those funds in Vermont, and to what extent? I don't believe that active member companies have, but I can't say for sure, so I can get you know. Whether it's high-cost or connectivity initiative. Okay. So I'd be interested in that. Okay. The question I've got is, you've mentioned not using the USF funds for personnel. What we're going to be talking there as far as administration personnel? That's correct. Yeah. Does that same priority, or use of funds on hardware, would that also preclude disability studies, engineering studies, things like that? We feel like the USF funds should be used for hardware infrastructure. Thank you. I certainly appreciate the committee discussion around any for feasibility studies. So the mass broadband initiative that's been out there that has been pretty successful. How many companies outside of the cable companies have participated in that, in solving that problem with the public dollars that were made available? Do you look for a specific number, or whether or not there are companies outside? I think both. So I mean, first, are there any other outside of the cable? And then I think a breakdown. I'll just be interested in understanding that. It seems to me, and correct me if I'm wrong, that that initiative has effectively served to use public dollars to offset the cost for private companies who are asking not to be regulated to build out their networks to the last mile. Do we think that that is an unfair or a fair characterization? So what I know about it is it's been predominantly, those funds have predominantly gone to cable companies to build out their networks to the last mile, places that were not profitable for them to build out to. So, and again, I'm technology agnostic too as to how we get to that last mile. But when we think about public funds, when we think about regulation, and the seeming incompatibility of those two things when it comes to private companies that they're, you know, we want our cake and eat it too. I'm just kind of interested in the breakdown. So if it's been, what what that breakdown has been in mass, so. So to answer the first part of your question, yes, there are other companies in addition to the original cable companies that have taken advantage of that program. It is a public private partnership that brings industry to the table so that those addresses that might not otherwise be served get that service. And I can hit you a number on that. I can work to get your number on those other companies that have engaged in that. And do you think that states have the right to regulate those dollars that are used by the private companies to get to the last mile? I think I'm waiting in a legal territory if I were to answer that question. All right. Thank you, Bill. Thank you. Thank you. So we are going to meet with the VEDA folks and ACCD at 10.15. For the record, Joe Bradley, CEO of VEDA. And I have with me, Cassie Palimas, who is going to be the new CEO of VEDA on April 1st. April 1st. Congratulations. Thank you. And thank you. So I think we've invited you here today to speak specifically to the, you know, for lack of a better term, we'll call it on the bus broadband bill, which is a combination of a number of different initiatives that we've pulled together. Very specifically, I think the committee is interested in hearing your feedback and thoughts on some of the funding mechanisms in here. We have a section that deals with VEDA funding for broadband initiatives. There's also some language in here that specifically relates to ACCD work in terms of a new funding program. And we're interested in all feedback on geo-bonding. I don't know if that's outside of your... But if you have opinions, we're interested in those on that as well. I certainly think that, as you know, Beth is definitely the best one. Yeah. And we spoke with the treasurer yesterday. Yes. I hope she's feeling better. My goodness. Yeah. She was definitely doing Yeoman's duty coming in, not 100%. So, but at any rate, welcome. Thank you for joining us and we welcome your thoughts. Actually, not any of us, but specifically, there are things here that relate to your day jobs. Okay. Then let's skip the about VEDA. The reason I did that was because I wasn't sure how many of you really knew really what we do, how we fund ourselves, that kind of thing. I want to welcome a couple minutes on that. This committee, you know, the nine of us, six of us, including myself, are new to this committee. And previously I'd served on health care, not economic development. And while I think I've got a general understanding of VEDA, I'd welcome, you know, your introductions to that. Well, knowing your background, welcoming it to the economic development. We were going to split this up. Cassie was going to do the general about VEDA. And then I will talk, and then maybe you should talk about the more, the general, what's in the bill other than broadband. And then I can go more specifically into the funding and what we're thinking of it. I have to say, I'm going to be very honest, not that I am not always honest, but I don't know that I've ever been this honest in a committee. I don't know what this broadband initiative is going to yield. I think it's a very important thing for us to do. I think we certainly have to try to do it. What we may all find out is that it's even too risky for us. I hope that's not the case, but if that is the case, I think what that does is give a perspective on how it really has to be. So just so you know, that's kind of where we're coming from. We're open to any suggestions too. I mean, VEDA is the most likely mechanism at this point. Absolutely. And we're certainly, we talked with Ted and we're very willing to do it. In fact, we think it's part of our economic development mission to absolutely see what we can do here. Just can't, I don't know enough about the industry and the playership. Do we do diligence? We'll look at each project and see what we can do. Well, okay, so on that note. I don't need to be a teller. We do want to keep VEDA going, and we do undertake, you know, public policy initiatives. We've been around for over 40 years, and we are one of the clauses. We're not an agency. So we are self-funded. We have a board of 15 members, five of them are ex-officials, and then the main 10 are appointed by the governor. Our, excuse me one second. I noticed you don't have anything. Would you like us to pass this out? Is it on your pads? You have it on your pads. We do. Sorry, sorry. The members may want a hard copy. I will just leave it here for anyone that wishes. Thank you. I'm sorry. Sorry. That's okay. Yeah. Our, we are a finance authority, so our business is making loans generally. We do, we do some bonds, but we're a conduit issue at Bonds. And we also run some programs on behalf of the state, such as the drinking water, now it's the drinking water and clean water program, the Brownfield Loan Program, the William County Economic Development Loan Program. These are funds that we do the underwriting and we collect a fee on behalf of the state, and we service those loans. But the bread and butter of what we do is direct loans for small business and agricultural lending. And our, so those are the two main sectors, commercial and agricultural lending. Our agricultural lending is a large portion of that is dairy. When we first got into agricultural lending, it was predominantly dairy. Over the course of time, that has been diversified a fair amount. And you can see on the first page of the About Leda, there's a pie chart that gives you the industry centers and the breakdowns. We are a small business lender. So even though we, we call, you know, we do bonds and we do agricultural lending and we do what we call our sub five lending. You know, in Vermont it's small business loans. Our average loan size is just under $250,000. We finance startups. We finance entrepreneurs. We finance in partnership with banks. So typically we are taking about 40% of a project. The bank is financing 50%. We'll finance 40% and the remaining 10% equity. So these are the projects that either the borrowers don't have enough equity to meet, say, typical financial institution equity requirements or they're in industries where financial institutions shy away from lending up to more than X% of the value of that collateral. And we come in to lend support or enhance that credit to make the deal happen. And that's sort of the economic development that we provide. I have a question. Definition of small business? Or have you used more than one or? Yeah, we don't have a definition as far as like maximum revenue size or number of employees. I'm using that term in the sense of small in that like our average loan size being less than $250,000. That's small relative to, say, what a typical commercial transaction and a bank would be that would fall into commercial and a lot of banks would have that in their branch