BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 186|
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THIRD READING
Bill No: SB 186
Author: Kehoe (D), et al.
Amended: 5/31/11
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 5-0, 3/16/11
AYES: Wolk, DeSaulnier, Hancock, Hernandez, Liu
NO VOTE RECORDED: Huff, Fuller, Kehoe, La Malfa
SENATE APPROPRIATIONS COMMITTEE : 6-2, 5/26/11
AYES: Kehoe, Alquist, Lieu, Pavley, Price, Steinberg
NOES: Walters, Runner
NO VOTE RECORDED: Emmerson
SUBJECT : State Controller John Chiang
SOURCE : Author
DIGEST : This bill, until January 1, 2017, expands the
State Controllers authority to perform audits or
investigations of counties, cities, special districts,
joint powers agencies, and redevelopment agencies, if the
State Controller has reason to believe, supported by
documentation, that a local government is violating
specified financial requirements. The audited agencies
shall be responsible for the cost of the audit.
ANALYSIS : The State Controller oversees the fiscal
concerns of the state and may audit the disbursement of any
state money for correctness, legality, and for sufficient
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provisions of law for payment. The State Controller can
audit state expenditures made to local governments,
including counties, cities, special districts, joint powers
authorities, and redevelopment agencies. The State
Controller may audit federal funds allocated to local
governments by the state.
This bill, until January 1, 2017, authorizes the State
Controller, at his/her discretion, to perform an audit or
investigation of any county, city, special district, joint
powers authority, or redevelopment agency, if the State
Controller has reason to believe, supported by
documentation, that the local government is not complying
with financial requirements in state law, grant agreements,
local charters, or local ordinances. The discretionary
audits or investigations would only take place if the State
Controller's Office (SCO) determines that sufficient funds
are made available for those purposes by the audited
agency.
This bill requires the State Controller to prepare a report
of the results of the audit or investigation that includes
any documentation that supports the decision to conduct the
audit and file a copy of the report with the legislative
body of the county, city, special district, joint powers
authority, or redevelopment agency, subject to the audit.
The State Controller must communicate any indication of
illegal acts, or fraud to appropriate authorities,
including the county grand jury.
Comments
In the wake of last year's revelations about extensive
misconduct by public officials in the City of Bell, the SCO
received numerous complaints of fiscal mismanagement and
financial distress in other local governments. However,
the State Controller's statutory authority to conduct local
government audits extends only to state expenditures or to
information compiled in local governments' financial
transactions reports. In conducting audits that identified
millions of dollars in illegally levied taxes, fees, and
assessments, excessive employee compensation, unlawful
contracting practices, and other abusive expenditures of
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taxpayer dollars in the City of Bell, the State Controller
relied on the cooperation of city officials and staff.
Without that cooperation, current law would have severely
limited the State Controller's ability to produce such
comprehensive and detailed audit findings. Audits provide
government officials and the public with objective
assessments of the cost, management, and performance of
government policies, programs, and operations. By
expanding the State Controller's independent authority to
audit local governments' finances and internal controls, SB
186 will help restore the public's trust in government by
making government officials more accountable for how they
use public resources.
Related legislation . The scandals in the City of Bell have
inspired numerous legislative proposals to improve state
fiscal monitoring and auditing of local governments,
including SB 449 (Pavley), AB 187 (Lara), AB 229 (Lara), AB
253 (Smyth), and AB 276 (Alejo).
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13
2013-14 Fund
SCO audit staff up to $2,329up to
$2,247 General
SUPPORT : (Verified 5/31/11)
State Controller John Chiang (source)
American Federation of State, County and Municipal
Employees
AGB:mw 5/31/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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