1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 5901 GREEN VALLEY CIRCLE 3 CULVER CITY, CALIFORNIA 4 5 6 7 8 REPORTER'S TRANSCRIPT 9 APRIL 25, 2017 10 11 12 13 14 15 CUSTOMER SERVICES & ADMINISTRATIVE EFFICIENCY 16 COMMITTEE 17 18 19 20 21 22 23 24 25 26 27 REPORTED BY: Jillian M. Sumner 28 CSR NO. 13619 1 1 P R E S E N T 2 For the Board of Equalization: Sen. George Runner (Ret.) 3 Chair 4 Diane L. Harkey Member 5 Jerome E. Horton 6 Member 7 Fiona Ma, CPA Member 8 Yvette Stowers 9 Appearing for Betty T. Yee, State Controller 10 (per Government Code Section 7.9) 11 Joann Richmond 12 Chief Board Proceedings 13 Division 14 For Board of Equalization Staff: David Gau 15 Executive Director 16 Mark DeSio Deputy Director 17 External Affairs 18 19 20 21 ---oOo--- 22 23 24 25 26 27 28 2 1 5901 GREEN VALLEY CIRCLE 2 CULVER CITY, CALIFORNIA 3 APRIL 25, 2017 4 ---oOo--- 5 MS. HARKEY: Ms. Richmond, please introduce 6 our next item. 7 MS. RICHMOND: Our next item is the 8 Customer Service and Administrative Efficiency 9 Committee. Mr. Runner's the Chair of that 10 committee. 11 Mr. Runner. 12 MS. HARKEY: Mr. Runner. 13 MR. RUNNER: Thank you. I will call the 14 committee to order. And we have, I believe, a staff 15 presentation. 16 MR. DESIO: Yes, Chairman Runner. 17 Good afternoon. My name is Mark DeSio, and 18 I'm joined today with -- by David Gau, Executive 19 Director. 20 Mr. Chairman, at your request the Customer 21 Services Committee brings forth four proposals today 22 for discussion, so that they can be addressed in the 23 next Education and Outreach Plan, which is currently 24 being drafted. 25 The four proposals are as follows: 26 One, impose a moratorium on all conferences 27 pending their approval as part of the 2017/2018 28 Outreach and education plan. 3 1 Two, create and implement an approval -- an 2 approval process for any event in which more than 3 five BOE employees are requested to attend. 4 Three, direct staff to draft an Issue Paper 5 and propose a policy on loaned/redirected staff. 6 Four, establish a clearance process for 7 videos, webinars, and town halls similar to the 8 clearance process utilized for print and in-person 9 activity. 10 That concludes my presentation, and I would 11 be happy to answer any questions. 12 MR. RUNNER: Thank you. 13 Let me just say that these -- these are 14 issues that I -- that our office worked together on 15 with staff in order to identify these as potential 16 good -- helpful, good government guidelines. 17 Um, not wanting to hinder either the 18 organization nor Members, um, I think I'm going to 19 go right off the bat and just go to the -- to 20 Mr. Gau and as -- as ED, um, let me just ask -- 21 again, we're gonna imp -- we're gonna go through and 22 discuss these one by one. 23 But I wanted just a general view, um, you 24 know, from -- from the ED's point of view as to the, 25 um -- the helpfulness of this in regards to 26 administering the agency. 27 Is that a fair question, Mr. Gau? 28 MR. GAU: Yes, it is a fair question. And 4 1 I'll do my best to respond. 2 I -- I think that these are the kind of 3 issues, um -- and I'm sure there are others that 4 other Members will have as well -- but the kind of 5 issues to come before the Board and have an 6 opportunity for the Board to -- to discuss are 7 beneficial -- it helps give the agency guidance that 8 we need that -- that is Board-directed. 9 So I think -- this was I know your -- your 10 attempt to start that -- I guess some -- I wanted to 11 call self reform or whatever, uh, along those lines. 12 So I would say these do help. 13 MR. RUNNER: And, again, I just as soon go 14 ahead and start dealing with these one at a time. 15 You know, as we start going through and just decide 16 now. 17 The other -- again, my observation here is 18 the only one that we really are -- No. 1 is really a 19 specific decision that's before us. 20 Um, I look at No. 2, 3 and 4 more as 21 asking, um, the staff -- the ED, specifically, to 22 come back and do, then, their report and come 23 back -- actually, not come back to us, but actually 24 make the policy on these. 25 So that's at least my thinking process. 26 But we can certainly discuss that. 27 Member Harkey. 28 MS. HARKEY: Hi. Thank you very much for 5 1 bringing these forward. 2 The conference issue I think was raised 3 initially -- the reason it came to light was because 4 of the -- the evaluation by Finance. And I know I 5 have put my one conference on hold. 6 MR. GAU: Yes. 7 MS. HARKEY: Moratorium. So that was kind 8 of self-decided. 9 MR. RUNNER: Mm-hmm. 10 MR. GAU: Yes. 11 MS. HARKEY: And, um, I was asked why I 12 didn't tell everybody that. Well, I'm not into 13 press releases for doing what I think makes sense. 14 So it was real easy for me. 15 Um, the next -- and I think -- I think 16 because those were made such a big deal of, I do 17 want to say that they were available to all. And in 18 larger districts, the large events, I think, make 19 sense. 20 Now, how to quantify that, I think we can 21 probably do that. I believe there were over 1500 22 people at the one event I had in, uh -- in 23 Temecula -- no, Escondido -- pardon me -- Escondido. 24 And so they are well attended, and people 25 do stay all day. But we have to make -- I, you 26 know -- and the agenda seemed to, you know, involve 27 everything. 28 I didn't think the Members were responsible 6 1 for a lot of this. But since we're being targeted 2 for it, I think it's very important that we really 3 understand the way it functions, and -- you know, 4 from nuts to bolts. Because I don't want to be held 5 responsible for something I don't understand. And I 6 thought this was under the purview of the Department 7 that offered the events. 8 So that being said, um, now the approval 9 process in No. 2, I think is, uh -- I just -- my 10 question is, how did we -- how did we reach 5? 11 So maybe Mr. Gau can answer that one. 12 On the third one, the loan or redirected, 13 those are two separate -- very, very separate 14 issues. 15 And I can see the MOU for 60 days for 16 loaned; but redirected, a one-day event, um, I don't 17 know that that's something that we can do an MOU 18 for. 19 I think we just need to ferret that out and 20 get into more of what I think we all have discovered 21 are Provision One guidelines. And I think maybe 22 draft a policy and be sure that everyone in the 23 district is aware of the BEAM policy for -- for the, 24 uh, Provision One. Which I think was the -- the 25 case that was brought up in the audit. 26 And so I would like to know -- I had never 27 heard of Provision One before. And I understand 28 it's not just a BOE issue; FTB also has Provision 7 1 One. 2 MR. GAU: That's what I understand. 3 MS. HARKEY: And I'm not sure who else 4 might have Provision One employees, but it may be 5 that this provision needs to be explained better 6 statewide. 7 So I think that's something that we should 8 look at and -- and draft a specific outline for and 9 be sure that it's an educational. And I would 10 actually like that to be brought back before the 11 Board so that we all understand it, so that we have 12 a public hearing of it. That we just -- we discuss 13 the BEAM policy. 14 And I think you'll find that I'm gonna be 15 requesting more of these BEAM policies coming 16 forward. Because they're supposed to be Board of 17 Equalization Administration Manual sections, which 18 wouldn't necessarily involve Board Members, but I 19 think it does. It's obvious by this audit that it 20 does. 21 Um, so the next item, the clearance 22 process, we have a clearance process for these items 23 currently. As I understand it, everything did get 24 cleared. I think what we need to do is define -- 25 rather than -- rather than establish a clearing 26 process, we need to redefine, again, through a BEAM 27 manual, if that's how it's supposed to be through a 28 BEAM policy, and bring that back so the Board 8 1 Members and everyone is -- is -- understands what 2 the policy is. 3 And I do think probably all of these items 4 need to come back to the Board just for input 5 and -- and to come in a way of an Issue Papers. 6 Which is what I used to see at the counsel where 7 staff reports, so that I could get my best advices 8 from my most knowledgeable people. And I think 9 we've been lacking those up here. We tend to make 10 decision by whoever decides to ask for something 11 first, and I think that's been a problem. 