BILL ANALYSIS Ó
AB 1794
Page 1
Date of Hearing: April 27, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
1794 (Cristina Garcia) - As Amended April 11, 2016
-----------------------------------------------------------------
|Policy |Local Government |Vote:|8 - 0 |
|Committee: | | | |
| | | | |
| | | | |
|-------------+-------------------------------+-----+-------------|
| | | | |
| | | | |
| | | | |
|-------------+-------------------------------+-----+-------------|
| | | | |
| | | | |
| | | | |
-----------------------------------------------------------------
Urgency: Yes State Mandated Local Program: YesReimbursable:
Yes
SUMMARY:
This bill revises the governance structure of the Central Basin
Municipal Water District (CBMWD) by specifying a seven-member
board of directors comprised of four elected directors and three
AB 1794
Page 2
directors appointed by water purveyors. The bill provides for
an interim board structure until the permanent board, elected at
the November 6, 2018 election, takes office. The bill also
requires the board to establish a technical advisory committee
within the CBMWD.
FISCAL EFFECT:
1)One-time costs to the District in the range of $200,000 to
establish the technical advisory committee and implement other
requirements in the bill.
2)On-going costs to the District, likely in the range of
$350,000 per year, some of which may be reimbursable by the
state General Fund. Actual costs would depend upon a
determination by the Commission on State Mandates (Commission)
regarding what expenses incurred by CBMWD in implementing the
bill are deemed to be subject to state reimbursement.
COMMENTS:
1)Purpose. According to the author, "In the last decade, [the
District] has lost credibility with the communities it serves,
as it battled other water agencies in its region and its
directors' actions were questioned. An auditor report from
2015 highlights the problems of leadership and ethics within
the Board that governs the District. While Central Basin has
responsibilities to respond to the auditor report over the
next year, permanent changes in governance are needed for real
long-term reform. One of the biggest conclusions of the
auditor is that the change in governance needs [to] make the
Central Basin . . . more accountable to its direct customers,
AB 1794
Page 3
the purveyors of the [District]." This bill implements
changes to the District's governance structure recommended by
the audit.
2)Central Basin Municipal Water District. Existing law, the
Municipal Water District Law of 1911, governs the formation,
internal organization, and elections for municipal water
districts. That law requires the board of directors of a
municipal water district to consist of five members elected by
voters in each of five divisions of the district, and requires
each board member to be a resident of the division that he or
she represents. Existing law requires board members to
receive compensation of up to $100 per day, up to six days per
month, for attendance at board meetings or other service
rendered as a board member, plus expenses incurred in the
performance of official duties. Municipal water districts
have the authority to fix rates at which water is sold, as
specified, to cover operating expenses, repairs and
maintenance, improvements, and principal and interest on debt
payments.
The CBMWD was established by voters in 1952 to help mitigate
groundwater overpumping in southeast Los Angeles County. CBMWD
purchases imported water from the Metropolitan Water District
of Southern California for sale to retail water suppliers,
including cities, other water districts, mutual water
companies, investor-owned utilities, and private companies
within the district's boundaries. Those water retailers in
turn provide water to residents and businesses within their
respective service areas. CBMWD serves a population of more
than 2 million people living in 24 cities and some
unincorporated areas within the district's approximately 227
square mile service area.
An audit report issued in December of 2015 by the Bureau of
State Audits (BSA) identified numerous concerns with various
AB 1794
Page 4
aspects of CBMWD's operations, including deficiencies in the
district's contracting practices, a pattern of expenditures
that may have constituted gifts of public funds, and
inadequate leadership by the board of directors. Among other
issues, the audit report found that:
"Poor leadership by the board of directors has impeded
CBMWD's ability to effectively meet its responsibilities.
In support of this finding, the audit report cited the
board's failure to provide stability in the district's
general manager position, lack of essential policies
necessary to safeguard the district's long-term financial
viability, inability to maintain the district's insurance
coverage, and failure to disclose the district's
establishment of a legal trust fund and transfers of
money into the trust fund."
All but one of the more than two dozen recommendations
contained in the audit report are the CBMWD's responsibility
to implement. However, one recommendation in the audit report
is directed to the Legislature. Specifically, the audit
report suggests a change in state law that would preserve the
district as an independent entity but modify the district's
governance structure to ensure that the district remains
accountable to those it serves.
3)Related Legislation. SB 953 (Lara), pending on the Suspense
file in the Senate Appropriations Committee, would add two
appointed members to the Central Basin Municipal Water
District's (CBMWD's) board of directors, prohibit the use of
district funds for board members to conduct community
outreach, and make specified changes to CBMWD's contracting
practices.
AB 1794
Page 5
Analysis Prepared by:Jennifer Swenson / APPR. / (916)
319-2081