The 2014-15 Budget: An Analysis of Local Libraries' Internet Speeds

The 2014-15 Budget: An Analysis of Local Libraries’ Internet Speeds MAC TAYLOR • L E G I S L A T I V E A N A L Y S T • MARCH 27, 2014 Executive Summary Governor’s Proposal. The Governor proposes to spend $3.3 million from the General Fund in 2014-15 for the California State Library (State Library) to contract with the Corporation for Education Network Initiatives in California (CENIC) in an effort to increase Internet speeds at local libraries. Of this amount, $2.25 million would pay for half of a $4.5 million annual contract with CENIC for access to its high-speed Internet backbone and related services. The Governor assumes remaining CENIC contract costs would be paid from the California Teleconnect Fund (CTF), a state special fund. In addition, the Governor proposes to spend $1 million from the General Fund on a one-time basis in 2014-15 to purchase networking equipment for libraries. Proposal Has Two Major Shortcomings. One major shortcoming of the Governor’s proposal is that it may not increase Internet speeds at many local libraries. This is because libraries still would rely on commercial Internet providers for “last-mile” connections from their sites to the CENIC backbone or other CENIC-connected sites. Many libraries (or their local governing bodies) may be unwilling to pay commercial providers for faster last-mile Internet speeds. Moreover, some libraries are located in areas with outdated infrastructure that cannot support fast last-mile speeds without costly infrastructure upgrades. Based on CENIC data, these upgrades could cost $85 million statewide. Libraries and commercial providers both may be unwilling to pay for these upgrades. Another major shortcoming of the Governor’s proposal is the lack of adequate cost information. Insufficient back up has been provided to justify additional funding either for CENIC or equipment. Moreover, the Governor’s proposal lacks information regarding both what happens if the CTF cannot pay for half the CENIC contract as well as how local libraries are to cover any new last-mile costs. Recommend Legislature Reject Governor’s Proposal and Focus Instead on Improving Existing Programs. In view of the above concerns, we recommend the Legislature reject the Governor’s proposal. Instead, we recommend the Legislature focus on improving certain existing Internet- related programs—including programs for Internet discounts, bulk purchasing of Internet services, and Internet infrastructure upgrades—that already are designed to assist libraries as well as many other public (and even some private) entities. 2014-15 BUDGET Introduction Local Libraries Are Run by Local Governments. In California, local libraries are This report examines the Governor’s proposal organized as one of four types of jurisdiction: to spend $3.3 million from the General Fund in county libraries, city libraries, special district 2014-15 to pay for certain Internet connections and libraries, or Joint Powers Authority libraries. equipment at local libraries. The report begins by Usually jurisdictions designate a central library providing information on (1) the fiscal relationship to help coordinate activities among all the library between the state and local libraries and (2) local branches (or sites) within the jurisdiction. In libraries’ current Internet service. Next, we describe 2013-14, 183 library jurisdictions with 1,115 library the Governor’s proposal which is intended to branches operated in California. Local libraries’ increase Internet speeds at local libraries by having responsibilities include hiring staff, conducting the state pay for certain Internet services on their branch oversight, and managing various programs behalf. The second half of the report provides (for example, offering children’s story time and our assessment of the proposal and discusses our resume-building workshops). The state has a very recommendation that the Legislature reject it. limited role in local libraries’ daily activities. Graphic Sign Off Background Local Libraries Funded Mostly by Local Secretary Governments. As shown in Figure 1, most local Analyst Role of State and Local Libraries library funding comes from local governments. In MPA 2011-12, local libraries received over $1.1 billion in State Library Mostly Performs State-Level Deputy funding from local governments—93 percent of Activities. The State Library’s main functions their total funding. Libraries received $67 million include (1) serving as the central library for in funding from other income sources, such as fees, state government; (2) collecting, preserving, and fines, and donations, which accounted for 6 percent publicizing literature and historical items; and (3) providing specialized research services to the Legislature and the Governor. In addition, the State Figure 1 Library passes through state and federal funds to Most Local Library Funding local public libraries for specified priorities and Comes From Local Sources provides related technical assistance. The 2013-14 2011-12 State Funds Federal Funds budget provides the State Library with $24 million All Other in state General Fund support—$19.2 million Incomea for state operations and $4.7 million for local assistance. The State Library also receives $4.6 million from special funds that are used for various purposes, such as to support the California State Law Library and make library materials accessible to individuals with visual impairments or physical disabilities. Additionally, the State Library Local Funds receives $20 million in federal funds, with the majority used for local assistance. The State Library a Includes donations, library fines, fees, and private grants. currently has 139 full-time equivalent positions. 