1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 7 REPORTER'S TRANSCRIPT 8 SEPTEMBER 13, 2012 9 10 ITEM P OTHER ADMINISTRATIVE MATTERS 11 ITEM P1 EXECUTIVE DIRECTOR'S REPORT 12 ITEM 3 EFFICIENCY AND EFFECTIVENESS INITIATIVE 13 INTRODUCTION, DISCUSSION, REQUEST FOR APPROVAL 14 15 16 17 18 19 20 21 22 Reported by: Juli Price Jackson 23 No. CSR 5214 24 25 26 27 28 1 1 P R E S E N T 2 3 For the Board Jerome E. Horton of Equalization: Chairman 4 5 Michelle Steel Vice-Chairwoman 6 7 Betty T. Yee Member 8 9 George Runner Member 10 11 Marcy Jo Mandel Appearing for John 12 Chiang, State Controller (per 13 Government Code Section 7.9) 14 15 Joann Richmond Chief, Board 16 Proceedings Division 17 18 For Staff: Jeff McGuire Deputy Director 19 Sales and Use Tax Department 20 David Gau 21 Deputy Director Property and Special 22 Taxes Department 23 Cynthia Bridges Executive Director 24 25 ---oOo--- 26 27 28 2 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 SEPTEMBER 13, 2012 4 ---oOo--- 5 MR. HORTON: Ms. Richmond. 6 MS. RICHMOND: Our next item is P1.3, 7 Efficiency and Effectiveness Initiative -- Introduction, 8 Discussion and Request for Approval. 9 MR. HORTON: Welcome, gentlemen. 10 MR. MC GUIRE: Good morning. 11 MR. HORTON: Good morning. 12 MR. MC GUIRE: I'm Jeff McGuire with the Sales 13 and Use Tax Department. With me today is David Gau, of 14 our Property and Special Taxes Department. 15 As you know, the Board continues to face 16 challenges due to the State's economic situation. 17 However, we also remain committed to ongoing efforts to 18 enhance efficiencies and effectiveness in our 19 organization. 20 We do this by continuing to review and improve 21 internal processes and procedures, looking for 22 opportunities to eliminate waste, enhance the customer 23 experience and capture the knowledge and experience of 24 our employees for the benefit of the organization, our 25 customers, as well as our next generation of employees. 26 Building on that, we are recommending that the 27 Sales and Use Tax Department and the Property and 28 Special Taxes Department continue to engage in a focused 3 1 commitment to identifying, developing and implementing 2 goals and objectives by looking at our overall 3 efficiency and effectiveness efforts and really taking 4 this to the next level in what we call the efficiency 5 and effectiveness initiative. 6 Pursuing this initiative, we believe, will 7 provide us with the opportunity to build upon the 8 achievements we already have, continue to shepherd our 9 resources and evaluate our overall agency effectiveness. 10 David, I think, has a few words and we'll kind 11 of talk about next steps as we pursue this. 12 MR. GAU: Yes. So, some of what we planned to 13 do with the initiative will include the following goals 14 and objectives. 15 And one is to improve the taxpayer service 16 experience, which includes our web services. We're 17 looking -- with our External Affairs area -- at trying 18 to revamp the web services. 19 Also the idea of the continuity of service and 20 that -- really from the beginning of our touchpoints 21 with our tax and feepayers, throughout that life cycle. 22 Looking at each of those areas and analyzing these, are 23 we being most effective and efficient in the way that 24 we're delivering those services and interacting and 25 doing that analysis. 26 We also want to, obviously, maximize the 27 voluntary compliance. The easier it is for our 28 taxpayers and feepayers to comply, as Mr. -- as the 4 1 Chairman had mentioned earlier, the more efficient and 2 effective we are. 3 And then also in the sales and use tax area is 4 to enhance the SCOP or the Statewide Compliance and 5 Outreach Program. 6 And, of course, our most valuable asset is our 7 employees. And, so, we need to invest in our skilled 8 and motivated and diverse work force, hopefully to 9 enhance staff productivity. I think there are tools and 10 techniques that we can perhaps invest in and share with 11 the employees and also some of the cooperative efforts 12 we can undertake across Mr. McGuire's program areas and 13 mine as well. And then to improve our recruitment, 14 retention and upward mobility. 15 And then, lastly, is our -- the overall 16 operational effectiveness of our program areas -- that's 17 audit, compliance. And, again, to build upon the best 18 practices that are available. 19 So -- and these are -- these are lock step with 20 our 2020 plan, which is our technology plan, that we 21 will, obviously, coordinate and make sure that we stay 22 in stride with that. 23 So, I think at this point what Mr. McGuire and 24 I would like to do is recommend moving forward with this 25 initiative. 26 And then Mr. McGuire and I would come back in 27 November with a little more substance and a little more 28 detail and give you an update on our progress with this 5 1 effort. 2 Thank you. 3 MS. YEE: Mr. Chairman? 4 THE COURT: Thank you. Member Yee. 5 MS. YEE: Thank you, Mr. Chairman. 6 I want to thank Mr. McGuire and Mr. Gau. In 7 some ways it's a little odd that we're talking about 8 efficiency and effectiveness as an initiative, when it's 9 something we ought to be doing 24/7 year round. 10 And I had really hoped that this initiative -- 11 let's call it an initiative -- this effort would be an 12 attempt to try to memorialize steps that we've already 13 taken to improve efficiency. 