12 So I do believe that Mr. Gau said he was 13 gonna implement more Issue Papers. And I think 14 these are all ripe for these sorts of things, and 15 your recommendation one, two or alternatives. 16 Because you guys are the experts. Staff is 17 the experts in their field. We just take what you 18 give us, add whatever, decide the priority that the 19 Board wants to -- wants to establish. But I do 20 think we need more of these. 21 So I want to thank you for bringing these 22 forward. I think they're very, very important. 23 I -- I do wish to see, though, you know, 24 full analysis and policies in place, because we've 25 got them. 26 Oh, one more thing. One more thing. 27 I have been asking for -- and I'm not sure 28 that it's -- how it's -- how it's divided, but the 9 1 budget that we have for Outreach, for mail, for 2 everything, all conclusive -- it seems to come from 3 variety of different pockets. And so when it gets 4 reported that so much is used here and so much is 5 used there, and there's a big huge number that 6 appears in this report, I'd like to know how that is 7 all -- how that's taken into account. 8 And maybe it would be wise for us to have 9 one budget for all and just segment it, rather than, 10 um -- apparently there's a different policy for the 11 Outreach people in the district that do the little 12 events, the smaller events. There's something for 13 them, and there's a -- we set a budget limit on 14 ours. 15 But I think there's a comprehensive. There 16 might be a separate mail budget. A separate -- and, 17 you know, you would know, I think, ahead of time 18 what, in fact, the Department needs to get out the 19 notices, the mail that they do, what, in fact, the 20 educational mail, you know, for -- for events 21 or -- or for seminars, business seminars and 22 whatnot. And then we might have a more 23 comprehensive look at this. 24 Because I -- what I fear is that, you know, 25 there's -- there's been little pockets somewhere 26 that somebody's moving around, and we don't want 27 that to come out somewhere. We just had a severe 28 issue reported in the press on a lot of -- lot of 10 1 things. And so I just want to be sure we're 2 budgeting, or at least that we know where it is. 3 And I'm not so sure that we do. 4 MR. RUNNER: I think that ought to be 5 included as we come back with the -- with the 17/18 6 Outreach plan. 7 MS. HARKEY: I'd like to know ahead of time 8 what we have. What -- what -- what categories. 9 So that's what I'm asking for, what 10 categories does our money come from for Outreach and 11 Education, BOE-wide? 12 Because some -- some do mail out of a 13 certain area, some do events out of a certain area, 14 some comes from here. And I know that the seminars 15 have been questioned as to where the money is for 16 those. 17 So I'm just trying to -- as long as we're 18 doing this, I want as little confusion as 19 possible. 20 MR. RUNNER: Yeah, it seems to me it ends 21 up, by nature, being included in that. And that's 22 going to be coming up in June. 23 But in between, I guess if Members have 24 requested -- if Members have requested a specific 25 idea of -- of where pots of money come together for 26 Outreach events, that seems like a reasonable report 27 to give back to Members. 28 MR. GAU: Okay. Certainly. 11 1 MR. RUNNER: Okay. Let me -- let me -- 2 MR. HORTON: Mr. Chair. 3 MR. RUNNER: Again, let me come back a 4 little bit. Because I think if we can -- in order 5 to get through these -- can we go through these one 6 at a time and then be able to make a decision? 7 MS. HARKEY: I don't care. 8 MR. RUNNER: Right. I know that. I know 9 that. 10 MS. HARKEY: Well, since you're asking for 11 reports, you probably don't need to -- I mean, you 12 can handle it any way you want, but I just wanted to 13 hit all of the issues. 14 MR. RUNNER: Sure. Sure. 15 So let's -- can we -- Item One. Can we 16 talk about Item One first, then we go onto the next 17 one? 18 MR. GAU: Yeah, sure. 19 MR. RUNNER: Okay. 20 Member Horton. 21 MR. HORTON: Thank you, Mr. Chair. 22 Members, you know, I think the legislature 23 is clear -- was clear in relationship to 24 Provision One, which is related to Item One. 25 The concern here is the use of 26 revenue-generating positions for tax administration 27 activities, or any other activities relative to 28 that. 12 1 And so as we begin to sort of deal with 2 this issue, I think it's -- this gives you an 3 opportunity to address that concern immediately, and 4 identify all of the revenue-generating positions 5 that are currently being used for tax administration 6 activities. 7 On the marijuana project, we're using CROS; 8 we're using revenue generations. So throughout this 9 agency, we're using hundreds of revenue-generating 10 positions for tax administration activity. 11 So I think it's important to begin to 12 develop that list, submit it to Department of 13 Finance, and go through the assessment and the cost 14 benefit analysis to make the determination if it's 15 appropriate. 16 The issue before us is actually rather 17 simple now that I've learned about it. It's been 18 around since 1991, which was really surprising to 19 me. 20 But now that I've learned about it, as I 21 understand the Budget Act, it's just simply if 22 you're going to use revenue-generating positions for 23 tax administration activities, just notify the 24 Department of Finance. Let them know. Let them 25 weigh in and determine if that use is appropriate. 26 Or at the same time notify the Legislature. I think 27 there's a lot of wisdom in doing that expeditiously, 28 as soon as possible. 13 1 Item One re -- relates to moratorium on 2 conferences, but the issue is not the size of the 3 conference. The issue -- that's irrelevant. There 4 is no incidental use of Provision One employees. 5 One, two, three, that's not how the Act works. 6 So if we're looking to assure ourselves 7 that this isn't happening as it relates to the 8 conferences, you've got Provision Ones that are 9 being utilized on going out as tax experts, small 10 business conferences. They're utilizing the various 11 different fashions within the agency. 12 And if the moratorium is the solution, the 13 moratorium should be on all of that activity until 14 such time that we can submit to the Department of 15 Finance a summary of those positions and get their 16 sign off. 17 Otherwise, we continue to be in violation 18 of Provision One. And I think the curing that 19 should be most expeditiously. And I would be 20 supportive of a moratorium on everything where 21 Provision One employees are being used for tax 22 administration activity, just stop it. Freeze it, 23 and then submit it to Department of Finance, and 24 let's get a sign off. 25 Historically, large seminars, the Board of 26 Equalization's been doing these since 1998 where you 27 have a combination of federal, state and local 28 governments having attendance of up to 3,000 14 1 individuals. 2 So -- so, you know -- so -- and it's 3 been -- and, you know, it's history after history. 4 The way that we -- the other part that I find 5 relatively interesting is that we're -- we're acting 6 as if, though, there's no policy in place. Which 7 seems to mean to me that maybe we don't know there's 8 a policy in place, and that may be the inherent 9 problem here. 10 So there may be a necessity to begin to 11 educate folks about the existing policy. The 12 existing policy in BEAM, which says that all 13 Outreach activity -- all Outreach activity has to 14 be -- has to go through an approval process. It has 15 to be approved by External Affairs, then reviewed by 16 Legal for -- to assure that it has a governmental 17 legislative purpose. And then the Executive 18 Director has -- or -- or -- or their designee has to 19 sign off. 20 That's the existing policy. Whether it's 21 five individuals, four, ten, fifteen, again, the 22 number's insig -- that's existing policy. So you 23 can simply make a copy and send it back to us, 24 unless you're going to modify the existing policy. 25 So I think another wise thing to do is to 26 begin to -- to set up or incorporate in the training 27 of all of our staff, as well as the Executive Team, 28 the existing policy so that line management is made 15 1 fully aware of what Provision One says, fully aware 2 of what a governmental activity is and -- and what 3 it is not, and begin to sort of educate folks about 4 our existing policy. 