BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 953|
|Office of Senate Floor Analyses | |
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THIRD READING
Bill No: SB 953
Author: Lara (D)
Introduced:2/4/16
Vote: 21
SENATE GOVERNANCE & FIN. COMMITTEE: 5-1, 4/6/16
AYES: Hertzberg, Beall, Hernandez, Lara, Pavley
NOES: Moorlach
NO VOTE RECORDED: Nguyen
SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/27/16
AYES: Lara, Beall, Hill, McGuire, Mendoza
NOES: Bates, Nielsen
SUBJECT: Central Basin Municipal Water District
SOURCE: Author
DIGEST: This bill changes the membership of the Central Basin
Municipal Water Districts board of directors, prohibits
directors from using district funds for outreach purposes, and
imposes restrictions on the District's contracting practices.
ANALYSIS:
Existing law:
1) Governs, pursuant to the Municipal Water District Law of
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1911, the formation, internal organization, and elections for
municipal water districts.
2) 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.
3) Requires municipal water district 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.
This bill:
1) Expands the membership of Central Basin Municipal Water
District's (CBMWD's) board of directors from five to seven
members.
2) Requires that five members of the board must be elected to
four-year terms pursuant to specified provisions of current
state law and two additional members of the governing board
must be appointed to four-year terms by the board of
supervisors of the County of Los Angeles in a public meeting.
3) Requires the board of supervisors to consider any
nominations of candidates for appointment made by a water
retailer that purchases water from the district, if any, and
allows the supervisors to consider other qualified candidates
for appointment.
4) Requires each member of the board of directors appointed by
the board of supervisors to possess the following
qualifications:
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a) Residence within the boundaries of the district.
b) Knowledge of the water industry and familiarity with
the role and responsibilities of a municipal water
district.
5) Specifies the manner in which the board of supervisors must
appoint a member to fill a vacancy if a member of CBMWD's
board of directors appointed by the board of supervisors is
unable to serve for the duration of his or her term.
6) Prohibits CBMWD from using sole source contracts unless one
of the following conditions is met:
a) The contract is limited to an emergency circumstance.
b) The circumstances are that only one vendor can meet
the district's needs.
7) Requires that CBMWD, before executing a sole source
contract, must provide written justification, which must
include specified information, demonstrating the reasons for
not competitively bidding the services.
8) Requires CBMWD to rebid a contract if the district
significantly changes the scope of work of the contract.
This bill defines "significant changes" to include changes to
the nature of the services or work products.
9) Requires CBMWD's general manager to submit a quarterly
report to the district's board detailing all of the
district's contracts, contract amendments, and contract and
amendment dollar amounts.
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10)Prohibits CBMWD from providing any member of its board of
directors with district funds to conduct community outreach
activities.
Background
The CBMWD was established by voters in 1952 to help mitigate
groundwater over pumping 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 two
million people living in 24 cities and some unincorporated areas
within the district's approximately 227 square mile service
area. The five members of CBMWD's board of directors are each
elected by voters residing in one of five divisions within the
district's boundaries.
An audit report issued in December of 2015 by the Bureau of
State Audits identified numerous concerns with various 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. Specifically, the audit report found
that:
CBMWD often inappropriately circumvented its competitive
bidding processes when it awarded contracts to vendors during
the period that was audited. In support of this finding, the
audit report noted that the district did not use competitive
bidding for 13 of the 20 contracts reviewed by auditors and
did not adequately justify why it failed to competitively bid
for 11 of those 13 sole source contracts.
CBMWD spent thousands of dollars of district money on purposes
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unrelated to its underlying authority, some of which likely
constitute gifts of public funds. For example, the audit
report noted that CBMWD provided thousands of dollars in
community outreach funds to each board member annually, which
various board members had the district donate on their behalf
to golf tournaments, a legislator's breakfast panel, religious
organizations, high school sports programs, pageants, and car
shows.
The board of director's poor leadership 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.
Comments
Purpose of this bill. This bill amends state laws governing the
CBMWD to implement some of the recommendation made in the audit
report published by the Bureau of State Audits last year.
Specifically, this bill implements the auditor's recommendation
for legislation to change the membership of CBMWD's governing
board. By requiring the Los Angeles County Board of Supervisors
to appoint two additional members to CBMWD's board, this bill
seeks to add some independent participants to the CBMWD's
policymaking process and make the board more representative and
accountable. The changes this bill makes to state law will
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promote public transparency, sound fiscal management, and
improved governance at the CBMWD.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Senate Appropriations Committee, unknown local
costs, some of which may be reimbursable by the state General
Fund. Potentially reimbursable costs may exceed $50,000.
Actual costs would depend upon a determination by the Commission
on State Mandates regarding what expenses incurred by CBMWD in
implementing the bill are deemed to be subject to state
reimbursement.
SUPPORT: (Verified5/27/16)
Central Basin Water Association
City of Huntington Park
City of Lynwood
City of Maywood
City of Montebello
City of Signal Hill
City of South Gate
City of Vernon
OPPOSITION: (Verified5/27/16)
None received
Prepared by:Brian Weinberger / GOV. & F. / (916) 651-4119
5/28/16 16:45:56
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