The Governor's budget proposes a significant reduction in expenditures for the California Teleconnect Fund (CTF) program, which provides discounts on telephone service and other advanced telecommunication services that provide access to the Internet (such as digital subscriber line [commonly referred to as DSL] services) to schools, libraries, and qualifying hospitals and community-based organizations. While we have concerns regarding the operation of the current program, we find this underfunding to be contrary to legislative direction. To address this, we recommend the California Public Utilities Commission report at budget hearings on the projected funding requirements of the program in the budget year. Furthermore, if the CTF program requires additional funding in 2004-05, we identify options for the Legislature to consider to provide additional funding for the program.