2 Legislative Analyst’s Office www.lao.ca.gov ARTWORK #140070 Template_LAOReport_sm.ait 2014-15 BUDGET of total funding. Local libraries received less than Internet service and received responses from 1 percent of their total funding from the state. 828 library branches (74 percent of all branches). State Funding for Local Libraries Usually All respondents reported being connected to the Restricted to Statewide Priorities. In recent years, Internet. About 40 percent of library branches state funding for local libraries has been limited for reported they operate at speeds the State Library certain statewide priorities that align directly with has defined as very slow—between 1.5 and Chapter 1255, Statutes of 1977 (SB 792, Dunlap), 10 megabits per second (mbps). This is similar to also known as the California Library Services the speeds of many households. Another 40 percent Act. This act requires that all state residents have of respondents reported having speeds between access to enriching library resources and services 10 and 100 mbps, which the State Library defines regardless of their location. To meet this goal, the as slow. The remaining 20 percent of libraries state has supported various programs that promote reported operating at speeds between 100 mbps uniform access statewide, including local literacy and 1,000 mpbs or higher. The State Library defines programs and interlibrary loan programs. these speeds as medium to fast. Typically, these speeds are not available to residential consumers Internet Service at Local Libraries and are used by businesses and governmental Legislature Directs State Library to Study organizations. The survey further found that Local Libraries’ Internet Services. During libraries with the slowest speeds generally are budget hearings last year, the California Library concentrated in rural areas in the northern and Association (whose members consist of local inland regions of the state, while libraries with libraries) testified that Internet speeds at local faster speeds are concentrated in urban areas in the libraries in California are inadequate and requested southern and coastal regions of the state. state funding to increase these speeds. In response, Report Estimates Local Libraries Spend in the Legislature included language in the 2013-14 the Low Tens of Millions of Dollars Annually on Budget Act directing the State Library to perform Internet Service. The survey asked local libraries a needs assessment and develop an associated to report their annual Internet connectivity spending plan to connect all local libraries to expenditures. Based on the survey responses, the a statewide high-speed Internet network. The State Library estimates that annual expenditures language specifically required the State Library statewide range from $8.5 million to $18.9 million. to (1) evaluate local libraries’ current Internet (The main reason the range is so large is connectivity and expenditures; (2) identify options because only 66 percent of all libraries provided for connecting all libraries to high-speed Internet, expenditure information, so costs for many including the option of using the CENIC; and libraries had to be extrapolated.) (3) estimate the costs of the identified connectivity Report Finds That More Than Half of options. The budget language also required the Library Jurisdictions Do Not Obtain Federal State Library to identify available funding sources, and State Internet Service Discounts. The report including non-General Fund sources. The report indicates that 44 percent of library jurisdictions was due February 1, 2014. that responded to the survey receive federal Report Finds That Many Local Libraries telecommunications discounts through the Have Slow Internet Speeds. The State Library Universal Service Schools and Libraries Program— surveyed local libraries about their current commonly known as E-Rate. The report also www.lao.ca.gov Legislative Analyst’s Office 3 2014-15 BUDGET indicates that 46 percent of library jurisdictions • The second alternative is to connect receive state telecommunications discounts libraries to the California Government through the CTF. (More information on both Enterprise Network, which provides discounts can be found in the nearby box.) Internet service to the California state Report Presents Options for Improving government. Internet Speeds. The report offers three alternatives • The last