5 And I -- I, you know -- if you can improve 6 upon having Legal review it, External Affairs' 7 person review it, and sign off by the Executive 8 Director and the ED, I mean, that's pretty -- pretty 9 thorough analysis. 10 As it relates to the loan position, Board 11 has the existing policy as it relates to the loan as 12 well. You can find it in BEAM when it comes down to 13 career advancement, career development, and so 14 forth. 15 All of those policies currently exist. The 16 challenge we may have is the inherent turnover and 17 the lack of awareness of what the existing policies 18 are. 19 So, I mean, I look forward to -- to -- to a 20 policy, but let me just encourage staff to take a 21 look at the existing policy. It's pretty thorough. 22 Pretty thorough. 23 Basically in -- and the challenge that we 24 may have is that the existing policy exists from 25 silo to silo. 26 In the Legal Department, they have an 27 existing policy where they -- I can't recall what it 28 says exactly in loaning positions, maybe up to 16 1 6 months, and then they'll review it again. Loaning 2 positions to other departments, from department to 3 department. The department that is providing the 4 loan has to sign off on the loan to assure -- has to 5 do a workload analysis to make sure that their 6 workload is not affected before they sign off on 7 releasing that individual to the party that's going 8 to receive the loan. 9 That info -- that information historically 10 goes up the channel and has to be signed off by the 11 Chief of Field, historically. 12 You know, so when we begin to ask for 13 something that actually exists, it tells me that our 14 issue here may be education. Because we've had 15 these huge turnovers in the various different silos 16 in the -- in the agency. And I'd be more than happy 17 to provide the -- the administration with a -- with 18 references to this. 19 In 2011 we -- we visit this again. It was 20 called by then Board Member -- strike that. It 21 would have been 2009. It was called by Board Member 22 Chiang at the time. It was his concern to 23 distinguish between, um, Board-sponsored events 24 versus non-Board-sponsored events. And a whole 25 policy was developed by the Legal Department. 26 I -- I would suggest that we take a look at that 27 policy as well. 28 External Affairs has submitted plans. This 17 1 information is also embodied in law that draws a 2 clear distinction as to -- to -- to what should be 3 done. 4 And so, I mean, I look forward to it, 5 to -- to -- to -- to what staff brings back. But I 6 really think we should have spent more time and took 7 a look at what exists. This way staff could have 8 advised the Members, "Here's what exists, and here's 9 what we can work on, and here's how we can improve 10 that." 11 But let me just close by saying if our 12 objective in doing all of this is to solve a 13 problem; one, the problem's been solved and 14 education may be -- education of that solution may 15 be helpful. 16 Two, the problem that we face is -- is the 17 violation of the 1999 Budget Act, the use of 18 Provision 1 positions. And we ought to 19 expeditiously -- expeditiously begin to address that 20 instead of, you know, kind working around it. We 21 shouldn't pretend that it doesn't exist. We should 22 just deal with it and -- and resolve it. 23 MR. RUNNER: Member Stowers. 24 MS. STOWERS: Thank you, Chairman. 25 Focusing on Item No. 1, I do agree that 26 when it comes to conferences, the evaluation by the 27 Department of Finance did highlight that Provision 28 One positions were being used in violation of the 18 1 Budget Act. 2 Um, and that Provision One positions are 3 for all state agencies, including our sister agency 4 the Franchise Tax Board, which do not use Provision 5 One positions, by the way, for the record, to 6 support various tax seminars for BOE. 7 They use, um, their taxpayer rights to 8 advocate positions. They may have previously been 9 the classification -- or in the classification of 10 auditors or program specialists, but the positions 11 they are holding now are not revenue-generating 12 positions. I just wanted to make that for the 13 record. 14 But with respect to what's before us, um, 15 it is our understanding that in addition to the 16 Provision One positions that were used at some of 17 these conferences, the issue was raised that some of 18 these conference had limited or any nexus to the 19 core mission of the Board of Equalization. 20 So with that being in mind, I want to get 21 clarification on how are you defining a conference, 22 first of all? 23 MR. RUNNER: Okay. In our -- in our 24 Outreach plan that was approved back in -- 25 MR. DESIO: January. 26 MR. RUNNER: -- in January, conferences 27 were defined and then approved by the Board. So we 28 can go back and read that. I don't have it in front 19 1 of me. 2 MS. STOWERS: I have it in front of me. 3 MR. RUNNER: Okay. There you go. 4 Actually, I do have it. My staff did give it to 5 me. 6 MS. STOWERS: Yeah. And they -- so a 7 conference is defined -- I wanted to put a mark on 8 the spot, but okay. 9 MR. RUNNER: I got it here somewhere too. 10 MS. STOWERS: Conference. Conference are 11 for -- 12 MS. HARKEY: I think we've all seen it in 13 the book because we chose them. 14 MS. STOWERS: -- all four-day events on a 15 larger scale than a small business tax seminar. 16 These events focus on business owners and topics 17 covered in general sessions and breakout sessions 18 that deal with a range of business development 19 issues and tax compliance. 20 Example of past conferences include 21 Connecting Women to Power and International Trade 22 Expo. 23 MR. RUNNER: Yeah. 24 MS. STOWERS: So based on that definition 25 of a conference, my hypothetical, if there was an 26 all-day tax seminar that had a -- a general session 27 or a breakout session that dealt with taxes at the 28 Board of Equalization administrants, and it also had 20 1 one or two general breakouts that dealt with non-BOE 2 events, non-BOE tax administration, would that be 3 something that's covered under this pending 4 moratorium, so that that type of event could not 5 take place? 6 MR. RUNNER: Again, let's be clear here 7 just timing-wise. Okay. This is the -- the idea of 8 this particular item is to put a moratorium until we 9 can establish then the -- the -- the 17/18 Outreach 10 plan. 11 MS. STOWERS: Which comes out when, again? 12 MR. RUNNER: In June. So we're only 13 talking -- so at this point I think we're -- I mean, 14 so I think those are good discussions, and I'll -- 15 certainly staff can respond to it. But the reality 16 is if those aren't on the books right now, I mean, 17 it's not relevant. Because we're going to get to 18 discuss this again -- 19 MS. STOWERS: We get to talk about it. 20 MR. RUNNER: -- by the time -- by the time 21 we do that. But I'll let staff respond to that. 22 MR. GAU: Well, I guess based on the 23 reading of the memo, the way I would -- I would 24 respond is that it's a moratorium, but the standard 25 small business and nonprofit seminars may continue. 26 So that was where my impression of was the 27 direction -- was the intent. 28 MR. HORTON: Members, I think it's helpful 21 1 that we continue that because we've got a lot of 2 staff. 3 But, again, those -- those activities -- 4 and I certainly love to continue -- those activities 5 are currently, you know, in violation of Provision 6 One. When a -- when an office conducts small 7 business classes in the Board of Equalization 8 offices, which is somewhere around 160 of them that 9 occurs throughout the state, they're using tax 10 auditors and tax compliance people to do that 11 training. And according to the Budget Act, that's a 12 violation of Provision One. 13 And so the -- the evaluation that was done, 14 it just -- the evaluation selected examples, but the 15 evaluation was clear is that this -- the use of 16 revenue-generating positions for non-revenue 17 generation of tax administration activity is 18 throughout the entire agency. And so whereas I 19 think there's wisdom, you know, in isolating this, 20 but by far is it solving the problem? 