system. So it really is the small business sector. That's not to say that we don't participate in some of the larger businesses out there. It could be that it's, for example, we have our sub-free loan program is for local and regional development corporations. We'll get involved in industrial park development. We'll get involved. And some of you may have heard of the Long Falls project that we recently did down in Brattleboro. We've been involved in some of many of the larger names in Vermont over the course of time where you know it may have been early on in the company's history. You know, actually what's really fun about Vita is that we've probably been involved in any most of the companies that you can think of like Ben and Jerry's, Oppenings and Mills. All these companies, Vita has at one point in time been involved in somehow financing or helping the company along the way. Dealer.com. There's just, I mean, the names go on and on. So there are large names out there, but our sort of bread and butter is the small business lightning. We do fund ourselves. As I say, we are not an agency. We sell commercial paper. And then we mark that up and reload that money. So from that mechanism, it's like a bank. But part of our mission is to provide low cost capital to our borrowers to the extent that we can and still cover our overhead. We have used data appropriations to help us with specific public policy initiatives, such as what we're here for today, or in the past, some other interest reserves that we've needed for specific programs. But generally we are self-funded. I mean, like a good example. Right, Hurricane Irene where we did an emergency flood loan program where we put a lot of money out the door in a very short period of time. And the state helped us with some loan loss reserve provisions for that program. So we used very little of it. I don't exactly. I'm sorry, I couldn't hear you. We used very little of it. We should have the number on the top of my head, but I don't know if it was successful. Mike, did you have a question? Yeah. So you said your handout says you borrow money from banks, right? And then you load it. Did the businesses get a better interest rate as a result of its being backed by the state? Yes, right. So that's the value of the data. Right, we do have support in the form of moral obligation from the state, which allows us to borrow from our banks at a better rate. And so then we can pass that on to our borrowers. Moral obligation is key to our ability to fund ourselves and keep the rate as low as possible. Cassie, I don't want to go too much into the minutiae, but to the extent it might be relevant as we get into some of the broadband loan program here. One of the things I do want to understand is how Vita's funding sources overlap with, Mike had asked about banks. In this legislation, there's discussion about bonding, state bonding, level of state bonding, and what Vita draws on there. And then you also mentioned commercial paper, which I think of as a very short maturity source of funds. And it looks like you have $250 to $300 million of loans outstanding. The funding for that money that you put out, some of it comes from banks. Some of it comes from bonding or no? No? Okay. Yeah, please. We're not, there will be no geobonds issued for this. We will get more moral obligation. And let's keep the statute. I was confused when I first read it, because it's talking about the telecom authorities, $40 million in moral obligation. And that is what this additional, the way I understand it, this additional moral obligation will be coming to us. But there's no geobonding, we've never. Okay. That's not a source of funds for Vita. But a source of, if you will, state support for Vita is that moral obligation backing, where the state has so much moral obligation that it's willing to take on. And this was a conversation we had with the treasurer of Pierce yesterday. And that what this bill does is it, I believe, lowers the amount of moral obligation related to the Vermont telecom authority bonding and increases the amount more generally under the state of Vermont, so that the amount of moral obligation is the same. Okay. That's helpful to me. I hope I haven't confused people on that. This is a switch, like $6 million from here to there. Right. Yeah. Okay. Thank you. Rob. I'm sorry. On the second page of the handout, the right here, you said the bonds are not a financial liability of Vita or the state of Vermont. And I'm just, can we explain more about how that works? So Vita is a conduit issuer. So in other words, we do underwriting. And then these bonds are generally their private placement. So a bank typically would buy the bonds. And so there's no credit risk on the part of the state. And there's no, the state is not on the hook. So when the bank buys the bonds, they assume the risk. Those are different than the bonds. These are private activity bonds. Maybe the small manufacturers or 501c3 corporations. Thank you. And then one other follow-up question I had. What's been the historic kind of loan loss experience that Vita has had? And the reason I'm asking that is because, and you had already drawn out one of the things we're going to discuss here is what a broadband loan through Vita might look like as a credit risk relative to kind of what your historical experience is. So I'm curious what your historic experience has been. Yeah. Well, given what we do, our historical experiences has not been too bad. It's been about, I think it's about one percent. Yeah. And our ag portfolio by loss rate has been actually phenomenally low, primarily because of the nature of that portfolio being folks homes farms. That's to distinguish it from delinquencies. I mean, we do have an ongoing issue right now with that industry and that it is in a down cycle. But to your question, our take on broadband is this is going to be high risk. There typically will not be the hard assets to collateralize these loans. You know, there is a reason they haven't been these rural areas haven't already been built out. The economics are very challenging and difficult. So we we're looking at this higher risk potential than probably our existing portfolio has already. So we factored in, I think, a 10 percent loss rate. With a potential 20 percent recovery on any collateral if there is any collateral. So that sounds pretty conservative, but it may not be. It may or may not be. It's an improvement at this point. So with that lending, what was the loss rate there? It was well under our normal loss rate. Was it really? Absolutely. And we were very surprised because we had to put out that money so quickly that people understood, you know, and it was it was really good. It was less than our normal loss rate. Less than one percent. Yeah. And well, on the small business, the normal loss rate is about 2.58 percent. So this one was less than that. The thing about this program is that also the loan size will probably be larger and fewer projects. So even if one tanks, that will impact the loss rate. Two tanks, you see. So versus if it's spread out amongst a lot of little loans, it's different. I'm just going to ask about the Moral Obligation Authority that Vita has $175 million. And that, I suppose, leverages a certain dollar volume of loans that you can make. Is that very or what is that? Do you want me to take that? What I'm wondering is. I think I got that. Sorry, I'll try. Um, we have about as Representative Briglin said, we have about, well, it's almost 300 now. In total, well, it's a little over 300 in total assets. About $275, let's say, million of that is loans. We have different sources that we borrow from. They don't all have the Moral Obligation behind them. The commercial paper does. Some of the bank loans do. We also have some cash that we have as a reserve that's set up to back those programs. So we've leveraged for $175. We've got $275. And if you look at a graph, David loves, David's our CFO, he loves to do the graph. So we, you know, Moral Obligation goes like this, our portfolio goes like that. So we are leveraging more as time goes on and people become comfortable. We're actually looking at getting our own rating now. So what that would we hope do is have us be less dependent on the Moral Obligation. Questioning rather, you know, S&P or Rooties, what they would rate us at, what that means to our lenders in terms of the rates there. Because, you know, we have very narrow spreads. One of the things we do do is, in addition to using the Moral Obligation, we also got some money from the feds. We've got 10 years ago now. Yeah, we'll put the melt down there in 2008. So we've used that and we still have a tiny bit left for subsidies. In other words, we buy our rates down. So they're lower. But that's not that complicated. You borrow it, you mark it up. You buy it down to a normal rate and you lend it. I have another question and