BILL ANALYSIS Ó
SB 953
Page 1
Date of Hearing: August 3, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
SB 953
(Lara) - As Amended August 1, 2016
-----------------------------------------------------------------
|Policy |Local Government |Vote:|6 - 3 |
|Committee: | | | |
| | | | |
| | | | |
-----------------------------------------------------------------
Urgency: No State Mandated Local Program: YesReimbursable:
Yes
SUMMARY:
This bill revises the composition of the Central Basin Municipal
Water District's (CBMWD) Board of Directors (Board) by
specifying a seven-member board of directors comprised of five
elected directors and two directors appointed by Los Angeles
County Board of Supervisors, and establishes restrictions on the
District's use of sole source contracting.
FISCAL EFFECT:
SB 953
Page 2
On-going costs to the District, likely in the range of $230,000
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, "This bill amends state
laws governing the CBMWD to implement some of the
recommendations 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 District's governing board. By
requiring the Board of Supervisors to appoint two additional
members to District's board, this bill seeks to add some
independent participants to the District's policymaking
process and make the board more representative and
accountable. The changes this bill makes to state law will
promote public transparency, sound fiscal management, and
improved governance at the District."
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
SB 953
Page 3
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
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
SB 953
Page 4
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.
1)Related
Legislation.3) AB 1794 (Garcia), an urgency measure pending in the Senate
Appropriations Committee, also revises the governance
structure of the CBMWD by specifying a seven-member board of
directors comprised of four elected directors and three
directors appointed by water purveyors. The bill would also
require the board to establish a technical advisory committee
within the CBMWD.
Analysis Prepared by:Jennifer Swenson / APPR. / (916)
319-2081
SB 953
Page 5