21 And so -- and I think we can probably 22 resolve this expeditiously. Cause everybody -- 23 Department of Finance wants to participate -- 24 everyone wants to participate in the solution and 25 just trying -- 26 MR. RUNNER: Maybe -- 27 MR. HORTON: -- to clarify that. 28 MR. RUNNER: Actually, I think there is a 22 1 solution in place even on those. And so let me 2 go -- I'll go back to the Executive Director in 3 regards to current processes of communication in 4 regards to Provision One. 5 MR. GAU: Right. So I believe 6 Member Horton is correct. Provision One is 7 paramount. That is what we need to deal with. And 8 as of last week, we requested to do exactly that. 9 Identify -- and it's a universal issue. It's not 10 just related to Education Outreach. It is broad. 11 So we are -- we are doing a "all hands on 12 deck" as we speak. Staff are working on identifying 13 any of those positions. 14 And so that's -- that is our prior to 15 address right now this week. 16 MR. RUNNER: Member Ma -- I'm sorry. 17 MS. STOWERS: I just want to close up my 18 thought -- 19 MR. RUNNER: Sure. Go ahead. 20 MS. STOWERS: -- and I'm done. Because I 21 was talking. 22 MR. RUNNER: Right. 23 MS. STOWERS: I wanted to make it clear 24 that I do support putting a moratorium on 25 conferences until we deal with the 17/18 Education 26 Outreach plan. But with the understanding that I 27 would like to, when we get there, be prepared to 28 have some questions about conferences, and whether 23 1 or not they support the core mission of the BOE. 2 And be prepared to -- and I know you guys are 3 working on it, having a matrix in the budget showing 4 the benefit for these various conferences to make 5 sure that you're getting a high return on the 6 investment. 7 MR. RUNNER: Member Ma. 8 MS. MA: Well, I think we've had, um, a lot 9 of legislative oversight, and the Governor has 10 weighed in to restrict some of our delegation of 11 authority. And are we talking about June, like, 12 next month, June? 13 MR. RUNNER: Two months. 14 MS. MA: In two months. 15 Well, you know, I think it would be wise 16 and prudent if we just stopped everything until you 17 all get a chance to go through every single program 18 we have and make sure that we are not in violation 19 of Provision One. Even with our in-house sales tax 20 seminars in the offices, you know, our one-on-one 21 consultations, you know, everything that we offer to 22 the public, even our small business seminars. 23 I only do the 3, you know, hour small 24 business seminars. But I would like to actually get 25 clarification that we are not in violation of -- of 26 those and that it passes muster. Because, you know, 27 doing this just like big conferences, small 28 conferences, it seems like there's more things that 24 1 are happening at the BOE, and you all should get 2 your hands wrapped around everything, get approval 3 from the powers to be that we are doing it 4 correctly, that we have gotten all the sign-offs, 5 gotten all the check-offs. You know, because that's 6 what's been getting us into trouble is that we 7 haven't been following exact protocol in my 8 opinion. 9 MR. RUNNER: So if we added in that line 10 then along with the first part, "And review all -- 11 all seminars." 12 MS. MA: Everything. Everything. 13 MR. RUNNER: Well, again -- everything's 14 everything. I don't know what everything is. 15 MS. HARKEY: I -- 16 MR. RUNNER: Hang on just a minute. 17 So review all seminars. 18 Well, I can tell you, go back to the 19 Outreach plan. We called them -- what was that 20 category of seminar -- the other category that we 21 have? 22 MS. HARKEY: I think Legal was talking 23 about something -- 24 MR. HORTON: Members, when we reduce it -- 25 MR. RUNNER: Hang on. Hang on. Hang on. 26 MR. HORTON: -- down to seminars, there is 27 no de minimis rule in Provision One. 28 MS. RUNNER: Well, no, no, no -- hold on. 25 1 You haven't -- 2 Jerome, you haven't heard what I've said 3 yet. 4 MR. HORTON: I apologize. 5 MR. RUNNER: Okay. What if we -- if we 6 were to include all of our seminars -- 7 MS. HARKEY: All Outreach. 8 MR. RUNNER: Don't we have that as a 9 specific issue? 10 MR. DESIO: We do. 11 MR. RUNNER: Okay. So if we were to go 12 ahead and add in the language that would just say, 13 "And review all seminars to ensure that there's not 14 a violation of Provision One employees," would that 15 solve the problem? 16 MS. MA: Well, I think -- I think all the 17 Outreach -- 18 MR. RUNNER: Because I think -- 19 MS. MA: I think all the Outreach -- 20 MR. DESIO: Seminars and events perhaps. 21 MR. RUNNER: Seminars and events. 22 MS. MA: Okay. Now, what about do the 23 webinars or the town halls, that doesn't violate 24 Provision One? 25 MR. DESIO: Well, it's part of the plan and 26 it depends on who's working them, the town halls. 27 MS. HARKEY: Can I -- 28 MR. RUNNER: Hang on. Hang on. 26 1 MS. MA: So I'd like all of our Outreach 2 events to be -- that's my preference. 3 MR. RUNNER: Okay. So all Outreach events. 4 Before all Outreach events. 5 MS. MA: Everything. 6 MR. RUNNER: And then in terms of clarity 7 that there's a proper use of Provision One. 8 Now, again, that means a couple of things 9 to me. That means, No. 1, we may determine in 10 ourselves that it's an improper use and not do it, 11 or we may decide that we believe it's a proper use, 12 and, therefore, get -- go through the permission 13 process in order to use the Provision One 14 employees. 15 MR. GAU: Correct. That would be my 16 understanding. 17 MR. RUNNER: Okay. 18 Member Harkey. 19 MS. HARKEY: Let me just say what I'm 20 really fearful of is that everything that's on the 21 books is going to be grounds to a screeching halt. 22 So what you don't want to do is that. What 23 you do want to do is just examine if there's any 24 Provision One staff attending any of these. And I 25 think it can be done by just reviewing your Outreach 26 and asking the question of whoever is involved. 27 I don't -- what I don't want to see is the 28 things that are planned, that the staff already has 27 1 out in the mail and other things, come to a halt. 2 And I think we're getting kind of a little bit over 3 the top -- 4 MR. RUNNER: Mm-hmm. 5 MS. HARKEY: -- with this. 6 So what I -- what I think is really 7 important is that you, you know, look at the 8 Provision One. I doubt that on the regular general 9 business tax and things you're going to find 10 Provision One people. You may, but, you know, I 11 mean, I'm thinking that should be an easy find. 12 You merely just check down the list of 13 who's attending; go to the IO supervisor, who's 14 attending, check them out on their -- it's a general 15 site that you can see every employee and what 16 they're categorized, and just check it out and be 17 sure they're all A-okay, and give them the go-ahead. 18 But let somebody do this and certify it to 19 you, so that you're not checking every event 20 yourself. 21 MR. RUNNER: I -- I -- 22 MS. HARKEY: We're getting kind of 23 bottle-necked at the ED level for minutiae. This is 24 a big job, a big organization. 25 So everybody just have your direct 26 reports -- report to you that they have verified 27 these people, and -- or that -- or that you 28 verified. 28 1 MR. RUNNER: I think Member Harkey's intent 2 is important because what we wouldn't want to do is 3 misconstrue that concern to be all of a sudden 4 creating problems for our Outreach to taxpayers, and 5 not provide them the kind of education that we 6 should be doing. 7 MS. HARKEY: I think most the IOs are not 8 Provision One. 9 MR. RUNNER: Right. Right. So I think 10 that's important for us to review and ensure. And 11 with the intent of that discussion about review, 12 meaning, to expedite so that we don't indeed create 13 a problem with not being able to do Outreach. 14 Member Horton. 15 MR. HORTON: Members, I think what may need 16 to happen is that Legal and the Executive Staff make 17 this decision and they take a look at Provision One. 18 My -- my understanding of Provision One is there is 19 no de minimis rule. There is no rule that says, "If 20 you use one, use them for a day, you use them for a 21 minute." 22 And -- and my understanding of Provision 23 One is that it's simple. You know, that all we have 24 to do is take, for example, the marijuana project. 25 My understanding, we may have four or five 26 revenue-generating individuals on that project. 