BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 953|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
UNFINISHED BUSINESS
Bill No: SB 953
Author: Lara (D), et al.
Amended: 8/15/16
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
SENATE FLOOR: 26-11, 5/31/16
AYES: Allen, Beall, Block, De León, Glazer, Hall, Hancock,
Hernandez, Hertzberg, Hill, Hueso, Jackson, Lara, Leno, Leyva,
Liu, McGuire, Mendoza, Mitchell, Monning, Nguyen, Pan, Pavley,
Roth, Wieckowski, Wolk
NOES: Anderson, Bates, Berryhill, Fuller, Gaines, Huff,
Moorlach, Morrell, Nielsen, Stone, Vidak
NO VOTE RECORDED: Cannella, Galgiani, Runner
ASSEMBLY FLOOR: 78-0, 8/18/16 - See last page for vote
SUBJECT: Central Basin Municipal Water District
SOURCE: Author
DIGEST: This bill imposes restrictions on the Central Basin
Municipal Water Districts (CBMWDs) contracting practices and
requires a super-majority vote of the board to take specified
actions relating to ethics, compensation, and benefits.
SB 953
Page 2
Assembly Amendments delete language that expanded the size of
CBMWD's board and prohibited board members from using district
funds for outreach purposes; and add language requiring a
two-thirds vote of CBMWD's board to approve an ordinance,
motion, or resolution relating to the ethics, compensation, or
benefits of CBMWD's board members.
ANALYSIS:
Existing law:
1)Governs, pursuant to the Municipal Water District Law of 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:
SB 953
Page 3
1)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.
2)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.
3)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.
4)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.
5)Prohibits any ordinance, motion, or resolution relating to the
ethics, compensation, or benefits of the members of the CBMWD
board of directors from passing or becoming effective without
the affirmative votes of two-thirds of the members of the
board.
SB 953
Page 4
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.
SB 953
Page 5
CBMWD spent thousands of dollars of district money on purposes
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, some public officials want the Legislature to change
the district's governing statute to ensure that the district
remains accountable to those it serves.
Comments
SB 953
Page 6
Purpose of the 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. The
changes this bill makes to state law will promote public
transparency, sound fiscal management, and improved governance
at the CBMWD.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Assembly Appropriations Committee, ongoing
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 regarding what expenses incurred by CBMWD in
implementing the bill are deemed to be subject to state
reimbursement.
SUPPORT: (Verified8/18/16)
Central Basin Municipal Water District
Central Basin Water Association
City of Huntington Park
City of Lakewood
City of Lynwood
City of Maywood
City of Montebello
City of Paramount
City of Signal Hill
City of South Gate
City of Vernon
Gateway Water Management Authority
Huntington Park City Council Member Karina Macias
OPPOSITION: (Verified8/18/16)
SB 953
Page 7
None received
ASSEMBLY FLOOR: 78-0, 8/18/16
AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,
Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke,
Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley,
Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth
Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto,
Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper,
Holden, Irwin, Jones, Jones-Sawyer, Lackey, Levine, Linder,
Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina,
Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen,
Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago,
Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,
Wilk, Williams, Wood, Rendon
NO VOTE RECORDED: Roger Hernández, Kim
Prepared by:Brian Weinberger / GOV. & F. / (916) 651-4119
8/24/16 18:31:55
**** END ****