alternative is to connect libraries for improving local libraries’ Internet speeds relative to CENIC, which provides Internet service to the status quo, whereby libraries would continue to four segments of California’s public to pay for and procure their own Internet service. education system as well as to several • The first alternative is for the State Library private and out-of-state entities. In its to oversee nine existing regional library report, the State Library endorsed the consortia that would work cooperatively to CENIC option. (Additional information purchase Internet service. about CENIC and its membership is provided in the nearby box.) Two Discount Programs Available for Library Internet Service E-Rate Provides Large Discounts on Internet Service for Participating California Libraries. The Universal Service Schools and Libraries Program, more commonly known as E-Rate, is a federal program that provides telecommunications discounts to schools and libraries. The program is under the direction of the Federal Communications Commission. Discounts depend on (1) the poverty level of the community in which the school or library is located and (2) whether the community is determined to be rural or urban (rural communities qualify for higher discounts). Discounts range from 20 percent to 90 percent of the costs of eligible services, with California libraries receiving an average discount of 70 percent. Applicants must carry out a competitive bidding process to select the most cost-effective telecommunications provider and certify that they comply with the Children’s Internet Protection Act (which requires the procurement of filtering technology against obscenity). Funding is provided by contributions from telecommunications providers, who usually pass through the cost in the form of a consumer surcharge. The E-Rate program was authorized to provide up to $2.4 billion in discounts in federal fiscal year 2013. California Teleconnect Fund (CTF) Provides Additional Discounts of 50 Percent. The CTF is a state program that also provides telecommunications discounts to qualifying schools and libraries, as well as hospitals, health clinics, and community organizations. The California Public Utilities Commission (CPUC) administers the CTF program. The program provides a 50 percent discount on telecommunications and Internet services. In the case of schools and libraries, this discount is applied after federal E-Rate discounts. The fund is supported through a consumer surcharge on intrastate telecommunications services. The CPUC adjusts the surcharge rate periodically based on forecasted demand. For 2013-14, $92 million is authorized for the program. 4 Legislative Analyst’s Office www.lao.ca.gov 2014-15 BUDGET CENIC Origins and Membership In 1997, the University of California (UC) and several private research universities joined together to form a nonprofit organization called the Corporation for Education Network Initiatives in California (CENIC). The CENIC was formed in order to develop a high-speed “backbone” network to support university research. Since that time, the California State University (CSU), California Community Colleges (CCC), and school districts also have joined CENIC. The UC, CSU, CCC, and schools are considered “public charter associates” of CENIC, while several private universities in California are considered “private charter associates.” Charter associates have representation on the CENIC board of directors. Public charter associates each pay $4.5 million annually toward CENIC’s operations, while private charter associates pay an amount based on their usage and number of connections—between $330,000 and $372,000 annually. In addition, several in-state and out-of-state entities connect to CENIC-operated networks as “non-charter associates.” These entities are not represented on CENIC’s governing board and pay for their connection to CENIC based on usage. The figure shows current charter and non-charter CENIC associates, how many physical sites each associate has that connect directly to the CENIC backbone, and the annual fee each pays. CENIC Associates Charter Associates Sites Directly Connected to Backbonea Annual Costs Public University of California All ten campuses, including medical centers $4.5 million Office of the President and Office of State Governmental Relations Lawrence Berkeley National Laboratory California State University All 23 campuses and Chancellor’s Office 4.5 million California Community Colleges All 112 campuses and Chancellor’s Office 4.5 million K-12 Education California Department of Education 4.5 million 53 county offices of education (COE) and 18 other sites Private University of Southern California Main campus and health sciences campus 372,000 Information Sciences Institute Stanford University Main campus and medical center 366,000 Stanford Linear Accelerator Center Stanford Hopkins Marine Station California Institute of Technology Main campus and Jet Propulsion Laboratoryb 330,400 Non-Charter Associatesc Carnegie-Mellon University, Silicon Valley Pepperdine University Chapman University