27 Make a list of them, send it over to Department of 28 Finance, ask that this is okay. 29 1 And clearly given Proposition 64 and the 2 other issues surrounding marijuana, that I would 3 think that there's a cost benefit associated with 4 that. 5 There are 160 classes conducted in the 6 Board of Equalization districts. Make a list of 7 those classes, send it over -- I'm not saying halt 8 them -- send it over to Department of Finance, have 9 them take a look at it. Clearly, if you look at the 10 Harris study and a number of other studies, it says 11 that for every dollar spent in Education, you have a 12 5 or 6 dollar return. 13 And that the reality is the Board of 14 Equalization -- 98 percent compliance rate at the 15 Board of Equalization, collecting $62 billion, which 16 is not attributed to the few tax auditors that we 17 have out there. Our tax program generates $1 18 billion. So the other $61 billion is being self 19 compliance as a result of taxpayers being educated 20 and complying. We need to make that argument 21 expeditiously. 22 When we participate, when you have a 23 conference -- a number of conferences coming up, 24 when a tax revenue position participates in there, 25 that's a violation of -- of the project. When you 26 have tax auditors come up to give advice to -- on 27 the CROS project where you go around and you talk to 28 them, if you visit the tax auditor and distract them 30 1 from doing audits, that's a violation of Provision 2 One. 3 As -- as unreasonable as it may sound, it 4 is the Budget Act, and -- and something that can be 5 fixed relatively simple. 6 So I think, again, that in the interest of 7 being in compliance with -- with the Budget Act, 8 that we allow the agency under the direction of the 9 Executive Director, make a list, do a cost benefit 10 analysis, have the discussion with the Department of 11 Finance as to the benefit of those, and -- and then 12 move forward. 13 Isolating this to large conferences says 14 we're not aware of the de minimis rule. We're not 15 aware of the provisions. It says that we are 16 putting a bandage on this problem. We need to be 17 clear that that's not the case. We also need to be 18 clear that it's not conferences; it's not seminars. 19 It is throughout the entire agency. Loan positions 20 are throughout the entire agency. 21 And so the challenge has been is that we've 22 isolated this to Members, when the agency has far 23 more usage of loan positions, far more usage of 24 revenue positions than any Member or collective 25 Members on the Board. 26 And, quite frankly, I think that the 27 assessment that was made by the agency was that it 28 was of benefit, is that education has one of our 31 1 greatest enforcement tools. 2 And so I don't -- I don't suggest, Members, 3 that we -- I mean, we could put a moratorium on 4 conferences. That ain't solving the problem. And 5 it's not necessarily communicating that we're 6 serious about solving the problem. If we're serious 7 about solving the problem, identify the problem in 8 its totality, and identify the solution, and begin 9 to move forward in implementing that solution. 10 When we isolate ourselves to try to point 11 fingers one way or the other, we don't get to the 12 larger issue. 13 MR. RUNNER: So I think the -- cause I 14 understand, then, what was -- been requested 15 is -- and I think it accomplishes all of that. And 16 that is, you take No. 1, and then you add to it, 17 "Review all Outreach events to ensure the proper use 18 of Provision One Staff." 19 I think that accomplishes all of that. 20 MS. HARKEY: Right. And -- 21 MR. RUNNER: Is that -- right? 22 MS. HARKEY: And then the rest of it is, 23 "Per policy, we -- we want to see the existing, and 24 the staff recommendation on how we're going -- what 25 we're going to do on -- 26 MR. RUNNER: But -- 27 MS. HARKEY: -- the other three items." 28 MR. RUNNER: Well, I mean -- I'm just 32 1 dealing -- I'm -- I'm -- again, I'm only being 2 methodical about this -- 3 MS. HARKEY: I know, but we don't have all 4 day. 5 MR. RUNNER: Well, we have as much time -- 6 MS. HARKEY: Everybody's -- everybody's 7 muddled -- 8 MR. RUNNER: No -- 9 MS. HARKEY: -- right now. 10 MR. RUNNER: No. No -- well, you're right. 11 So we have as much time to do this right as 12 we had -- need. 13 So in -- in No. 1 -- in No. 1, then, the 14 idea of using No. 1, would that review -- is that -- 15 would that -- is that under -- I just need a motion 16 if we're going to move forward. 17 MR. HORTON: Well -- well -- 18 MS. STOWERS: Chairman, would you restate 19 it, please? 20 MR. HORTON: Member Runner, if I may, sir. 21 I -- I also think -- I mean, I would defer 22 to -- to -- to the Executive Team, but I -- I also 23 think that 160 conferences, education things that we 24 do in the district, to hold those for a month -- 25 MR. RUNNER: That's not what's being 26 said. 27 MR. HORTON: -- to -- to allow -- to allow 28 us to go through that process of -- of determining 33 1 if that -- making sure that we're in compliance with 2 Provision One, I mean, I don't necessarily see 3 anything wrong with that. 4 MR. RUNNER: Well -- 5 MR. HORTON: The small business conferences 6 that we do may be a little bit different. 7 So I agree with Member Harkey that we've 8 already expended, possibly notified people. People 9 are aware, they're coming, canceling may be more 10 expensive -- 11 MR. RUNNER: Right. 12 MR. HORTON: -- than actually -- so those 13 small conferences maybe should go forward. We're 14 already -- excuse the expression -- uh, we're -- 15 we're -- the ship has already, you know, sailed on 16 that. 17 And -- and so the large conferences, 18 I've -- I've also put that on hold as well. So if 19 that's a concern, uh, let me relieve you of that 20 concern. 21 Um, in order to try to get to solving a 22 problem; one, let me just be clear, the 160 23 education thing, uh -- thing we do in the districts 24 on a regular basis -- they're not 160; it's 160 25 annually -- we should hold off. 26 If there's any Provision One person that is 27 visiting or going out to speak at a conference, even 28 though I think just speaking at a conference or 34 1 going to a conference, it -- you're going there 2 strictly for tax purposes. 3 But it appears that that participation and 4 conferences where other non-BOE activity may be 5 taking place, you know -- we send expert speakers 6 all over -- all over the state. We should probably 7 hold off on that as well. If they're Provision One 8 employees, we should, you know, probably hold off on 9 that. 10 The Provision One employees that are -- are 11 on special projects within the agency, we, you 12 know -- it's just the month. Project's not gonna be 13 hurt because the auditor can't give an advice, and 14 so forth. As much as I love auditors and compliance 15 people, which I really do, um, we can hold off that 16 for a month. 17 I just think that when -- when we go in and 18 say, "We're not prepared to deal with the larger 19 problem, but we want to isolate this to the 20 conference sense," anyone that reads the evaluation 21 will -- will -- will understand that this is a much 22 bigger issue, as simple as it is. 23 And -- and for the life of me, I don't know 24 why back in 1991 forward, why we didn't comply. 25 Because compliance is so simple. To comply with 26 this is relatively simple, and we have an excellent 27 reason for doing it in hindsight. 28 But to not comply going forward, when we 35 1 know -- had I known Provision One existed to the 2 extent that it does, and, you know -- I don't know 3 how I missed it after spending so many years here, 4 uh, many of us. But, um, we -- we could have put in 5 the qualifications, "Get the Department of Finance 6 to sign off." 7 In fact, it has a negative sign-off. If 8 you send it to them and they don't respond within 9 30 days, you can move forward. They've got 30 days 10 to respond. You send it over, 30 days, and they 11 don't respond, you can move forward with your 12 project. 13 MR. RUNNER: Again, it seems to me that 14 the -- it seems to me that the item covers all that. 15 MS. HARKEY: Good information. 