actually I think it's protected. And it's with regard to the assumption that these will be larger loans. Having done, should we do any kind of modeling about how these financing pieces are going to stack up when we're thinking about that this piece or the bonding piece? Have you guys done any of that? Is that how, you know, is that something we should do? Do you know what I'm talking about? I think she's asking about the different ways it was stacked. So if you have a bonding, VEDA, private equity, private bank all involved, our assumption has been that for the VEDA program, most of these applicants would be coming to VEDA for the entire cost of the project, less than 10% equity they'd be required to bring. That equity is likely going to come in the, we assume based on the five or six providers we talked to, we assume that that equity is going to come in the form of customer acquisition equity of the partners of the people that are running the program. But that 10% could possibly come from any, many places. And then in addition to that, you have the connectivity fund and how is that, how is that involved with it? Which we want to see some sort of a convergence there between what VEDA is doing, the town's doing and what PSD is doing. So for our purposes, we assume for VEDA it's, it would be almost the whole project be funded by the VEDA project. So here's kind of where I'm, where that question is coming from. When I think about some of the startups that we've heard from like UC Fiber, Newbury Ready, I've heard, you know, they have been missing CV Fiber, the first dollars, like to kind of get things. And I don't know that that's where they, I mean, that's not where UC Fiber went after, you know, it was like, how do we get stood up? So I'm just, it's just a, it's just a point I'm thinking about. Yeah. And I look, the example I'm most closely familiar with is Kingdom Fiber and how the town of Craftsbury went about seeking grants and they get grants to, for that, to establish what they wanted to do, which brought the private provider in that private provider then would go and try to find funding to build the rest of their system. That's, that's kind of the simplest way I understand this, but I think there's so many other ways they could come in. And you're right. The first dollar in could be a grant, it could be equity from a wealthy business partner to a business or it could be a town appropriation. There's so many ways you could get that first 50 hundred, 250,000 dollars you need to do planning, feasibility, and other elements. As I see in the omnibus bill, you folks have built some of that into it. And just one more piece and I see Joe. Well, I was, I think I confused you, so go ahead and then I'll. Just in terms of, in terms of this assumption that they would be larger, is there a number that you think you can do at this? Have you, I mean, is that a calculation that's been made or? We modeled between, we modeled a two million dollar, six, two million dollar loans. Okay. Now, is that, does that make it even more risky? Of course, we have six companies. I don't think it's going to be, and I know Ted's done a lot of research, so that's his best estimation right now. It may be that what happens is Vita comes in and says, we can't do two million dollars here. We can do 500, and then we're going to have to find the money. You've been talking about the municipal bonding and I've been talking about Vita not using bonding, so I think that's, I confused you a little bit, I'm sorry. EC5 was an interesting case. I sat on the telecom authority for a while when they were looking for funds. And what they ended up doing, as you probably know, is they issued bonds and sold them to people in the service area that were willing to pay for them. I don't see why that wouldn't work on a smaller scale, perhaps, in some of these smaller towns. Maybe the town doesn't bond, maybe the company bonds. And people don't have probably the kind of money that they have in a wealthy area, but maybe they'd be willing to pay a thousand dollars or whatever and you put it all together and then maybe you have a viable system. I don't know, we haven't looked at it yet. I have to look at every situation, every project and see what we can sort of figure out with it. So just something I want to mention, this bill talks about, as you've noted, a couple of different types of funding to support, whether it's a CUD, whether it's municipality, whether it's a for-profit or non-profit entity. And I think unequivocally the most risky money that we're talking about here is the grant money because that money's not coming back. That is money that is going out to support a municipality or a CUD and there's going to be no repayment on that. And that's in contrast to what we're referring to is, whether it's about what's the length, high-risk loans or higher than historic loss rate. But the fact of the matter is that a loan, we expect to be repaid back. So by definition, it's infinitely less risky than the grant money we're talking about here, which under no circumstances is going to be paid back. So I just want to make sure we level set as to where the risk profile is about the money that we're talking about here. Grant money, really high risk. It's not coming back to the state. Loans, there's full expectation that that money be repaid, though the credit risk on those loans may be higher. And just so you know, we put that language in there because I wanted people to understand we added to your bill. It's unequivocal. You know, I don't want this to something bad to happen and somebody to come back to us and say, you idiots. As long as we all are very clear what we're going to do. And that's something we want to take a look. I mean, in section 11 of this bill, the Broadband Expansion Loan Program, it very specifically says it is understood that the loans under the program are high risk loans to likely startup businesses, and therefore losses in the program will be much higher than the authorities historic loss rate. I thought I took out the word much. That's still in ours. Maybe we're a draft behind you, Joe. No, probably not. But I mean, I think that's helpful to be clear as to what these loans would look like relative to the more typical loan in Vita's portfolio. Yeah, we just want to be honest about that. And I want the committee to also know we think it's really important. It's really important from an economic development standpoint. It's for education. There are so many reasons that we have to get internet everywhere for the workforce to be able to come and live here and do what they do from home and small business. So that's why we're willing to try it. And we're putting up $3 million of our own money if we have to. So it would be helpful for me, and I'll need to speak for the committee. But in this section of the bill, whenever I see a column of numbers, I add them up to see if they actually add up to the numbers at the bottom of the column. No, and it's just helping me understand some of the numbers that we have in this section and what is being proposed. So what we're talking about here is financing for projects of, let's call it, $12 million. 10% of that coming from, I think as Treasurer Pierce referred to it, a skin in the game. So whether it's the municipality, CUD, nonprofit, for-profit, putting in 10% of that money. The other $10.8 million is essentially what Vita would have in terms of authority to make loans. That's fairly clear to me. We're also talking about an appropriation here of $540,000, which I view as essentially reserve money to support loans that could potentially be underperforming or not paid back. So there would be an appropriation in 2020 of a reserve funded in the event some of these loans, a portion of these loans aren't paid back. And that would be supported out of that reserve. Please jump in. We have to book and reserve. These loans are risky. And so that's 5% of the potential lending authority for Vita. Well, we figure maybe we do half year one, half year two. So that's 10%. It's 10%. Is that a good number? I don't know. I think it's awfully high compared to, but some people have, what if they all go bad? Well, that's $8.5 million for the state and $3 million for Vita. Well, then there's also pacing as to how quickly these loans are made. That's right. That's right. And we'd like to get them made, obviously. So people, and I know a lot of these companies, let's think correct me if I'm wrong, that are already in the business and need money for expansion capital, working capital. So when we say startup, it's not a typical startup, I don't think. I think they're up and going, some of them. I think the attention of this is, it's a term that's been thrown around here. I think we are technology agnostic, which is the end of that dirt road to get that person broadband access or to get that farmer broadband access, whether it's the