University of San Diego NASA Ames Research Center University of San Francisco Naval Postgraduate School University of Pennsylvania, Wharton School, San Francisco Nevada System of Higher Education a Some charter associates connect additional sites but not directly to the backbone. For example, over 7,700 schools are connected to the backbone but virtually all of them connect through a COE. b CENIC indicates it charges the Jet Propulsion Laboratory an additional unspecified amount. c Annual costs vary based on usage and number of connections to the backbone. www.lao.ca.gov Legislative Analyst’s Office 5 2014-15 BUDGET Governor’s Proposals the CENIC backbone. This would be most likely for local libraries located close to the Governor Proposes $4.5 Million Annual backbone. Contract With CENIC to Increase Internet Speeds. The Governor’s budget proposal implicitly • As shown under option 2, a second way is based on the CENIC option. The Governor’s that local libraries might connect to the budget assumes contracting with CENIC would CENIC backbone is through another cost $4.5 million annually (the same rate charged already connected site, such as a county to all existing public charter associates). The office of education (COE) or a California contract would allow local libraries to use CENIC’s Community College. This would be the way Internet backbone. Libraries also would receive most local libraries likely would connect to representation on CENIC’s governing board. the CENIC backbone. Additionally, CENIC would provide technical Libraries Responsible for Last-Mile support, apply for federal E-Rate and CTF discounts Connections. Under the Governor’s proposal, local on libraries’ behalf, and negotiate discounts for libraries would be responsible for the infrastructure libraries on Internet services from commercial and operating costs of all last-mile connections. providers. (As described below, libraries would That is, libraries would pay for (1) connections need to continue to purchase Internet services, as between each of their library branches and their well as potentially improved infrastructure such main library and (2) connections between their as fiber, from commercial providers for last-mile main libraries and the CENIC backbone or an connections.) existing CENIC-connected site. (Libraries also Governor Proposes $2.25 Million for CENIC may incur some operating costs for “middle-mile” Contract From State General Fund, Remainder connections that run from a CENIC-connected site Likely From CTF. The Governor proposes that the to the CENIC backbone. The CENIC-connected sites state General Fund cover half of the $4.5 million currently bear these costs but may require libraries CENIC contract. The State Library’s report suggests to enter into memorandums of understanding to CENIC likely would obtain the remainder of share them.) If a library has inadequate Internet funding needed to cover the contract from the infrastructure in its area to connect to the CENIC CTF. The CENIC would submit the State Library’s backbone or a CENIC-connected site, the library $4.5 million Internet services invoice to the CTF, would have to cover the cost of updating its which would then reimburse CENIC for 50 percent infrastructure. The infrastructure and ongoing of that charge ($2.25 million). operating costs of last-mile connections depend Two Ways Libraries Likely to Connect to on the proximity of each local library site to its CENIC Backbone. Under the Governor’s proposal, main library, the CENIC backbone, and CENIC- CENIC would work with libraries to determine connected sites as well as the physical terrain and the best way to connect to the CENIC backbone. the existing Internet infrastructure between all these Figure 2 compares libraries’ current connectivity sites. CENIC indicates it would negotiate last-mile model with the two ways libraries would be most infrastructure upgrades and operating costs with likely to connect under the Governor’s proposal. commercial Internet providers on behalf of libraries. • As shown under option 1 in the figure, some The Governor’s proposal, however, does not include local libraries might connect directly to estimates of these costs. 6 Legislative Analyst’s Office www.lao.ca.gov 2014-15 BUDGET Governor Proposes $2 Million From the though the language does not specify how much General Fund for Equipment Grants. In addition non-General Fund must be raised. to the $2.25 million General Fund for covering Assessment half of the CENIC contract, the Governor proposes Graphic Sign Off $2 million from the General Fund on a one-time Governor’s Proposal Unlikely to Secretary basis to purchase networking equipment, such as Increase Many Libraries’ Internet SApneaeldysst routers and switches, which libraries would install MPA at their individual locations. This funding would be Libraries’ Internet Speeds Will Depend on spread across two years, with $1 million provided Last-Mile Connection Speeds. ConneDcteinpgu ttoy the in 2014-15 and $1 million in 2015-16. Proposed CENIC backbone will not necessarily increase budget bill language