16 MR. RUNNER: You know, if we review where, 17 again, the instruction is -- or the motion is 18 to -- or there hasn't been a motion yet. 19 If there is a motion to this item that was 20 added, "To review all Outreach events to ensure the 21 proper use of Provision One," I think that covers it 22 all. 23 MR. HORTON: Well, my -- 24 MR. RUNNER: Right? I mean -- 25 MR. HORTON: -- my -- my -- 26 MR. RUNNER: -- why -- why -- why don't you 27 think it's -- 28 MR. HORTON: My motion -- my motion would 36 1 be to -- to put, uh -- with the exception of the 2 events, put all the large conferences on hold. With 3 the exception of the events that, uh, the small 4 business conferences that have -- that you've 5 already advised taxpayers of, they're aware of, 6 they're coming up, allow those to continue. 7 Also, put on hold all the business classes 8 that occur at the District Office, the E-filing and 9 so forth, where Provision One is involved, or use 10 non-Provision One employees in order to accomplish 11 those objectives. All expert visiting where you're 12 participating -- 13 MS. HARKEY: Don't write everything down 14 yet. 15 MR. HORTON: Put -- 16 MR. GAU: No, I know -- 17 MS. HARKEY: This is just a debate to it, 18 so just pay attention. 19 MR. GAU: I'm trying to hit the highlights. 20 MS. HARKEY: Listen up. 21 No, that's okay. 22 MR. HORTON: Put -- put -- put those on 23 hold as well. Um, and a four-month or so -- and, 24 again, let me -- let me just say, I don't wanna -- I 25 would defer to -- to -- to the Executive Team and 26 Legal and say that -- 27 MR. RUNNER: [Inaudible] ask a question. 28 MR. HORTON: -- my position is to solve the 37 1 problem. And my advice is to put it all on hold. 2 And as I -- as I have articulated, until 3 such time that you can report back to -- to -- to -- 4 to the Board individually and collectively that 5 we've got a handle on this and we're aware of what 6 our exposure is. 7 MR. RUNNER: Let me ask the Executive 8 Director -- 9 Here -- here's what my concern with a broad 10 issue like that is; No. 1, the issue that we're 11 trying to get around, I think, is the proper use of 12 Provision One. 13 MR. GAU: That's correct. 14 MR. RUNNER: Okay. That's the issue. So 15 it seems to me that is our objective is the proper 16 use of Provision One. 17 MR. GAU: Well, globally. 18 MR. RUNNER: Globally. 19 MR. GAU: Yes. 20 MR. RUNNER: So, again, it would seem to me 21 if we go ahead and talk about the fact that all 22 Outreach events are supposed to be evaluated to 23 ensure the proper use of Provision One staff, we've 24 accomplished all of that without putting a 25 moratorium on -- on -- on, you know -- without 26 saying next -- all of a sudden out of this meeting, 27 "If you have a conference scheduled with some 28 taxpayers next Thursday, you can't do it," what we 38 1 can do is decide that -- that the proper employee is 2 dealing with that issue. 3 Or we go to Finance and get the approval 4 for them to be using that employee. That, to me, 5 is -- would be the better, proper way for us to do 6 this. And also, then, not disadvantage taxpayers in 7 the process. 8 So I think we're trying to get to the same 9 issue in regards to the proper use -- 10 MR. HORTON: I think we're saying the same 11 thing, Mr. Runner, except it's not just conferences. 12 Let's be clear here. 13 MR. RUNNER: No -- no, I said all -- I said 14 all -- 15 MR. HORTON: It's not business seminars. 16 It is -- they're used in -- in the agency for a 17 number of different reasons other than that. 18 You've got to evaluate -- as -- as Mr. Gau, 19 our Executive Director, indicated, this is a global 20 issue for the agency. 21 And -- and I agree with everything you 22 said, Mr. Runner. I concur. I -- I would say 23 "second that" if you would -- if you would expand it 24 to a more global assessment, uh, that encompasses 25 all the current, uh, potential misuse of Provision 26 One employees. 27 MR. RUNNER: Well, I -- I don't have any 28 problem with adding it to the issue, "In addition, 39 1 making sure that all Provision One employees are 2 used in the proper way." 3 MS. HARKEY: Okay. Can -- let's -- 4 let's -- 5 MR. RUNNER: Does that -- does that -- let 6 me -- I'm just asking -- is that -- would that 7 accomplish that? 8 MR. GAU: Yes. Because I -- what I'm 9 hearing is that we're talking about a subset of the 10 global Provision One issue here -- 11 MR. RUNNER: Mm-hm. 12 MR. GAU: -- when we're talking about 13 conferences. So obvious -- you know, with -- with 14 the -- the attention and our need to comply with 15 Provision One where we aren't, that certainly 16 any -- whatever the Board's direction is with 17 respect to small business seminars or conferences, 18 that anything comes through Mr. DeSio or my office. 19 And I want to make sure we're not using a 20 Provision One person at an event. 21 MR. RUNNER: But I think Mr. Hor -- 22 MR. GAU: That it's not appropriate, but -- 23 MR. RUNNER: Mr. Horton's talking about a 24 broader aspect. 25 MR. GAU: And we are doing that as well, 26 because I -- we are inventorying our agency as we 27 speak to identify where we may -- if we are out of 28 compliance, identify it. And then if there is a 40 1 conversation that we -- an education and a con -- a 2 conversation and decision-making we need to have 3 with the Department of Finance to, um -- are they -- 4 are there any that we need to -- feel like we need 5 to go forward and ask for an exception to, or -- 6 or -- or are those just not -- 7 MR. RUNNER: Member Harkey -- 8 MR. GAU: -- we're just taking these back, 9 you know. 10 MR. RUNNER: Member Harkey's been wanting 11 to have a word. 12 MS. HARKEY: Okay. I -- I think we need to 13 separate these things. I think that Provision One 14 is a huge global issue. 15 So I think that first pose -- impose a 16 moratorium until June till we figure out what we're 17 doing on the large conferences. 18 And, um, I think that's a -- that's a 19 separate issue. We've done that. I know Mr. Horton 20 has; I have. We're -- that's done. So that's 21 probably the one. 22 And the second subset of that would be 23 review all Outreach events as simply as possible. 24 Like, you know, get your people and review all 25 Outreach events -- 26 MR. GAU: Yes. 27 MS. HARKEY: -- and ensure the proper use 28 that, you know, if Provision One employees are being 41 1 used, that management is aware and can -- can 2 justify, somehow -- 3 MR. RUNNER: Is that a motion? 4 MS. HARKEY: -- the -- the use of it. 5 Yeah, that would be the second part. 6 MR. RUNNER: Is that a motion?. 7 MS. HARKEY: Or the -- that could be a 8 motion. 9 MR. RUNNER: Second. 10 MS. HARKEY: Okay. Then -- 11 MR. RUNNER: Put it on the table. 12 MS. HARKEY: Then, I'm not -- 13 MR. HORTON: [Inaudible] discussion, 14 Members. 15 MS. HARKEY: Then -- just a minute. 16 MR. HORTON: Discussion, Members. 17 MS. HARKEY: Just -- just -- 18 MR. RUNNER: Right. Right. 19 MS. HARKEY: Just a minute, please. 20 Because we've had a lot of discussion on this. 21 There is a larger -- 22 MR. HORTON: Well, when there's a first and 23 a second in this discussion -- 24 MS. HARKEY: A first and a second -- well, 25 I'm still discussing. 26 Okay. There is a larger global issue on 27 Provision One in -- statewide, I believe. 28 MR. GAU: Yes. 42 1 MS. HARKEY: And even though, maybe, 2 certain angel agency isn't doing something in one 3 direction, they might be doing something somewhere 4 else. 5 I think if -- if there -- everything is 6 perfect at every other agency in the state, then I'm 7 very happy with that. And we're the bad guys. 8 But I -- somehow I think that the BOE is 9 not unique in a lot of what it's -- a lot of what's 10 gone on. I just have this feeling. So, you know, I 11 can be proven wrong. 12 But I think we need to look at, for the BOE 13 globally, Provision One employees. And I think 14 you're doing that now. And then that's something 15 you need to report back to the Board with what 16 you've discovered when you discover it. 17 Um, and, uh -- 18 MR. RUNNER: So to get us through this 19 particular item -- 20 MS. HARKEY: To get us through this 21 particular item, and also -- 22 MR. RUNNER: The motion is -- 23 MS. HARKEY: The motion is, there's two 24 parts of the motion. 25 One is to improve, you know -- impose a 26 moratorium on all conferences till the 2017/2018 27 Outreach has been approved by the Board standard, 28 you know -- standard. 43 1 And small business nonprofit tax seminars 2 may continue, and -- and any other Outreach may 3 continue pending review of appropriate, um, 4 allocation of employees, pending review of -- 5 MR. GAU: Compliance with Provision One. 6 MS. HARKEY: -- compliance with Provision 7 One guidelines. 