cable company, whether it's the wireless provider, whether it's a CUD that starts up, we want to see access out there. And so some of those business models may be up and running. Others may be startups. So I think there's a wide range of business models that you could potentially support through this. And then every year, again, let's say we make year two, book and reserve, probably by the end of year two, you really haven't lost any money. But you have reserves, which our accountants make us have. And if we don't get them from somewhere, then it shows up on our income statement and our lenders don't like that. As we have modeled it and shown a worst case scenario, shown a 50% loss rate, shown a 25% loss rate, to be honest, we need to get into and we're going to have a lot of help from the Public Service Department and from ACCD to become familiar with where we really are, what might work there, do these projections look right, or are they way off? So we're going to do a lot of due diligence, but have help from people that are in the industry. Did you have a question? Yeah. So we are also part of this bill. Envisioning, putting out some technical assistance funds for CUDs and municipalities to do some planning. Yeah, that's true. Which feels like a guardrail of sorts on the risk aspect here. Are there any specific other guardrail or pieces of those planning that you feel would be really important for communities to undertake, or municipalities to undertake? I was... How much money is that? So it comes in two forms. One, there's an appropriation in here that would support CUDs, municipalities, that are actually doing business planning for what that model would look like in their area. Again, it could be different. So this is me. Oh, great. Oh, super. And then the other context that comes in is funding a human at the public service department who would have... Who would be working with localities? And how do you support your business model? How do you form a CUD? That work right now is really being done on a grassroots basis, where Carol Monroe's phone rings, or, you know, Herb Tomay's phone rings at E.C. Fiber, and someone says, hey, can you help us out? We're looking to form a CUD. We want to institutionalize that so that that support for regions, localities, it's not just a volunteer hoping that somebody answers the phone. That's great. I think that's really needed because as I recall, it wasn't very much money when I was listening to it in Senate finance, and I thought, oh, yes. Well, that's the Senate. And I had a second question on this. So I think we envision these planning exercises, these problems that are getting solved, in addition to being technology agnostic. You know, also we may be working with traditional carriers on this, or startup carriers, you know, providers. And so is there any sense of increased or diminished risk, depending on whether or not we're working with an established provider or startup? And by established, you know, I mean, I'm thinking about some of our national providers who are here that have not built out to the last mile, who may see this as an opportunity to do so. Well, as the chairman just pointed out, I think we have to be technology. Agnostic. And that would, I know, I'm not so little, but I do know about this, that there is some kind of tension, I'd say, perhaps, between some of the larger carriers and the smaller folks trying to start up. And I would hate to put a Vermont company that we believe that's going to be successful. At a disadvantage, on the other hand, the first person you have to think about is your customer. What's going to be the best for them? And then you have to think about the finances and all those things, obviously. But I would say, depending on the situation, we wouldn't throw them out. So for, and I've been thinking of this mostly in terms of smaller startups, the CUDs. Yes, that is what I am. And so I'm wondering, as opposed to Comcast, who nationally has deep pockets, I don't know what their Vermont situation is, would it be advantageous for a large national or international company to borrow money as opposed to doing it internally? Would they avail themselves of something like that? I don't know. I mean, it would all depend on their situation and how much they can borrow elsewhere at what rate. Obviously, the vice chair is correct in saying that it would take away some of the risk in the total portfolio. And that's something we would want to consider. So there's a lot of different impacts coming in. And I think we have to try to consider all of them, which will be difficult. It's like, and one of the things I think Cassie said is, in general, Vita has an economic development mission and a prudent lending mission. Sometimes it's too really hard to put together. You know, you find the balance between economic development and prudent lending. And sometimes, and I think it's exactly the same thing you're doing up here, just a different industry, a difficult industry, let's say. This may not be a concern or interest in your regard, but for me, I represent Lowell J. Westfield, Troy, and Eden. Pretty rural, if you're going to get. My concern is, with any of the other bigger towns, they generally have somebody on staff a lot of times to write grants, to get the head start on any of these sort of stuff. So from my perspective, I'm hoping that we can somehow level the playing field a little bit with some of the more rural towns, whether it's with the CUDs or, you know, if these came in collaborative, can get together a bunch of towns. But it's going to be a challenge in my towns right now. I don't think it's really on the radar, other than looking at private providers to expand. I think that's what you're suggesting, having a person, a sort of an omnibus person at the PSD is a really important and really a good idea. Well, and we've seen that in terms of, you know, as select boards wrestle with this, and you've got folks on the select board who have their hands full with kind of the day-to-day municipal operations, and then think about how to solve broadband issues in their town. I mean, there's a level of complexity here, just in terms of the business model, but I think it's way above and beyond to ask local volunteers to organically, all over the state, you know, come up with that. So I think that's one of the orientation behind making a resource available that's not calling TV Fiber or EC Fiber, asking them to kind of, you know, expand or come help us. Show us how you did that. So just, I want to go a little more granular and not too deeply, but just helping me understand the numbers. Do you have something here that might be helpful? Yeah. We have lots of papers. Okay, so in our bill currently, I've mentioned the $540,000, kind of 2020 reserve that's in there. We also make reference to the accumulated total of the appropriation, and this is, I believe, the lending of the program should not exceed $8.5 million. And so, you know, we've talked about $12 million of projects, 10.8 lending authority for Vita, and... $3 million for Vita, that Vita will take, the way we envision it, and people may say it's crazy, but anything over our normal loss rate, which I think, again, I didn't want to confuse anybody, big commercial, 1% small business, 2.58. Okay. This will go in the small business, and so anything above that, we will share with the state, $75.25, up to $3 million. It will come over time, so it won't... I won't say it will be easy for us to take that into our balance sheet, if we have to, but we can. The $8.5 million is if everything fails. You got $8.5 million from the state, $3 million from Vita, approximate. So that's okay. Yeah, so that, I mean, and I was scared to put the, I thought, you don't want to put the $8.5 million there, because you're going to scare everyone, but that's the reality, if everything fails. Now, we're not expecting that. Again, we did a 50% loss, 25% loss, 10% loss, just to see what that would mean, and I don't know that we... Yeah, we do, it's right here on the sheet. Actually, he did it over and did what's assuming we get six projects, one of them fails, two fail, three fail. So can you take me through one of these lines or several of them? Let's go with one of six, I like that one the best. Great. So year one, we're taking 540 is just a, it's an accounting, it's a reserve. Year two, it's probably also a reserve. Year three is when some of your portfolio actually starts, you start losing real money. And then year four, that actually goes back to the state, the way the numbers all, the waterfall comes down. And year five, the state ends up getting 685,000 back, and they've given us a total of 971 minus 103, so the total state loss, total state loss, if I think maybe that's what we should concentrate. Total state loss, if one of the six projects fails is 1.1 million, or 76% of the losses, and Vita's loss is 371. So can