From CalMatters state Capitol reporter Alexei Koseff:
Coming soon to California: a diversity reporting mandate for venture capital firms. Not coming soon to California: a diversity reporting mandate for Gov. Gavin Newsom.
As the bill signing period wrapped up earlier this month, Newsom approved a measure that will force venture capital firms operating in California to collect and disclose demographic data about the founders of the companies they invest in — while on the very same day, he vetoed for the third time a similar transparency requirement for his own gubernatorial appointments.
Senate Bill 54 by state Sen. Nancy Skinner, a Berkeley Democrat, was among nearly 900 measures that Newsom signed into law this year. It represents an effort to boost lagging venture capital investments in businesses founded by women, Latino and Black entrepreneurs.
Under the law, venture capital firms must annually survey the founding teams of the companies they invested in during the year for information such as gender identity, race, ethnicity and disability status, as well as whether they are LGBTQ+, military veterans or California residents. Aggregated data, along with how much money was invested in those businesses, will be reported to the state starting March 1, 2025.
The National Venture Capital Association opposed the bill, arguing it would “produce misleading and counterproductive data that would hurt the cause of diversity” because founders from diverse backgrounds would be more likely to participate in the voluntary surveys, exaggerating their representation in startup investments.
Newsom identified his own issues with “problematic provisions,” “unrealistic timelines” and the cost to the state of administering the program — some of which he promised to address in cleanup language in the next budget — but ultimately signed the measure.
- Newsom, in his signing statement: “This bill resonates deeply with my commitment to advance equity and provide for greater economic empowerment of historically underrepresented communities.”
The governor looked less favorably on SB 702 by Sen. Monique Limón, a Santa Barbara Democrat who has spent the past three years trying to pass a law documenting the diversity of gubernatorial appointments. Newsom again rejected her latest effort, which would have required the governor’s office, starting in 2026, to annually publish aggregate demographic information of appointees to state boards and commissions in the previous year, including their ethnicity, gender, disability status, region, party affiliation and veteran status.
In his veto message, Newsom noted that the data would be voluntarily self-reported and argued that it would therefore “not necessarily accurately reflect the diversity of appointees.” Limón expressed frustration in a statement to CalMatters that her proposal was in line with the goals and data collection methods of the venture capital firm reporting mandate that Newsom signed.
- Limón: “We believe that this Administration has taken strides to diversify our statewide appointees, but more needs to be done to ensure we have mechanisms in place long after this Administration is gone.”
The governor’s office did not respond to repeated questions from CalMatters about why Newsom supported a diversity reporting requirement for venture capital firms but not for himself, why he signed that bill in spite of the concerns he identified, and why he thought that self-reported data was only a problem for the gubernatorial appointments proposal.
- Newsom spokesperson Omar Rodriguez, in an email: “Thanks for reaching out. The messages for SB 54 and SB 702 speak for themselves here. Will let you know if we have anything further to add.”
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Other Stories You Should Know
An ‘F’ for CA’s lack of computer science classes
Despite California being home to Silicon Valley and a lucrative tech industry, the state nationally ranks near the bottom in the percentage of high schools offering computer science classes, reports CalMatters’ K-12 education reporter Carolyn Jones.
Only 40% of high schools in the state offer computer science classes, compared to the national average of 53%. And students coming from low-income or rural households, as well as students of color, are significantly less likely to have access to these classes — putting them at a disadvantage in the job market and perpetuating an equity gap in the technology industry that keeps underrepresented groups out.
One reason these classes are so inaccessible is a lack of qualified computer science teachers. Becoming a computer science teacher can be a long and expensive process, involving career pathways that include a math or industrial technology credential, or earning a credential in any subject and then adding an extra 20 units of computer science.
This confusion over requirements prompted Gov. Newsom to sign a measure this month that will create a commission looking into ways to streamline the process, and hopefully help solve the teacher shortage. State schools chief Tony Thurmond said Wednesday that he might also propose legislation next year for schools to require computer science to graduate.
For more on the state’s efforts to expand computer science education programs, read Carolyn’s story.
