Legislative Analyst's Office Analysis of the 2003-04 Budget Bill

State Emergency Telephone Number Account

The administration proposes to increase the maximum 911 surcharge rate from 0.75 percent to 1 percent of intrastate phone charges. The administration estimates an additional $50 million would result from the increase and proposes to reimburse state agencies for a number of activities. Since the proposal is inconsistent with current law and changes the nature of the 911 surcharge, we recommend the Legislature reject the proposal.

The budget proposes to shift $47 million in funding for various state activities from the Motor Vehicle Account (MVA) and the General Fund to the State Emergency Telephone Number Account (911). The 911 account is funded through a surcharge that is placed on monthly phone bills.

Background

Current Law Specifies Activities to Be Funded. Revenue and Taxation Code Section 41136 allows government agencies and telephone companies to be reimbursed for equipment and related costs associated with California's 911 phone system. Specifically, as summarized in Figure 1 (see next page), the entities receiving 911 funding are:

• Telephone Companies—to maintain the 911 database and network.
• Public Safety Answering Points (PSAPs)—to replace or upgrade 911 phone equipment for police, sheriff, and fire departments. If a PSAP purchases and installs a computer aided dispatch (CAD) system, reimbursement may be provided for the software interface between the 911 system and the new CAD system, but not the CAD system itself. Personnel costs for answering the 911 calls are not eligible for reimbursement. 

• Department of General Services (DGS) and the Board of Equalization—to administer and process the reimbursement claims from the PSAPs and other entities.
• California Highway Patrol (CHP)—to answer cellular 911 calls and transfer those calls unrelated to incidents on state highways to the closest PSAP. On an annual basis, CHP answers about eight million cellular 911 calls. The DGS has authorized this funding because, unlike noncellular 911 calls, CHP must ask several questions to pinpoint the caller's location.
• Secondary PSAPs (those PSAPs which do not directly answer 911 calls)—to replace and upgrade their 911 phone equipment.

Wireless 911 Service Is Being Piloted. In order to install new technology to route cellular calls to the closest PSAP, the Legislature increased DGS' expenditure authority in 2001-02 by $32 million to begin the implementation of wireless 911 service. One of the project's benefits is to reduce the number of cellular calls answered by CHP. The DGS has completed a pilot in San Francisco and estimates that wireless 911 should be statewide within the next few years.

Administration Proposes Additional Activities for Funding

It is our understanding that the administration will propose legislation to increase the maximum 911 surcharge rate from 0.75 percent to 1 percent of intrastate phone charges. This increase is estimated to provide $50 million to fund additional state activities, which we discuss be low and illustrate in Figure 1. Since the rate change would not be effective until November 2003, the new revenues would provide a full-year increase of $67 million in 2004-05.

• CHP. The administration proposes (1) $29 million to reimburse 5 percent of officers' and supervisors' total personnel costs—the estimated time for responding to dispatched 911 calls, and (2) an additional $9 million for answering cellular 911 calls. These activities are currently funded through the MVA.
• Department of Health Services (DHS). The administration proposes that $3.6 million of DHS Poison Control Centers' (PCCs) budget be funded by the 911 Account. The PCCs' purpose is to prevent poisonings and provide treatment recommendations when necessary. According to the administration, a portion of PCCs' activities consists of receiving and responding to transferred 911 calls. These activities are currently funded through the General Fund.
• California Department of Forestry and Fire Protection (CDFFP). The administration proposes $2.6 million in one-time funding to continue the implementation of CDFFP's CAD system, which allows CDFFP to dispatch its resources to emergencies. In 2001-02, CDFFP received $10.4 million General Fund for the development and implementation of the CAD system.

Proposed Activities Do Not Relate to 911 Telephone Systems

We have several concerns with the administration's proposal, discussed in detail below.

Proposed Activities Are Inconsistent With Current Law. The purpose of the 911 Account is to pay the equipment-related expenses of the 911 telephone system. Current law specifies the particular 911 system activities eligible for funding. The administration's proposal, however, does not tie to any of those eligible activities. For example, current law specifies that PSAPs may be reimbursed to upgrade or replace their 911 equipment, not their officers' response to the 911 calls. The administration, however, proposes that CHP be reimbursed for its response to 911 calls. While the administration could propose trailer bill language to allow the funding of these activities, the proposed activities are inconsistent with the broad intent of current law, which is to provide funding to maintain the 911 system.

Proposed Activities Do Not Relate to Telephone Use. Surcharges or fees should have a direct relationship with the particular services provided. Under current law, telephone users pay 911 surcharges to support the operation of the 911 telephone system. In contrast, the proposed activities would pay for expenses state agencies incur as a result of 911 phone calls. For example, the administration proposes to fund CDFFP's continued implementation of its CAD project because the CAD system takes information from the 911 system and uses it to manage CDFFP's activities.

Proposal Does Not Treat State and Locals in Similar Manner. California's 911 PSAPs are made up of both state and local agencies. Under current law, PSAPs—regardless of the level of government—may receive reimbursements for the same activities. In our view, equal treatment is reasonable since all responders perform the same activities when maintaining and operating the 911 system. 

The administration, however, proposes to change that equal treatment in several ways:

• Reimbursement of Response Costs. Under current law, PSAPs do not receive funding for personnel costs related to responding to 911 calls. The administration proposes to fund CHP personnel costs related to 911 call responses from the 911 Account. The administration, however, does not propose to fund these same personnel costs for any other PSAP.
• Implementation of CAD Systems. Most PSAPs use some form of CAD technology to manage their resources when responding to calls. Implementing CAD systems can be very costly and time consuming. The administration proposes 911 funding to complete CDFFP's CAD implementation. The administration, however, does not propose to fund other PSAPs' CAD implementations.
• Agencies Receiving Transferred 911 Calls. In some situations, PSAPs may transfer 911 calls to agencies that are not typical 911 responders (if they are better able to respond to the needs of the caller). For example, in cases of homelessness, a PSAP may transfer a nonemergency call to a local homeless shelter. These agencies are ineligible for 911 equipment and funding. Since they receive transferred 911 calls, the administration proposes that PCCs—which are currently neither a primary nor a secondary PSAP—receive 911 funding. The administration, however, does not propose to fund any other agency receiving transferred 911 calls.

If current law is changed to allow these additional activities, the change should treat equally all PSAPs.

No Workload Data to Justify Increases for CHP Dispatchers. The CHP answers most cellular 911 calls, for which it currently receives $4 million for staff costs. This annual cost is based on answering 8 million cellular calls. The administration proposes to increase this amount by $9 million but has not submitted any workload data to support the proposed increase.

Recommend Rejecting Proposal. Since the proposal is inconsistent with the intent of current law and changes the nature of the 911 surcharge, we recommend the Legislature reject the administration's proposal. The fiscal effect of this action would fall primarily on the MVA. Please see the "Transportation" chapter of this Analysis for a discussion of how the Legislature could address the account's condition.