directs the State Library or Internet speeds for libraries. Instead, library local libraries to secure other non-General Fund Internet speeds will depend almost entirely on the resources to supplement the equipment grants, speed of their last-mile connections, which are Figure 2 Comparing Current Internet Connectivity Model With CENIC Connectivity Optionsa Current Internet Connectivity Model LLiibbrraarryy BBrraanncchh MMaaiinn CCoommmmeerrcciiaall TThhee LLiibbrraarryy BBrraanncchh LLiibbrraarryy BBaacckkbboonnee IInntteerrnneett LLiibbrraarryy BBrraanncchh Connectivity Option #1 LLiibbrraarryy BBrraanncchh MMaaiinn CCEENNIICC TThhee LLiibbrraarryy BBrraanncchh LLiibbrraarryy BBaacckkbboonnee IInntteerrnneett LLiibbrraarryy BBrraanncchh Connectivity Option #2 LLiibbrraarryy BBrraanncchh LLiibbrraarryy BBrraanncchh LL MM iibb aa rr ii aa nn rr yy CCOOEEbb BBaa CC cc EE kk NN bb II oo CC nnee IInn TT ttee hh rr ee nn eett LLiibbrraarryy BBrraanncchh a Distances not to scale. Distance from branches to main library and from main library to backbone or other sites vary significantly across the state. b Could be any site COE, CCC, CSU or UC already connected to CENIC backbone. Libraries likely would enter into memorandums of understanding with these sites to gain access to their connections to the CENIC backbone, with some chance of incurring associated costs. CENIC = Corporation for Education Network Initiatives in California and COE = county office of education. www.lao.ca.gov Legislative Analyst’s Office 7 ARTWORK #140070 Template_LAOReport_large.ait 2014-15 BUDGET provided by commercial providers. In order for • Libraries May Wish to Redirect Savings libraries to obtain faster Internet speeds, they will Toward Other Priorities. Even if libraries need to purchase better Internet service from these were able to keep the savings acquired on providers. The Governor’s plan, however, provides their behalf by CENIC, no assurances are no money for libraries to purchase faster last-mile included in the Governor’s proposal that connection speeds. Instead, his plan indicates these savings will be used to purchase that CENIC will obtain savings for libraries by faster Internet speeds. Libraries might (1) obtaining federal E-Rate and CTF discounts prefer to pay less for their current speeds on libraries’ behalf and (2) negotiating bulk and redirect the savings towards other purchasing agreements with commercial providers priorities (for example, staffing). for last-mile connections. His plan does not • For Many Libraries, Fast Speeds estimate the associated savings from the discounts Impossible Without Costly Infrastructure or the bulk purchasing or ensure any such savings Updates. According to CENIC, as many actually are used for purchasing faster last-mile as 50 percent of libraries would need to connections. acquire updated Internet infrastructure in Several Barriers Exist for Many Libraries to their area to realize fast Internet speeds. Obtain Faster Last-Mile Service. The Governor’s Libraries would be responsible for the costs plan may not result in libraries purchasing faster associated with these potentially costly last-mile connections for several reasons. infrastructure updates. While the report • Local Governments May Restrict indicates that CENIC will help libraries Libraries’ Ability to Purchase Faster negotiate these costs with commercial Service. Libraries often are constrained providers, the Governor’s proposal by procurement rules set by the local includes no assurances that libraries will government that oversees them. For choose to incur these costs. Moreover, example, city and county governments commercial providers may not even agree might not allow libraries to participate to update infrastructure in areas that are in CENIC’s bulk purchasing agreement not commercially viable. (The nearby box because many cities and counties already provides information on current state use a state-negotiated bulk purchasing efforts to help communities with limited agreement called CalNET. (CalNET does Internet infrastructure.) not necessarily increase speeds for its Data on Schools’ Internet Connectivity clients, but it can save them money on Suggests These Barriers Will Be Significant for their connection costs.) In addition, the Libraries. Starting in 2000, some schools began State Library indicates that in the past connecting to the CENIC backbone. Although when some libraries have obtained E-Rate the state has paid more than $200 million since and CTF discounts, their associated local that time to allow schools to connect to and use governing body has redirected the savings the CENIC backbone, many individual schools to the city or county General Fund. This connected to CENIC still operate at slow speeds. means libraries may not necessarily be This is because the speeds of these schools’ last-mile able to use any savings to purchase faster connections remain slow. The Imperial COE last-mile services. 