8 MR. RUNNER: That's good. 9 MS. HARKEY: Okay. So that's No. 1. 10 MR. RUNNER: Okay. 11 MS. HARKEY: No. 2, the second subset -- 12 MR. RUNNER: Well, hold on. Let's -- can 13 we -- can we dispense that? Cause that's a motion 14 on that, or are you gonna add to -- 15 MS. MA: [Inaudible] Does that make sense? 16 MS. HARKEY: I was gonna add the -- I was 17 gonna add the -- 18 MR. GAU: I think so, yes. 19 MS. HARKEY: I was gonna bifurcate my 20 motion. That's part one. 21 And part two, to keep -- to be sure we -- 22 we don't lose track, but it is to have staff review 23 all Provision One within the Board of Equalization, 24 and report back to the Board at a date as soon as 25 possible, maybe by next Board hearing. 26 Let us know where you are, um, by next 27 Board hearing as to what the situation is with 28 Provision One employees, and what we might need to 44 1 do to go forward. 2 MR. RUNNER: Let me ask, I -- I'm fine with 3 those. I think those are good -- good ideas. 4 The only thing I want is, I don't want to 5 be misconstrued. I'm concerned in regards to a 6 report. 7 What I'd like -- and I -- because I think 8 this is what we're doing, we're doing an immediate 9 evaluation and correction. 10 MR. GAU: Yes. 11 MR. RUNNER: So the report isn't -- to my 12 understanding, just to make sure we understand, the 13 report isn't to tell us what we need to do, we want 14 to re -- we want to know what they've done in terms 15 of the correction, right? 16 MR. GAU: That's correct. 17 MS. HARKEY: Right. 18 MR. RUNNER: Okay. 19 MR. GAU: We -- I don't want to wait a 20 month to take the -- 21 MR. RUNNER: Right. 22 MR. GAU: -- necessary correction 23 actions -- 24 MR. RUNNER: Right. 25 MR. GAU: -- that may be necessary. 26 MS. HARKEY: No, you -- you don't have to 27 come back to us -- 28 MR. GAU: But we will report back what we 45 1 did. 2 MS. HARKEY: -- to -- to review. 3 MR. RUNNER: Right. 4 MS. HARKEY: You don't have to come back to 5 us to review your current events -- 6 MR. GAU: Thank you. 7 MS. HARKEY: -- and be sure you're okay. 8 We trust you. 9 MR. RUNNER: Yeah. 10 MR. GAU: Thank you. Okay. 11 MS. HARKEY: Handle that. 12 MR. RUNNER: To take care of it quickly. 13 MR. GAU: All right. Yes. 14 MS. HARKEY: Handle that. We don't want 15 any -- 16 MR. RUNNER: Okay. So that's a part one or 17 part two of a motion? 18 MS. HARKEY: Part two is global. 19 MR. RUNNER: Okay. 20 MS. HARKEY: Which is response to what 21 Member Horton wants to do. He wants a global 22 approach, ASAP, and report back to the Board. 23 MR. HORTON: Now -- 24 MR. RUNNER: Okay. 25 So is there a motion? 26 MS. HARKEY: I made a motion; two-part. 27 MS. RUNNER: Is there a second? 28 MS. MA: Second. 46 1 MR. RUNNER: Okay. There's a second. 2 MR. HORTON: Discussion. 3 MR. RUNNER: Okay. Now there's discussion. 4 MR. HORTON: I'm -- I'm supportive of that, 5 although I still believe that it is -- it is 6 limited. I mean, that it -- we should do a broader 7 moratorium on the activities that are being 8 conducted currently. 9 And -- and I think that the direction to 10 the Executive Team would be to the extent that they 11 find, which we all know exists, violation of 12 Provision One throughout this agency, that the 13 Executive Director stop it when it is economically 14 feasible. 15 There's no disadvantage to the taxpayers 16 and so forth until such time that you can get a 17 sign-off from Department of Finance or notify them 18 immediately. 19 So I would broaden that to incorporate 20 that. 21 MR. RUNNER: Well, I think it -- I think 22 that's kind of the under -- I think, currently -- is 23 that's what's going on currently? 24 MR. GAU: It is. And that's what I heard 25 is part of the motion. 26 And just to confirm of the Board direction, 27 we are doing that as well, but also the Board's 28 direction as part of that motion was that all 47 1 Provision Ones, we will deal with immediately where 2 necessary and report to the Board our results of 3 that as well. 4 MS. HARKEY: And corrective action and 5 results. 6 MR. GAU: Correction and -- and -- yes. 7 MR. RUNNER: Okay. 8 MR. HORTON: With that understanding, I'd 9 be supportive, Mr. Chair. 10 MR. RUNNER: Okay. So there's a motion and 11 a second. 12 Objection? 13 No objection. 14 Okay. So let's -- let's, kind of, walk 15 through the next couple ones. 16 Next one was, "Create and implement an 17 approval process to include review of the 18 Executive Director with notification sent to all 19 Board Members for any event which -- which more than 20 five BOE employees are requested to attend. 21 If the Executive Director objects to an 22 event, an employee partici -- or an employee in 23 participation, the requesting Board Member may add 24 the matter to an agenda for a full review of the 25 discussion." 26 That's -- and, again, what these would be, 27 would be, then, policies that would be done, then, 28 by the administration, by -- or by the ED, and 48 1 create this -- this process, um, and would report 2 back to the Board, then, in regards to -- to that 3 policy. 4 So discussion on that item. 5 MR. HORTON: Discussion, Member Runner. 6 MR. RUNNER. Yes. Yes. Go ahead, 7 Member Horton. 8 MR. HORTON: Thank you, Chairman Runner. 9 Members, I -- I believe that the ED ought 10 to have the authority to reject, um, any use of 11 staff in any way, whatsoever. It doesn't have to 12 come back to this Board for that purposes. Um, 13 in -- in as long as that rejection is in -- is in 14 accordance with the Government Code 17804 through 15 7801, and 15623, and the others, which I'm sure 16 we're all familiar with. 17 And -- and so -- 18 MR. RUNNER: So you'd like to take the last 19 line out? 20 MR. HORTON: I just don't see -- yes. 21 MR. RUNNER: Okay. 22 MR. HORTON: To not have it come back to 23 the Board. 24 MR. RUNNER: Okay. 25 MR. HORTON: The second thing is that the 26 policy exists. The policy exists where the 27 Executive Director has the authority to sign off on 28 the uses of staff; has the authority to sign off on 49 1 any Education and Outreach events. We provided that 2 authority in the resolution of conferring powers. 3 It's also spelled out in BEAM; it's also 4 spelled out in the policy that we passed on the 5 small and large moratoriums. I mean, small and 6 non -- excuse me -- Board of Equalization events and 7 non-Board of Equalization events. 8 So what we may be looking for is an 9 education where the direction would be to -- to 10 immediately have a class with all of the 11 decision-makers in the organization, down to the 12 district administrators and his two supervisors on 13 the compliance's side, to educate them about the -- 14 the rules that are applied, and so forth. 15 And then maybe the formation of a team with 16 the representative from the ED, External Affairs and 17 Legal, to review every transaction. Which I thought 18 was currently the process. And I do believe -- 19 MS. HARKEY: It was. 20 MR. HORTON: -- is the current process. 21 And I do believe that there's evidence that every 22 transaction in question has actually gone through 23 that process of evaluation, including a cost-benefit 24 analysis, including a legal determination of the 25 governmental purpose of it. 26 And the challenge was -- is that the 27 Department of Finance just wasn't aware of the 28 process, and wasn't provided the information of when 50 1 the various events were approved. 2 For example, the VITA events dates back to 3 2004, the Outreach Plan has been approved from 2004 4 forward. They have all gone through the legal 5 analysis, all gone through analysis with 6 External Affairs, all been signed off by the 7 External Director at the time. 8 In fact, we actually submitted four $4,000 9 grants for the VITA program, because we -- everyone 10 was supportive of it, thought it had a governmental 11 purpose until the evaluation came out. And, 12 "Whoops, well, maybe it doesn't." 13 So there's a process that's there. And 14 it's the fact that that process is not deemed to be 15 there, and not understood to be there is where the 16 inherent challenge is. And I think it's important 17 that we began to make everyone aware of that. 18 MR. RUNNER: Well, that would be, then -- 19 that would be, I would think, the report that would 20 be brought back on this issue. And then whether or 21 not -- 22 MR. HORTON: Well, Mr. -- Mr. Chair, I 23 don't know that we have time for a report to come 24 back a month from now. 25 I think it's important that the 26 Executive Director has the autonomy to do this 27 expeditiously, immediately. I actually believe that 28 we don't need to give him that authority; he -- he 51 1 has that authority under the conferring powers. 