14 And I -- and I hope that this doesn't get 15 bogged down in kind of bureaucratic morass. And I mean 16 that. 17 We've got the strategic plan. We've got the 18 2020 plan. But we're doing a lot of this already and I 19 want us to give recognition to ourselves that we're 20 implementing a lot of this. And some of it may be -- 21 need to be further analyzed with respect to whether -- 22 what we may have been mandated to do by the legislature 23 or of our of own initiative really has sustaining impact 24 with respect to improving things like taxpayer -- the 25 taxpayer experience. 26 But I -- what I had hoped to see out of this 27 process -- and I think the staff is sensitive to this -- 28 is, you know, taking credit for what we've already 6 1 accomplished. We've done a lot. The recession did -- 2 wasn't the beginning of us becoming more efficient, 3 we've been efficient. 4 And I think we've been very good about 5 utilizing limited resources, certainly during the 6 history that I've been here. So, let's kind of take 7 credit for what we're already doing. 8 And the taxpayer experience really is about 9 moving through the entire course of their experience 10 with our agency. So, whether it's, you know, from audit 11 to compliance, but, just as we put these initiatives in 12 place to see whether we can look at what some of the 13 sustaining impacts are throughout the whole -- you know, 14 continuing with the experience of the taxpayer with our 15 agency. 16 And then, lastly, you have touched upon it, but 17 throughout all of this, I would like to see some 18 discussion about the -- frankly, the two assets that we 19 have that can really improve the taxpayer experience in 20 every single aspect of this organization, our employees 21 and the use of technology. 22 I have high hopes for the CROS project and the 23 enhanced capability that that will bring over time. But 24 as we look at these efficiency -- effectiveness and 25 efficiency measures, I'd like them not to be static, but 26 really to kind of have it incorporate things that we're 27 going to be doing that will build capacity, either 28 within our work force or technology that can, you know, 7 1 continue to improve the experience by the taxpayer. 2 From my perspective, that's probably the 3 primary goal is really as taxpayers touch us, that they 4 are having the best experience possible. Certainly our 5 overall mission of -- of enhancing and maximizing 6 voluntary compliance is key. 7 But in terms of the work force issues and the 8 operational issues, those ought to be built into all 9 those things. I don't see those as separate categories. 10 So, what I hope is coming back is really, you 11 know, kind of a view about what this agency does across 12 the continuum in dealing with taxpayers, what we've 13 already accomplished with regard to efficiency measures 14 and then where we hope to go, given these enhanced 15 capabilities. 16 MR. MC GUIRE: Certainly. 17 MR. GAU: Just briefly, we have begun 18 cataloging. And I think would do us all great value to 19 bring those things forward that we -- what -- the things 20 we have accomplished and have in the pipeline. 21 And, so, we've started to array those and we'll 22 bring those back -- 23 MS. YEE: Yeah. 24 MR. GAU: -- because I think it would put great 25 transparency on -- 26 MS. YEE: Well, transparency and -- 27 MR. GAU: -- as you said, give us credit -- 28 MS. YEE: Yeah. 8 1 MR. GAU: -- for what we do and have 2 accomplished. 3 MS. YEE: Yeah, and we don't memorialize them. 4 MR. GAU: That's right. 5 MS. YEE: And, frankly, when we go up the 6 street and are testifying as to what the heck has the 7 Board of Equalization been doing? 8 It would be more efficient if we have it at the 9 ready. 10 MR. GAU: Yes. 11 MS. YEE: Some of it has been because of 12 mandates that they've placed upon us, but I -- I think 13 it tells a better story in terms of where we've been and 14 where we're headed. 15 MR. GAU: Thank you. We'll bring that back. 16 MS. MANDEL: Mr. Chairman? 17 MR. HORTON: Ms. Mandel. 18 MS. MANDEL: Sure. It's -- it's my impression 19 that these initiatives -- and I think we had one the 20 other month as a starter -- they are all things that we 21 do and the staff do every day. 22 And -- but -- and the word "initiative" does 23 make it sound like it's something you never did, "Oh, 24 we're going to start doing it." But it is -- it is 25 things that we do every day as part of just how we run 26 the agency and while always looking for more 27 improvements. 28 And, so, my, sort of, take these initiatives 9 1 generally, we do other strategic plans, those are very 2 high level. We have the 2020, it's very high level. 3 And my sense of these different initiatives, 4 which is the magic word of the way they're being brought 5 forward at BOE, is that it is a memorialization of -- as 6 Ms. Yee was talking about and also of -- of a plan to go 7 forward. 8 But it's really kind of -- it -- it -- if you 9 don't get real bureaucratic about it, but you somehow 10 reduce it into a plan, then, you know, that enables 11 managing competing demands that there might be and 12 maintaining the focus on moving forward as an 13 enterprise. 14 And it also sort of helps achieve overall 15 buy-in and shared sense of responsibility for improving 16 the programs and operations and taxpayer experience. 