8 Legislative Analyst’s Office www.lao.ca.gov Graphic Sign Off Secretary Analyst MPA Deputy 2014-15 BUDGET (ICOE), which oversees Figure 3 schools’ connectivity to Internet Speeds at Schools Connected to CENIC, indicates that CENIC's Backbone Are Similar to Those Not Connecteda last-mile speeds have remained slow at some 35% Non-CENIC- Connected Schools schools for two main 30 CENIC-Connected Schools reasons: (1) schools are not willing to pay 25 for faster last-mile 20 speeds and (2) some 15 schools are located in areas with outdated 10 Internet infrastructure. 5 As shown in Figure 3, data from ICOE shows Very Slow Slow Medium Fast nearly half of schools (<10 mbps) (10 to 100 mbps) (100 to 1,000 mbps) (>1,000 mbps) connected to CENIC Internet Speed have slow or very slow a Shows data for 6,922 CENIC-connected schools and 1,015 non-CENIC-connected schools together representing roughly 90 percent of all public, noncharter schools in California. Speed categories match Internet speeds (as those included in the State Library’s 2014 connectivity report. defined by the State CENIC = Corporation for Education Network Initiatives in California and mbps = megabits per second. Library). Moreover, the distribution of speeds Data Provided on Costs Inadequate of schools connected to the CENIC backbone is Conflicting Information Provided Regarding similar to that of schools that have opted not to Cost for CENIC Contract. The CENIC has connect to CENIC. provided conflicting information as to why it would charge $4.5 million for libraries to access ARTWORK #140070 Discount Program Available to Improve Internet Infrastructure Template_LAOReport_med.ait California Advanced Services Fund (CASF) Subsidizes Commercial Providers to Improve Internet Infrastructure. The CASF is a state program that subsidizes commercial providers who extend or update Internet infrastructure in unserved and underserved communities. The California Public Utilities Commission (CPUC) administers the CASF. The CASF has three components: (1) a grant account, which provides grants to commercial providers to cover up to 70 percent of Internet infrastructure construction costs; (2) a loan account, for supplemental financing up to 20 percent of construction costs for CASF grant projects; and (3) a regional consortia account, which provides funding for a CPUC-established nonprofit organization to work with regional consortia to promote high-speed Internet use in unserved and underserved communities. The CASF is supported through a consumer surcharge on intrastate telecommunications services. In 2013-14, the CASF is authorized to provide a total of $59 million for the program. www.lao.ca.gov Legislative Analyst’s Office 9 2014-15 BUDGET its backbone and receive related services. One Insufficient Justification for Equipment Costs. explanation provided by CENIC is that $4.5 million The administration has not been able to provide is the rate paid by all public charter associates, any detailed information on how it determined regardless of how much they use the backbone that $2 million would be needed for equipment and related services. A second explanation is that upgrades at libraries to connect to CENIC. it would cost CENIC $22.5 million to upgrade its The CENIC has indicated that this amount is backbone to account for libraries’ use and that loosely based on its experience connecting schools this cost would be spread over five years (resulting but also has not provided more detailed cost in $4.5 million annually). A third explanation is estimates. that half of the $4.5 million is for improvements Costs to Local Libraries Not Identified in to the backbone and the other half is for related State Library Report But Could Be Significant services. Because of this conflicting information, on a Statewide Basis. Although the Legislature determining whether the $4.5 million in proposed tasked the State Library with estimating the total state funding actually would be used to support project costs of the identified connectivity options, library connectivity is difficult. the State Library’s report only estimates the costs Concerns Regarding Availability of CTF to associated with contracting for access to the CENIC Pay for Half of CENIC Contract. As mentioned backbone and for basic equipment to connect to earlier, CENIC plans to recoup half of the cost of CENIC. Notably, the report does not estimate the the CENIC contract by claiming Internet discounts cost for libraries to (1) undertake any necessary from the CTF. However, the Governor’s budget Internet infrastructure upgrades to actually does not make this assumption in its projections connect to the CENIC backbone at high speeds and of expenditures from the CTF. In order to pay for (2) purchase last-mile connection services at high the additional discounts, the California Public speeds. Using assumptions made by CENIC in a Utilities Commission (CPUC) indicates it likely recent white paper estimating the cost to update would have to increase the CTF surcharge. (Using infrastructure for schools to achieve speeds of at current-year telecommunications bills, we estimate least 100 mbps, we estimate the infrastructure costs the surcharge would increase from 0.56 percent to for libraries to