I play this back to you to see if I understand it? Yeah. So what line one represents is six projects are financed? Yes. And 10.8 million dollars is a lend? Yes. Okay. And in year one, we do an appropriation to fund $540,000 of reserve. In year two, based on credit quality, loan loss, experience, we do an additional appropriation of $442,000. Correct. Year three, one of those six projects is looking less sunny, let's say, and so the assessment is that a higher appropriation is to be done to that reserve fund, just based on credit quality. Year four and year five losses from that one project start to occur, and Vita... Well, they occur in year three, actually, and in year four, we're collecting, I think we figured 20% recovery on some of the collateral. Okay. Okay. So you just answered one of my questions. There's an assumption of a small amount of recovery here on that aspect. If the company totally tanks with assumed, maybe you could get 20%, maybe you could get more. I mean, I just, we don't know if somebody going to want to come in, maybe a large carrier, because it's all built out now. Right. And pay something for that. It seems like it's got to be worth something. Yeah. And so, at the end of year five, the occurrence is that the state has incurred 76% of the losses on that one project that didn't pay off. Right. And Vita has incurred 24% of those losses for that one project. That's correct. That's exactly right, yeah. Okay. And it's the same, you know, it follows all the way down. Going down. You know, it's, again, I was hesitant to put the 8.5 million in there, but because we're not, the reality is we're going to make a loan if we believe that the company has the capability, management, financial, etc., to survive long-term. Not that we're not going to make a bad decision, perhaps. It happens. Yeah. Well, and as it says in the draft legislation, the authority shall not make a loan unless the authority has a reasonable expectation of the long-term viability of the business. And I would say that, that sounds kind of like you. Well, carry your voice there. But the point is also to underscore something represented in civilian said earlier, what we're doing elsewhere in this legislation is we are looking to fund through grants, essentially the business modeling of what these projects would look like through feasibility work, that whether it's a CUD or a municipality would do. And, you know, part of the hope there is that, you know, as a CUD looks to come forward to Vita for a loan, work has been done, and maybe some of those will decide, you know what, this is a business model that doesn't work for us. And that doesn't even rise to your attention as a prospective project. I'm glad you mentioned feasibility studies because that's going to be an important consideration for us. And hopefully they will be done through the person in the public service. And maybe some other, I mean, we have thought maybe we'll have to get a consultant on board to help us with feasibility of the projects. Yeah, I mean, it seems like so we're really looking for solutions being manufactured, which I believe are possible in all of these places. So giving folks the tools to manufacture a solution where one has not been available yet. My question was just wanting to check in around, I heard you say companies, and then I thought, oh, but it's also municipalities. Yeah, for some reason, I'm sorry. I'm so focused on our part of it. And I went back and looked at the language of eligible borrowers and saw that I left myself a note that the chair has actually frequently brought up, which is utilities. So would utilities be able to access these types of funds? This is not a problem. And I mean, honestly, I view most of these loans being taken out by some municipal entity, but I mean, we want to, you know, we have some feasibility around utilities. I don't know why off the top of my head. It's not something that I know. I mean, there's something I don't understand why they shouldn't. But my thought would be why wouldn't you open it up to as many potential companies or suppliers or solutions? Thank you. As you possibly could. So I don't want to put this in a footnote category, but Ted, I've got a question for you. And a few weeks ago when you were in committee with Commissioner Tierney and had talked about some of the administration's, you know, thoughts on this and kind of the portfolio generally speaking. And this legislation reflects it. This legislation would establish something called the Think Vermont Innovation Fund, which would be something under the ACCD umbrella. And there's an appropriation in here that would essentially kick off that innovation fund. For what I understand that funding would be used for, I'm very supportive of it. Just a question I have is it's being an ACCD. And we'll have multiple programs going here, you know, the Connectivity Fund and, you know, funding high cost areas and connectivity initiative orientation. And then, you know, I think Vermont Innovation Fund, I'm trying to put a hat on to think about how that is different and is it, you know, would it be confusing to perspective folks who would benefit from, you know, from those grants and just if you could give us a little bit of thought on that. So the Think Vermont Innovation Fund was created last year. And it has six charges. And originally the governor had asked for, I believe, a half million dollars last year to fund the Think Vermont Innovation Fund. It was housed at the AMC of Commerce. And it was everything from co-working spaces to aviation, economic development to broadband. And we put out an RFP. We got 150,000 of the 500,000 we asked for. We put out an RFP and we received more than a half million dollars in requests. We looked at those, we have three broadband related applications sitting before us. We looked at our total task. And we said, there's six charges. We'd love to fund at least one from each charge, multiple from each charge. The average grant amount was about $20,000 that was requested. And so we recognized we had the potential to fund those three if we asked for additional funds this year. And so we proposed using $45,000 carry for actually it was originally a budget adjustment. But punted to carry forward to fund those three applications. At the time, there is no place in state government to go to get broadband funding. Broadband planning and feasibility funding. Think Vermont Innovation Fund is the only place you can go to get it. It already existed. So it made sense to put it there. In context of everything else in your Broadband Omnimus bill, maybe that's worth reevaluating. Certainly, the Agency of Commerce has a pretty good track record of making and monitoring grants. The public service department, they have a connectivity fund. But we have 30 to 40 programs you run of grant and tax credit programs. So we kind of have just a wheelhouse of doing grant management. So there's things to weigh there. However, you're a customer and you want to do broadband. Where do you go? I can understand why you might think public service is where I should go. So why? A good case can be made that this is economic development, too. Yes. And I also want to be clear that the way the Think Vermont Innovation Fund is currently structured, is it necessary to broaden the categories to which you can fund grants here to include broadband? Because we have new language in this bill. But I don't think it's necessary. I don't think it's necessarily harmful. I don't think it's necessary. The existing statute says broadband is an eligible use of the funds. Yeah. And our intention would be to fund the three applications that we have on broadband with that funding. Now that obviously could be a little confused. We're about to make the announcement. Well, we better hurry up then. Yeah, right. Oh, it could be confusing. We could end up having to issue a new RFP for additional broadband projects if, because we didn't get it through the budget adjustment process. So, but any, the reason it's so little and the reason it's in Think Vermont Innovation is because the program exists, we have the existing authority and we have the existing grant. Right. Got it. Okay, that's helpful. May I make a request? You may. Thank you. In the bill, it says that the money goes to ACCD and then to VEDA. That's never been the case when we've done a special program for this day. I think it would be much quicker, easier if it came directly to us. It always has. Otherwise, you have to grant it to us and it becomes a whole. We've never done that before. So, so can you, I don't know if you have the specific section there. Let's just add it here. Section 12. Yes, section 12, page 50, line 10. So I would say $500,000 is appropriated to the Bronocademic Development Authority to serve as a loan loss. 540,000. Oh, sorry. And the agency has absolutely no issue with that. Just a budget contract