 Welcome to an overview of the set and a funding process. We're going through some slides and providing an overview of how the California statutes relate to the 988 surcharge, an overview of the state funding process, an overview of the fund condition statement and the budget process within the state of California. While this overview is focused primarily on 988, much of what I discussed today will probably apply to the 9-1-1 surcharge as well. I want to make sure that I put out this disclaimer. There are certain California statutes that apply to this process. Nothing that I'm going to present today supersedes those and I'm not providing an interpretation of those statutes. Just trying to explain this in everyday terms that people can understand on how the funding is set up. There's government code that gives authority to what Cal OES has with respect to the set and a 988 surcharge. There's also the revenue and tax code sections that apply to how the surcharge is collected and the rules and conditions. Please refer to those California statutes and government code sections for additional details. Now with the disclaimer out of the way, I want to walk through the process on how the 988 surcharge is determined, and this is all outlined in the revenue and tax code. When the Miles Hall Act was first passed, that set and established the surcharge at eight cents for the calendar years of 2023 and 2024. In calendar year 2025 and every year after that, there's a process that we have to go through to set the surcharge. The first step in that process is the budgets from all the agencies that are receiving revenue through the 988 surcharge process. They send in their budget request to the Department of Finance. And at the end of this, I'm gonna give an overview and flow chart of how that process works. And they're really focused on submitting budget requests that align with eligible expenditures for the surcharge. Now, once that budget is all put together, the California legislature votes on the budget, it goes to the governor and the governor signs it. That sets the authorized amount that each agency can use from the 988 surcharge. Once that happens in the July, late June, early July time period, we then start to receive the number of access lines from each of the carriers. So these are all the carriers that are out there, like AT&T and Verizon, NT Mobile and Comcast and Charter. And there's a whole list of what all these carriers are. They send us their access lines. And these are any device that when you use the numbers 988, you could access the system. So we get that total list of access lines. And it's provided to us by August 1st of each year. We then just do the math. We figure out the number of access lines that are out there. We understand and know the budget that we've been authorized, and we sent this surcharge fee based on those two numbers. We then have to send a letter to the California Department of Tax and Fee Administration by October 1st of each year. They then communicate that back to the carriers. And in January, the change in the surcharge is put into place by the carriers. And the new revenue starts coming in associated with that updated whatever it is set based on this process. Now, there's some information that you can use to determine what is the authorized budget. Each state agency is given what's called a fund condition statement. It's posted on the Department of Finance's website, and you can go and find that information there. Each year, obviously it updates and changes. This is the current fund condition statement that we're under. It went into effect on July 1st, 2023, and it's good through the end of June of 2024. I'm gonna walk you through the numbers in this fund condition statement that are important. Now, each agency is given an allocation in the budget for the surcharge. Keep in mind the numbers in this spreadsheet or in this fund condition statement are in thousands. So this is essentially $5.5 million that goes and is authorized for the Health and Human Services Agency that can be used out of the surcharge. Cal OES also has some authorizations in there. We break it down into two pieces. Local assistance is what we dedicate to the local agencies, all the 98 centers that are out there for the technology that we support under the statute. And then the state ops is what we have on our side to manage all this and do all this functionality. And the same thing happens over at the Department of Health Care Services. The 19 million that you see here would be dedicated for the operational side of the 98 centers and then the 773,000 that you see here is the state ops piece of that. Each year, these numbers are gonna change. The important number is this total expenditures and adjustments. That's what we would then use to set the surcharge for the next year. So I've got a graphic for you on that. Whatever the authorized budget expenditure is, in this case, I'm using 44 million. We look at whatever fund condition balance was in the fund from the previous year. Sometimes not everything is used. Keep in mind the money in the fund, the revenue in the fund is dedicated for only authorized 98 expenditures. So this is a special fund and can't be used for anything except what's outlined in statute. So that revenue needed, you subtract off any balance from the previous year. You arrive at the revenue needed for the upcoming budget year. You pull in the number of access lines that were reported to you from all the carriers. In this case, 46 million 121,214 is the number of access lines. And then you just simply start changing this number until you bring in the revenue that's equal to or slightly above, because remember each penny is gonna trigger a certain amount of revenue coming in so that you make sure that the projected annual revenue coming in is sufficient to cover the amount of authority that you have to spend out of the fund. This process happens each year. Now, probably the next question is, okay, how do you determine the revenue needed for the next year? It's actually a process. There's a lot of words on this chart. I understand, but I'm gonna walk you through it. So each agency in the timeframe from say January through April starts to gather information and data on the revenue that they will need the following year. So remember, this is January through April, but if you walk through the timeline, it's not until the following July, 18 months later, that you would actually have the revenue available to use. So you're projecting what you will need in the following year, not the current year. And that's a really important part of the process. So for technology related to 988, we're projecting ahead the technology needs of all of the 988 centers. Operationally the same process happens so there's going to be a back and forth between the Cal OES and DHCS, Department of Healthcare Services on the needs of the 988 centers. Once that needs and analysis is brought in, the state agencies will then begin to discuss those budget needs with the Department of Finance and they're gathering up what we call budget change process concepts. And we start to have these conversations. The Department of Finance is focused on making sure that requests align with Governor's priorities and guidelines and also that it's in alignment with what's allowed to be used in the fund. In September, by the first week, these budget change proposals are submitted to the Department of Finance. From September through December, there's some back and forth and questions and clarifications that happens as the Department of Finance is building the Governor's budget. On January 10th, the Governor's budget is released and that's where you see in printed form all of these budget requests. And then from January through May, you're going through the legislative process. So the Governor introduces the budget and now the legislature needs to go back and forth and make sure that what's in the Governor's budget aligns the legislative priorities and all of those details. There'll be questions that come from the Legislative Analysis Office or the LAO and budget hearings are conducted. These hearings are public and they're soliciting feedback from the public and also taking a look at the legislative process. In May, there might be some additional or unexpected revenue needs or some type of adjustment based on that legislative process that needs to be made. So the May revise budget comes out. If there is a new budgetary need that's discovered at that point, there is another budget change control process or budget change process that can be initiated to submit new budget requests. This way, the budget can be a little bit more nimble because you can see how we are in this timeline. Once that May revise budget is released, the budget bill will then be discussed through both the Assembly and the Senate and it'll be voted on and passed and then goes to the Governor for signature. Once it's signed, then as of July 1st, whatever revenue was requested now becomes available. So in July, what happens is, we'll go back to this fund condition. The numbers on this fund condition statement are updated and the 24, 25 budget is set and that shows the authorized expenditures that are allowed to be used by each state agency out of the 988 surcharge. And so that starts in July and then whatever those authorizations are, each state program starts to put the pieces in place and policies in place in order to start encumbering the funds and using the revenue that is generated from that. And there's a bunch of rules and policies and procedures on how you can get access to that revenue, but that happens as of July 1st. So it's a process that we will go through each year, I wanted to give this quick update and overview and really encourage you if you have questions, reach out to Cal OES and probably the best way to interact with us is through our regularly scheduled technical advisory board meetings where we'll have a public interface and Q&A and provide this type of overview. Thank you for listening and I hope this information was helpful. Have a good day.