Assembly subcommittee hears update on state generative AI pilots; LAO and lawmakers press for more oversight

State technology officials told the California State Assembly Subcommittee 5 on State Administration that a first round of state generative AI proofs of concept (POCs) is moving into minimum viable product (MVP) work and that one CDPH pilot is seeking an $8 million budget increase in the governor's May Revision.

The update, delivered by Justin Howard, deputy secretary for fiscal policy administration at the California Government Operations Agency, and Jared Johnson, deputy state chief information officer and chief deputy director at the Department of Technology, outlined a new Project Delivery Life Cycle intended to use iterative POC and MVP steps and state-hosted sandboxes to test generative AI projects before large procurements.

The Legislative Analyst's Office (LAO) and subcommittee members said legislative oversight has been insufficient so far. "We do not have the scaled-up contract to review and do not know how demonstrations and tests during the first round informed the administration's decision to go ahead with a broader implementation," Brian Metzger of the LAO said, urging publication of POC results and a pilot-limited approach to the new process.

Department of Technology officials said the life cycle is intended to reduce risk by testing in state-managed sandboxes and that CDT will include LAO and legislative stakeholders on approval letters and the agency's project portfolio dashboard. Jared Johnson said projects that come through the budget process will be treated as nondelegated projects and receive typical CDT oversight and reporting.

On questions about CDPH's request for up to $8 million, Christine Sherwood of the Department of Finance said the budget change proposal arrived in the spring after departments obtained better cost estimates for scaling an MVP beyond initial POC work. Justin Howard said most deliverables from the governor's executive order on AI have been met except for one item still under review related to workforce impacts.

The LAO recommended that the administration publish a report for each POC showing lessons learned, whether a contract resulted, the contract amount and terms, and that the new approval process be limited to a pilot in 2025' 26 to allow evaluation and legislative oversight. Subcommittee members and the LAO also said they will continue monthly meetings with the administration as spelled out in budget bill language, and pressed the administration for more transparent documentation of how POC results inform scaling decisions.

Next steps identified during the hearing included continued monthly briefings among administration staff, the LAO and designated legislative staff and further documentation of the POC-to-MVP transition for projects that request budget funding.

Ending: The subcommittee did not take action at the hearing. Members and LAO staff said they would press the administration for written POC reports and continue regular meetings to refine oversight of generative AI projects.