as we're doing this. It was put into the agency's budget. So it has to get to VEDA somehow the way that was done. But we've got no issue with it going directly to VEDA as it has in the past. I've exhausted my question. I just have one more. So this document, has it made its way to our committee assistant or to Ledge Council? I mean, it might be helpful for the fiscal. Should have this morning. It was late, but I believe it. I have an email copy of it. If Sarah doesn't have it. I'm sorry, Sarah. We, over here. I'm sorry. We'll send it again. Yes. We were still working on it last night. Great. Any other questions? Thank you very much. Yeah. No, it was very helpful to the Bronocademic. The other thing we're going to send you is everything that we've done. We thought you might be interested in our energy programs as well. So we'll send you from a little bit. Thank you very much. Okay. Yeah. Super. Sarah, my energy. Oh, yeah. We'll send it again. Great. Thank you very much. Thank you so much for your consideration. Thanks. Yeah, 1130. Thank you for making time for us today. There are many reasons that we'd love to have you here. And we can talk about many things today. And maybe some of those things will come up. But really, our focus, I think, as you know, is the appropriations committee has asked Energy and Technology Committee to provide a recommendation or a pine upon some of the initiatives in the governor's budget, including those related to ADS. And so, you know, would welcome your input and kind of talking us through some of those things. And I'm sure that the questions, but that would be great if you could help us with that. Sure. For a little history, I came in earlier in the session and we talked about $1.8 million that was for firewall upgrades, switches, routers, and some network equipment that needed to be replaced due to some risk on the state. When we put together the budget, when we looked at the BAA money, we specifically broke it into two buckets. What was absolute emergency right now and what could we wait a little longer for? So the bucket was split into two. It was originally 2.3 and we split it into 1.8 that we've talked about and I believe is being voted on now. And then there's $500,000 that I considered necessary to do, but not in emergency or at least due to priorities of getting that other equipment installed. I felt that this was secondary to that. So this $500,000 is for wireless access point upgrades and security vulnerability assessments and network assessments. And that's broken out into two ways. $300,000 for security vulnerability assessments across the state and $200,000 for hardware, specifically related to our wireless access points in the state buildings. When the state of Vermont started to put together a wireless network, it was, in my opinion, not well thought out as far as the funding model went. So in several ways. But what the Department of Information and Innovation did was they would ask the department to fund the device, but never built in any kind of life cycle, never built in any kind of support, never built in anything. Pay for the device, we'll configure it and put it up on the wall. You guys, we all said forever, right? And no one had a longer view of what was going to happen when the equipment got old, when it got vulnerable to security updates and it became end of life. And so throughout the past six months or so, we've started looking at that equipment and we have over 400 of those wireless access points that are end of life at the end of 2019, along with the servers that go under data centers to control those 400 access points. So this is one of those areas that no fault to ADS specifically was never budgeted for a traditional way before. I saw it as a fairly large security vulnerability because of the way it was pieced together. And so I saw these two pieces going together as far as when I say two pieces, the security assessments and the wireless access points. And so when we purchase new wireless access points, we'll be doing security vulnerabilities in those areas as well. Yeah, for security vulnerability assessments, excuse me. Clarification, both the data wireless access points and the servers are vulnerable or is it the two breaches? Or is it the servers that are vulnerable and the wireless access points are just outdated? By the end of 2019, there will all be end of life, which means there'll no longer be security updates. So they'll all be vulnerable. The wireless access points and the servers that they connect to. Let me explain that a little further just to clarify. The servers that they connect to are the servers that can really control a certain number of access points across the state. So the mob failure complex would have a server that controlled 100 or so access points. Burlington would have a server that controlled 50 or so access points. We have five of those now. We've been working with our partners to consolidate that down and build a architecture that gives us higher availability and more redundancy, but lowers the number of servers that we need. So we're going from five to four. So we're looking at doing it better at the same time, not just in-house straight-up replacement. We saw some of these issues come up this summer or fall with the Joint Information Technology Committee. I appreciate bringing these forward. The notion of capital planning for replacing these, you're not seeking funds to do any of that at this point. I'm not seeking capital funds. That's my own thinking. We're installing something that we're going to have to replace. So not only are we asking for the funds to replace it, but we're thinking about that replacement and starting to budget to replace that in 20 years. You know, that notion of, I mean, I'm thinking about like capital equipment funds for town because that's what I have. Is there any element of that happening here or elsewhere? Or is it on your radar? Can you talk about that a little bit? Yeah, that is on my radar. And that's one of the first things that, you know, I thought of when I came in today was, you know, they're going to ask me, you know, what's the plan? You can't come back in five years and do this to me again. Right? I mean, I certainly wouldn't want that. So this year, we're redoing all of our network contracts. And there's, we're projecting about a $400,000 savings through renegotiating contracts. I plan to use that money next year's budget to start to plan out the longer life cycle of these. So I won't have an up due to these in my budget next year. I'll be using existing funds to for support and replacement costs. Is that where you're asking? Well, I want to make sure I want to clarify what I'm sure you said. Did you say the savings that you're going to generate this year on network planning contracts? Network contracts. Did you say that you're going to use that for replacement of materials next year? Or did you say you're going to use that for thinking about the next 10 years? That's what I'm asking you about, is how are we thinking about replacing these things in 10 years? Right. I'm talking about putting out on a life cycle. So we have support going forward. We're continually working with our different partners to think about the longer term, what our network looks like. And part of that $1.8 million, there's a lot of just standardized replacement of pieces of equipment. But we're also looking at how do we not build it for today, but how do we build it for tomorrow? And what equipment can we buy and put in place that will not only replace the equipment that's gone bad, but give us a path to the future where it may, where we may be able to consolidate equipment or become more secure, have the ability for higher bandwidth. So yes, we're continually looking at how we do things better in the future and making sure the equipment we buy isn't just for tomorrow, but it's going to be longer. So I don't want to belabor this, but I'm going to belabor it, just because I think it's something I really want I would want the agency to be thinking about. So, and it could be that we're just crossing each other with words, John. So I mean, I only get a municipal perspective really to think about. So when we're thinking about replacing our fire truck that we have to have because of the one building in our town, we're not raising those funds every 10 years. We are budgeting a porch, so we're smoothing that cost out over. And so are you saying that's what you're doing? I would love to do that. As a former selector, I understand exactly what you're talking about. Yeah, special buckets for special projects or special pieces. That you're smoothing the cost out over time. Right. You're putting $20,000 a year towards the fire trucking. In 20 years, you'll have half the cost. Yeah, we don't currently do that. We would like to do that, but that's something that we have to work the finance and management on. And