17 So, to me, these initiatives, which is kind of 18 like a little funny word that maybe -- I don't know if 19 that's the right message, initiatives -- but to me 20 they're really slices, as each one -- 'cause I guess 21 we've had two, maybe there's like more in the pipeline, 22 I don't know, but they're really kind of slices of an 23 enterprise business plan, which brings the strategic 24 plans, goals and objectives down to a more real sort of 25 micro level for people. 26 Because I do get questions sometimes about, 27 "What's the Board doing? Are they -- you know, why 28 don't they do this? Why don't they do that?" 10 1 And it's like, well, it's already happening. 2 But people may not know it's already happening. 3 And, so, to me it's kind of slices of an 4 enterprise business plan, focused on, in this case, 5 efficiency -- and whatever it's called. And the other 6 one we had focused on whatever it was called. 7 But that's -- that's how I perceive them. 8 MS. BRIDGES: Cynthia Bridges. 9 MS. MANDEL: She's going to tell me I'm 10 confused. 11 MS. BRIDGES: No, no. 12 MS. MANDEL: Okay. 13 MS. BRIDGES: I think you're right on target. 14 Actually, it is something that the Deputy 15 Directors and I are going to be working on. 16 And starting with the strategic plan, there is 17 a business plan. And you're are absolutely correct in 18 that you take bits and pieces of -- or identify what 19 initiatives or strategies you're going to employ on an 20 annual basis, or, in this case, a fiscal year basis. 21 And that actually becomes the focus for your business 22 plan, an annual business plan. 23 And, to a certain extent, many of these 24 initiatives will fall into that category. 25 But we are in the process of trying to work 26 through that kind of system structure and then hope to 27 share that with you in the coming months. 28 Okay. 11 1 MR. HORTON: Okay. 2 MS. BRIDGES: And that actually allows 3 everybody to understand the direction that the agency is 4 going in and also to be able to communicate those 5 desires down to the front line employees. So, everybody 6 understands where we're headed. 7 MR. HORTON: Thanks. 8 I can -- I agree with my colleagues. I think 9 this is a -- somewhat of a semantics issue. 10 And then I think the other issue is just 11 articulating it to the public, how efficient we are. 12 The numbers reflect our efficiency. The proficiency of 13 our staff do as well. 14 And the -- I think the strategic -- strategic 15 plan and business plan embodies the direction that the 16 Board is going. And, so, we're looking at it as action 17 -- an action plan to implement the strategic plan, if 18 you will. 19 Relative to our efficiencies, I think we are 20 probably one of the most efficient agencies in the 21 world. However, can we be more efficient? Of course, 22 we can. 23 And as we begin to -- as the industry begins to 24 change, we have to wharf (verbatim) with that industry 25 and there a number of things that are happening in the 26 surrounding environment that causes -- will cause us to 27 have to -- to change, even if that is, at a minimum 28 level, just an increase in technology and ability to 12 1 interface and work with other diff -- with other 2 agencies. 3 And the -- and the other thing that I think is 4 important is that we have a relatively young staff in 5 the District. And many of them need the additional 6 professional development. And because of some of the 7 budget cuts that occurred historically, we didn't have 8 the opportunity to necessarily train our staffs. 9 And now that we're hiring more individuals and 10 the -- trying to provide increased opportunities for 11 promotions and so forth, we are a victim of our success. 12 And that's always a positive thing. 13 I'm reminded of -- of a conversation that I had 14 where I was actually sharing about my pride with this 15 agency and how effective and how efficient we are. And 16 I used the number that for every 82 cents that's 17 invested in the Board of Equalization, we generate $100. 18 And the guy responded to me, he said, 19 "Well, Jerome, why don't you invest 164 and 20 see what happens?" 21 And, so, the decision is that we invest more in 22 our staff along the lines of professional development. 23 We invest more in our taxpayers and it stimulates jobs 24 here in the State of California. And it stimulates the 25 creation of additional revenue, as well as we begin to 26 educate and enhance and make it easier to start a 27 business in the State of California. 28 So, those are some of the things that I believe 13 1 we can do a better job at -- not that we're -- and I 2 think we're doing a fabulous job. 3 So, anyway, further discussion, Members? 4 Thank you very much, appreciate it. 5 ---o0o--- 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 14 1 REPORTER'S CERTIFICATE. 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, JULI PRICE JACKSON, Hearing Reporter for the 8 California State Board of Equalization certify that on 9 SEPTEMBER 13, 2012 I recorded verbatim, in shorthand, to 10 the best of my ability, the proceedings in the 11 above-entitled hearing; that I transcribed the shorthand 12 writing into typewriting; and that the preceding pages 1 13 through 14 constitute a complete and accurate 14 transcription of the shorthand writing. 15 16 Dated: OCTOBER 11, 2012 17 18 19 ____________________________ 20 JULI PRICE JACKSON 21 Hearing Reporter 22 23 24 25 26 27 28 15