achieve similar speeds would be $85 at least 0.60 percent of a consumer’s total phone million statewide. This figure does not include any bill in the first year.) Though this would make additional ongoing costs for high speed last-mile funds available to pay for discounts for libraries, a services from commercial providers recent CPUC staff proposal to adjust how the fund Recommendation reimburses claimants might diminish CENIC’s ability to recoup 50 percent of the $4.5 million Recommend Legislature Reject Governor’s contract. The CPUC staff proposal would adjust Proposal. To summarize, we have five major the reimbursement rates from 50 percent to a concerns with the Governor’s proposal to connect fixed dollar amount, which could be less than libraries to the CENIC backbone. $2.25 million. The CPUC will make a decision on • The Governor’s proposal would not this rate restructuring proposal in the summer of increase Internet speeds for many libraries 2014. The administration’s plan does not address because (1) local governments may restrict how any resulting funding shortfall would be local libraries’ ability to purchase faster addressed. service, (2) libraries themselves may not 10 Legislative Analyst’s Office www.lao.ca.gov 2014-15 BUDGET choose to purchase faster speeds, and Before the Legislature considers new solutions, (3) obtaining significantly faster speeds we recommend it examine how well its existing would be impossible for as many as half of programs are working and, to the extent needed, local libraries without costly infrastructure explore ways to improve them. For example, as upgrades in their area. highlighted earlier in the report, data indicate that about half of all local libraries choose not to • The $4.5 million requested for the CENIC access substantial Internet discounts that currently contract may not reflect the actual cost for are available to them. The Legislature could libraries to use the CENIC backbone and examine why certain libraries do not access these receive related services. discounts and then explore ways to increase their participation in discount programs. Similarly, data • The plan does not address how a potential presented earlier in the report show that some shortfall in funding for the CENIC local libraries have very slow Internet speeds. The contract would be addressed if CPUC Legislature could examine whether these libraries enacts a different reimbursement structure access discount programs, participate in bulk for CTF claims. purchasing agreements, and have benefitted from • The proposal lacks sufficient cost data Internet infrastructure developments. Depending to support the request for $2 million in upon what the Legislature learns, it then could equipment. explore ways to rectify shortcomings with one or more of its existing programs. • The plan does not estimate the costs Any Improvements to Existing Programs for local libraries to access the CENIC Could Result in Widespread Benefits. If the backbone, but available data suggest these Legislature were to identify shortcomings with costs likely are significant. one or more of its existing programs, making Based on these concerns, we recommend the refinements could benefit not only local libraries Legislature reject this proposal. but various other public (and even private) Recommend Legislature Focus on Existing entities. For example, finding ways to (1) increase Programs to Increase Internet Speeds. The state participation in the state’s discount program, already has in place several programs designed (2) encourage more entities to participate in to improve Internet access and speeds for local bulk purchasing, and (3) create or upgrade libraries as well as other public and private entities. infrastructure in very remote areas of the state As referenced in several places throughout this could have benefits not only for libraries but also report, the state provides substantial discounts schools, hospitals, health clinics, community on Internet service for libraries and certain organizations, and various other public agencies. other organizations, negotiates bulk purchasing In all these ways, refining existing programs agreements with commercial Internet providers could have broader public benefits than creating a for local governments, and offers subsidies questionable new solution tailored to a single type to commercial Internet providers to build of public agency (as the Governor’s proposal does infrastructure in unserved and underserved areas. solely for local libraries). www.lao.ca.gov Legislative Analyst’s Office 11 2014-15 BUDGET LAO Publications This brief was prepared by Natasha Collins and reviewed by Paul Golaszewski. The Legislative Analyst’s Office (LAO) is a nonpartisan office that provides fiscal and policy information and advice to the Legislature. To request publications call (916) 445-4656. This brief and others, as well as an e-mail subscription service, are available on the LAO’s website at www.lao.ca.gov. The LAO is located at 925 L Street, Suite 1000, Sacramento, CA 95814. 12 Legislative Analyst’s Office www.lao.ca.gov