I don't know what the rules are around creating those special buckets. But I absolutely understand what you're saying, and I'll talk to finance and management. So, and just to continue to belabor it for another moment, if I may, Mr. Chair, we know that these things that you're purchasing in the budget have a finite life. And so for us to purchase them without any sense of how we will replace them just feels like we're potentially creating a future problem. So that's, and I think with the agency coming together, this feels like a very important function that hopefully the agency can take on for all of state government. Like, how are we going to ensure that we have adequate access and financial that we've thought ahead? And I know you don't have a big... Well, I shouldn't say I know you don't have a... Okay, I'm going to stop right now. So articulate my concern. Yeah, I'm not going to stop there because I think there is a bigger strategic consideration here that Laura has picked at. And I'll pick at it a little bit more. And we're not going to get to it today, but I think it's something that, working with you, this committee should be looking at. And the strategic consideration is how we think of these expenditures as flowing through the general fund state budget relative to the, you know, the institutions committee capital budget. Because I think it's really important to think about where technologies expenditures reside. And are we making capital expenditures or are these really ongoing operating costs of government? And frankly, I think it's the latter. That, you know, whether it's, you know, software expenditures that we're ramping up in terms of integrated eligibility. But there's going to be ongoing maintenance costs of that that go on over time. And the institutions committee is going to be pounding on our door saying, wait a minute, we thought we'd finish this. Understandably. But there are operating costs that continue. And so we're getting a little off the appropriations committee bill here. But I know, and I think this is really important. I think there's a broader strategic conversation that we need to have with ADS as to how do we fund technology in our state government? And where do those costs reside? You know, as capital expenditures or as kind of ongoing costs? That are funded through the through the general fund. So we're not going to solve that today, but I appreciate you bookmarking that as something that we need to kind of get into. I completely agree. And I would suggest making sure that finance and management is at the table when we discuss those things. I can, I can recommend to some extent, but finance and management really controls the different pieces of the budget and whether we use the end of the day, you know, they, they bring the recommendations to the governor. And usually I'm, I'm there, but you know, the finance commissioner will, will say, you know, here's, here's the pot of money we're going to use based on, you know, overall priority. So I think we should have a discussion. I just think that finance commissioner should be involved. I fully acknowledge there's lots of, you know, political and public financing considerations that go on and to, you know, who pays what when to dig more into the granularity. Did you have a question? Yeah. Okay. Go ahead. And it's sort of related to that. First, first though, let me ask you for those numbers here. 200,000 for servers and 200,000 for wireless access points. $200,000 total for the wireless access network, which is wireless access, wireless access points. And the four servers that were made. Oh, so it's 200,000 for total? For that piece. Yes. Oh, okay. And then 300,000 for the security slash network assessment work. Okay, 300,000. DGS here, four servers or five? We have five now. We're going to consolidate down into four. So just following on to Laura and Tim are saying, there are, there are, the life cycle for a piece of hardware is probably five to seven years, right? Yes. And for software, it's even sooner than that because you've constantly got to be upgrading it for security updates, things like that. I don't know how often the contracts have to be renewed for software, but is it on an annual basis or is it a couple of years or what? We've changed that because software has changed as we move towards software as a service where the software is hosted usually by the vendor that makes the software and they're continually doing updates. We don't look at the five year cycle as much anymore. So it's not that the software is out of date in five years. We still have procurement rules around, you know, no longer than seven years contract for IT. But software is changing in a way that doesn't give it the shelf life that it used to have necessarily. Yeah. So I guess what I'm getting at is that it's not really a capital expenditure. It's an ongoing expense that you've got to keep updating this continuously. So the question is, how do you budget that? How do you know that over the next three, four years you're going to be spending this much on this, this much on that, you know, and what's going to be ending its life cycle in each of the years and who has to be replaced. We've been moving, part of our strategy has been moving from the capital expense to the operational expense. We did that with Office 365. We used to host all the servers. We used to do all that work. We used to redo the licenses every year. Now, and so there was a, you know, capital expense every five or six years for half a million or a million dollars or a million and a half, whatever it was. Now we're on a subscription model. So it's more of an operational expense. As you said, we've worked that into our budget to do every year where the challenge still is is figuring out what the increase will be from the vendor at the end of the contract. So this past year we had a Microsoft contract that came up. It was a three-year contract and it came up this past year. The number that came out was extremely high compared to the number that we had had the previous year. We were able to negotiate down about a million and a half dollars, but it still ended up in about a 30% increase. Those are the things that are really hard to project even in the operational model, but we're absolutely moving towards that operational model rather than the capital expenditure model. Some of the newer big systems like the integrated eligibility or child welfare systems that aren't necessarily off the shelf. It's not as easy to go to an operational model as quickly, but that's where we want to end up. So, John, in budget adjustment, ADS had asked for $2.3 million for essentially cybersecurity upgrades. $1.8 million of that was funded or is being funded in BAA. The other $500,000 is what we're talking about here. Can you remind me that the $1.8 million that went through BAA essentially the same stuff that we're talking about here in terms of vulnerability assessment and hardware related to access points and servers? All connected. All connected. All living in our network or building our network, part of our network. We have our firewalls. We have our routers which connect us to the internet. And then we have our switches that connect the computers. Together to the network through the router to the internet. So there's that piece. And then there's the wireless access points which give us a different way to connect to the network. Rather than a hard wire through the wall, you're now connecting over the air, which connects us to the same switches and routers in the end. So $1.8 million in BAA was more firewall oriented again. The other $500 is kind of working deeper into our cybersecurity system. At the end of the expenditure of that 2.3, let's say by the end of fiscal year 20, how will we be doing in terms of our cybersecurity needs? We'll have a pretty strong foundation. Finally, I feel like we've been pretty rocky not knowing what we have, what the assets look like, what the age is. Compared to other states, I think we're doing pretty good. I think we'll be doing pretty good. It changes continually. Some states are able to fund a lot more money for cybersecurity. Georgia built a huge cyber center and spent $50 million. Illinois spent I think $13 million to help with some of their security vulnerabilities. Every state's a little bit different, but looking at us as the size of our state, I think we're doing pretty good. We will be. What I'm trying to get a sense for is, and this relates to the prior conversation of operating costs. When we will get to a point in terms of cybersecurity expenditures where you feel we will have caught up so that we can more maintain a steady state of expenditure to maintain what we have, upgrades as opposed to we're kind of in a red flag mode where we are behind and we've got a spike in expenditures to get ourselves to a point where we need to be even to have the