Speaking of education: On Tuesday, CalMatters’ higher education reporter Mikhail Zinshteyn moderated a panel featuring some senior state officials and education advocates discussing the feasibility of making college debt-free for all Californians.
In his latest piece, Mikhail dives deeper into the the gaps of the state’s Middle Class Scholarship program, which provided nearly $3,000 in aid to students with family incomes above $100,000 since its debut last year, as well as the Cal Grant, which benefits low-income students.
With the state’s $32 billion budget crunch, funding for both programs requires trade-offs, at times prioritizing middle-income students above low-income students and vice versa. Some advocates argue that, if money is really tight, the state should pull funds from the scholarship program to pay for more aid to students of lesser means. But key figures in the Legislature and Newsom’s administration disagree with that approach. For more on this debate, read Mikhail’s story.
Where goes the neighborhood?
From CalMatters housing reporter Ben Christopher:
California housing regulators are putting gentrification on the map.
As part of a broader effort to reduce housing segregation, analysts at the Department of Housing and Community Development are now tracking which neighborhoods have seen the most rapid demographic shifts from non-white to white and from lower- to higher-income.
The word “gentrification” is an oft-discussed but rarely defined pejorative in housing debates that might describe a fresh construction project, a new restaurant, a general climate of rising rents, new residents — a “you know it when you see it” vibe of neighborhood change.
Here, a California state agency, aided by UC Berkeley and the non-profit California Housing Partnership, have put some numbers to the phenomenon, even if they don’t use the “g” word. They’ve also mapped it out, Census tract by Census tract.
The methodology is a little wonky, but to categorized as a “neighborhood change” tract, an area had to:
- Have a higher share of people of color living in a neighborhood before seeing an above-average influx of non-Hispanic white residents;
- Have a lower than average income before seeing an above-average surge in income;
- See a sharp uptick in rents;
- A combination of 1, 2 and 3.
This wasn’t just an academic exercise or a public service for those in search of new overpriced coffee places. The map of neighborhood change could be used to direct affordable housing dollars in the coming decade.
The last decade has seen an overhaul in the way that the state channels taxpayer dollars for affordable housing. Rather than concentrating new projects in low income neighborhoods, the state, armed with a state-spanning “Opportunity Map,” began shifting those dollars towards jobs-rich areas of elevated economic opportunity.
The new map of “neighborhood change” suggests state housing authorities may soon take gentrifying neighborhoods into account too.
- From a document posted on the agency’s website: “Building and preserving affordable housing in neighborhoods which fit this profile would be important for advancing (fair housing) objectives.”
The agency is fielding public comment on the new map through Nov. 17.
CA poverty rate rises
The average poor working adult in California makes $28,000 annually — barely enough to pay for rent, food and bills.
Federal and state aid helped buoy millions of families nationwide during the pandemic, but many people have slipped back into poverty now that those aid programs have ended, according to a recent study by the Public Policy Institute of California.
As Alejandra Reyes-Velarde of CalMatters’ California Divide team explains, the state’s poverty rate climbed in the first quarter of 2023 — increasing from 11.7% in 2021 to 13.2% — despite an improving economy. That brings the total to about 5 million people in California living in poverty.
The report also showed how poverty rates varied by demographic, occupation and region:
- Latinos make up about half of Californians living in poverty, despite being 39.7% of the population.
- Workers in the service industry and agriculture tended to experience poverty at higher rates than other labor sectors; workers in food preparation and service have a 16% poverty rate.
- San Diego and Los Angeles counties endure the highest poverty rates, while the Central Valley and Sierra counties experience the lowest.
One of the reasons why different regions experience different poverty rates is the cost of living. Poor Californians in counties with higher costs of living may earn incomes that render them ineligible for aid that’s based on federal poverty thresholds — but still extremely poor for where they live. To learn more about the latest number on California’s poverty rates, read Alejandra’s story.
California is continuing to lead on privacy protections, passing legislation that will allow people to prevent data brokers from selling their information, writes Matt Schwartz, a policy analyst at Consumer Reports.
CalMatters commentary has a new California Voices page with previous op-eds and columns, plus picks by editor Yousef Baig. Give it a look.
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