rudimentary level of cybersecurity. Where are we in that cycle? We've put together a five-year plan, and this is the second year of that five-year plan. There's a lot of work that we're still not doing that I'm not going to go into. But our five-year plan addresses those things as far as staffing and contracting and assessments on our network, some of those types of things that I feel that are still inadequate. But our five-year plan addresses those. At that point, we feel we'll be reevaluating at that point. It's so hard to say, but we're going to level off the cybersecurity because I don't think if you ask any CIO across the states they're going to give you a firm answer on that. But we have a five-year plan to try to get us to where we feel it will be starting to play. I would very much like to schedule a meeting where we can go into that. Sure. As an executive session. Executive session, yeah. Would you like to follow up? Yeah, I'd love to bring in my new chief information security officer to talk about what he sees coming in from the outside, coming from the federal government. He was a former CIO for the Coast Guard and has been doing cybersecurity work for the federal government and the different intelligence branches for the past few years. So him coming into the state has a lot of visibility and the different things going on out there and has really been an asset to us even in the short time he's been here so far. But he can give you a really good lay of the land as far as where he thinks we are and where he thinks we should be five years from now in a more in depth. We do that. Chief, like this afternoon, from 1 to 6.30. How about after we hold 30 he'll win that. Yeah, of course. We're sleeping now. That's for the optimistic of you. I am optimistic. At the risk of kind of opening another vein of questioning that we don't have time for, are there other things in the ADS budget that you would like to highlight for us at this time? And I will say that as a precursor to in the next week or two, we're going to have another conversation with regard to integrated eligibility and a recommendation that this committee might make to the institutions committee with regard to the budgeting work that they're doing on that. But we've got a few minutes and are there other things that you would like to highlight in your world, even beyond some of the specific things that the appropriations committee is asking us to opine on that we should flag for future conversations we have with you. Whether it be cybersecurity, integrated eligibility, some of the other big projects you're working on in terms of how your spending is going for your FY19 budget, any of those things. And we don't have to cover them all now. But I think what I would say, and it's budget related, but overall remember we're an agency that's been in existence for about 20 months. We've pulled together a lot of information and put together a lot of good plans. We've done a lot of good for the enterprise in a very short period of time. But my staff is continually on the edge of nervous breakdowns because they're working so hard. Our different areas, they're just go, go, go all the time, whether it's our budget office and trying to get new bills out that we've never had to do before. Build back for every one of our 400 people in different models and meeting federal guidelines. And our project management office has now went from six people to 52 people and is wrapping their arms around and building a project portfolio software suite that gives us a dashboard of what we do in state government. To being able to interface and liaison with the different agencies say, I know you did that before. I know you budgeted and you just went in by yourself. But it's different now and here's how we need to work together. All of that type of stuff takes a while to really change the culture and change the way we do things. So I think we've made really good progress and I could talk, I could keep you guys busy until midnight, just talking about the different areas. Would you please? And our enterprise architecture unit and the stuff that we're doing with data and our plans for our data architecture and the technology that we're using to be able to share across agencies that we haven't necessarily been able to do because they've been siloed in separate systems and procurement and how we've inserted new language to strengthen the responsibilities of the contractors and some of the security risk that we used to hold now, the vendors hold. So there's a lot of different areas that we're working in all at once and my team has been really good about putting in a lot of time and a lot of heart into making sure that we move as fast as possible, show progress, show savings for everyone. But really, beyond the savings, it's about making sure that we're doing the right thing long-term for our state government. So the things that I think pop up on our radar screen, excuse me, in this committee are the headline but the headline projects that ADS is overseeing, which we definitely want to give appropriate oversight to. More broadly, some of the things you talk about in terms of managing what is an agency that you're kind of building in real time, are there more fundamental resource management issues that we should be aware of with regard to ADS support? And I know all areas of government are under extreme pressure in terms of funding support. Where do you stand on that spectrum? I think it goes back to the question on how we want to fund IT and where we want to fund it from. Do the agencies own their IT budgets and we work for them implementing what they want to do or is it IT gets the pot of money and says here are our priorities based on risk, based on need? Which one of those is it right now in government? The agencies have their IT budgets for the most part. We have some of the shared service stuff, some of the enterprise type stuff like networking equipment, desktop support stuff but the agencies are still dictating what system they're going to stand up next. And it's what I say dictating it, what's the wrong word to use. It has gotten a lot better. I've been here for 18 years in state government so I've seen this play out over the years and they are decisions that we're making together. But in some cases where I may think a system needs to be replaced at the end of the day, if there's no budget for it, if there's no budget, if agency acts didn't budget for it, my hands are somewhat tied as far as what I can do. So it creates a real challenge as far as I think the system needs to be upgraded. Well, we didn't budget for it and it becomes a challenge and to be able to have the visibility across state government to all the agencies and all the departments, especially when we have so much legacy equipment and so many systems that are over 15 years old, it becomes a challenge to kind of try to stay in in those budget conversations and make sure that we're pitching as hard as we can, which ones need to be updated and when. Mike? Yeah, it's a two-way communication. I mean, there's ADS, public agency that, hey, you're going to need to upgrade this piece of hardware or something for this, yeah, for your software in the coming years. So make sure you put it in your budget. We estimate it's going to be this much and put it into your IT budget. And do you get good responses from doing that? Sometimes, you know, everyone's under budget pressure. I think that we shine a light on things that have never had that light shine on them before, like networking equipment, like things that they need in order to operate day to day that, you know, maybe just get pushed aside because it was, you know, not, they didn't have someone advocating or they didn't have someone saying, you really have to do this. This is something that's needed. So some of the bigger projects are a little bit more challenging because, you know, when you start talking about $15 million or $20 million coming out of, you know, General Fund or Capital Fund, it becomes a little bit more challenging than just the CIO saying, you know, you need to do this. For smaller projects, I would think it makes sense for the agency to have a responsibility to request their support. Larger ones, I don't know. I think it's moving toward more of our collaborative effort. We have an agency IT leader in every agency. They're part of the senior management team for those agencies. So one of the things that they've been tasked with is, you know, here's your portfolio, here's everything that you have going on, here's everything that we're projecting that you want to do. Prioritize it. At the same time, we're going to prioritize what we feel needs to be done and we'll come back together and talk about, you know, how we move forward. And I think that's, you know, that's maturing. Any other questions for John? Thank you, guys. Thank you very much for joining us.