2 When -- when the Board conferred the powers 3 for the executive manager -- Executive Director to 4 manage this organization, uh, we gave him that 5 power. 6 Then the Board should just, you know, 7 acknowledge that he has the power, and allow him and 8 his team to begin do educate folks about that. 9 I would suggest a review of being -- a 10 review by the Executive Team. I mean, our Legal 11 team is new in their position, our External Director 12 is doing a -- a good job. But he's new in our 13 position, and so forth. And the same thing with our 14 ED. 15 And so that education process has to take 16 place expeditiously. I -- I -- I welcome a report a 17 month from now, you know. But between now and a 18 month, you know, who knows, you know, what might be 19 happening. 20 I -- I think, for me, you have the 21 authority to do -- take the actions you need to take 22 now to make sure that folks are aware of existing 23 policies. 24 MR. RUNNER: So I think we accomplish this, 25 then, by simply -- we don't need a report back, 26 the -- the -- the ED can just review and send out a 27 memo, and say, "This is what we're doing, and this 28 is what I understand the authority is," correct? 52 1 MR. HORTON: Mr. Chair, let me clarify 2 here -- 3 MR. RUNNER: Well, just -- I mean, just 4 asking the -- the -- 5 MR. GAU: That'd be my understanding. And 6 then if we need to -- to put anything in -- in the 7 Education Outreach Plan that comes forward -- 8 MR. RUNNER: Right. 9 MR. GAU: -- in June to memorialize 10 anything, we could do it -- 11 MR. RUNNER: Because I don't think -- yeah. 12 MR. GAU: -- enhance it that way as well. 13 MR. RUNNER: I don't think -- I don't think 14 we need to wait a month for it. I think we can 15 establish it now. 16 MR. HORTON: But let me say this -- 17 MR. RUNNER: Go ahead. 18 MR. HORTON: This just is our conversation. 19 I mean, working for this agency 22 years 20 before I came here, we used to get those green memos 21 all the time. 22 And I -- I dare tell you what happened, 23 Mr. -- Mr. Gau, you probably know as well as I what 24 happens -- 25 MR. GAU: Policy Memos. 26 MR. HORTON: -- to those green memos. 27 Um, what needs to happen, in my mind, is an 28 immediate calling of all the Executive Team to go 53 1 over existing policy, education, make sure they're 2 aware, and pull up the line management to begin to 3 do that. 4 We have some very talented folks within the 5 agency. And I think the making them aware, as 6 opposed to just sending a memo, is very important, 7 sir. 8 MR. RUNNER: So if this Board believes it 9 has -- that the ED has the ability to do No. 2, 10 that's fine. We're just -- 11 MS. HARKEY: Okay. I -- 12 MR. RUNNER: -- reminding them of that. 13 Member Harkey. 14 MS. HARKEY: I think No. 2 might need to be 15 amended that to have the -- have the Executive 16 Director, with notification -- or not with 17 notification. Have the Executive Director review 18 and, uh -- uh, revise an approval process, if 19 necessary. Um, which he -- which he has the 20 authority to do under conferring powers. And for 21 any events where more than five employees are 22 requested to attend 23 MR. RUNNER: That's good. I'm good with 24 that. 25 MS. HARKEY: And then, you know, I 26 think -- I think it would be nice to report, or 27 let -- let -- have everybody know. I mean, send out 28 whatever notification needs to be sent out, and also 54 1 probably to cc the Board. 2 MR. RUNNER: Yeah, that accomplishes -- 3 that accomplishes No. 2. 4 MR. HORTON: Mr. Chair, if I may. 5 MR. RUNNER: Yes, Mr. Horton. 6 MR. HORTON: Again, I don't see -- I don't 7 believe that there is a de minimis rule that you can 8 have one, two, three, four. You can't be partially, 9 uh -- you can't be partially at sail. You're either 10 at sail or not. 11 So the five or more, I -- I -- I don't want 12 to handcuff the -- you know, the -- the -- the -- I 13 don't want to say that, uh, the agency has the 14 authority to violate, uh, the Budget Act when it's 15 four, you know. 16 I -- I think -- I think regardless of the 17 number, the Executive Director has the authority, 18 and I think communicating that the Executive -- or 19 the Executive Team has the authority. 20 And I would -- I would basically, let me 21 just make it short -- eliminate the No. 5. I 22 mean -- 23 MR. RUNNER: Okay. 24 MR. HORTON: I don't know where that number 25 came from in the first place. But eliminate the 26 No. 5, period. 27 Take a look at it. If it's in compliance, 28 it's in compliance. Go through the review process, 55 1 the legal review process. Go through the evaluation 2 of External Affairs, and -- and whomever else the 3 Executive Director deems necessary to review these, 4 in order to assure that we are in compliance with 5 them, with the various provision, and make a 6 decision. 7 And, um, I, you know -- I, for one, will 8 follow that decision. I think that's where the 9 problem lied, you know. Nobody knew, nobody 10 understood what the rules were. 11 Although, I think in -- in every case, we 12 made sure that you follow those rules, because we 13 did know what they were. 14 MR. RUNNER: Let me just ask Mr. Gau, then. 15 At that point, through this discussion, do 16 you believe that you understand your authority well 17 enough that that is the intent of -- of, uh, item 18 No. 2? 19 MR. GAU: Uh, you know, in all honesty, I 20 think I do. And I think that, uh -- 21 MS. HARKEY: Good for you. 22 MR. GAU: -- with the results and the weeks 23 and months to come, we'll -- 24 MR. RUNNER: Okay. 25 MS. HARKEY: Okay. 26 MR. GAU: -- prove that out. 27 MR. RUNNER: Member Harkey. 28 MS. HARKEY: One more comment on that. 56 1 MR. HORTON: Thank you. 2 MS. HARKEY: Again, I don't want everything 3 to get lodged into ED level. Just because we say -- 4 MR. GAU: Yes. 5 MS. HARKEY: -- ED, here -- 6 MR. GAU: Right. 7 MS. HARKEY: -- you can assign, you 8 know -- I mean -- 9 MR. GAU: Right. And I will. And I -- 10 MS. HARKEY: Okay. Just be sure. 11 MR. GAU: And we do have levels of 12 approval. And -- and we will make sure that peop -- 13 that everybody understands the things to question, 14 things to ask about, and make sure that they get 15 asked before it gets to my office. 16 MS. HARKEY: I just -- yeah. I just -- 17 MR. GAU: Get it resolved at the lowest 18 level. 19 MS. HARKEY: -- want to be sure. Because 20 when I was listening to those hearings, it's like 21 everything stops at the ED. We could just -- we 22 could just bottleneck this. 23 MR. RUNNER: Right. Right. 24 MR. GAU: It's a busy office. 25 MR. RUNNER: Right. Right. 26 MS. HARKEY: But I want to be sure that 27 we're -- we're clear -- 28 MR. RUNNER: Okay. 57 1 MS. HARKEY: -- that you have this. 2 MR. RUNNER: Okay. 3 No. 3 was, "Draft an Issue Paper -- an 4 Issue Paper and policy, and propose a policy on 5 loaned and redirected staff. Considering putting -- 6 consider putting -- this would be the direction of 7 what to consider -- an MOU in place within 60 days 8 for all loaned/redirected staff, pending the 9 development of an Issue Paper and adoption of the 10 policy." 11 And we'll use, "Shall clearly state the 12 purpose and duration of the loan and redirection 13 issue." 14 MR. GAU: Okay. 15 MR. RUNNER: Member -- 16 Mr. Gau -- 17 MS. HARKEY: The only thing I want, I want 18 to -- I wanted to kind of segment those, because 19 loaned is different than redirected. 20 MR. RUNNER: Okay. Let's talk -- let's 21 hear -- 22 MS. HARKEY: And I'm not sure if redirected 23 is even a proper term. 24 What -- what I think we're getting to in 25 redirected is, again, Provision One. 26 MR. GAU: Okay. And I think you -- uh, if 27 I may, each of those is something to distinguish 28 between. And you're right. 58 1 MS. HARKEY: Right. 2 MR. GAU: And so Provision One paramount 3 of -- of concern is we don't violate Provision One. 4 Now what we're talking about, I believe, 5 where the genesis of the loan and whether you call 6 it a redirection. 7 A loan, to me, is sometimes of a -- it 8 could be -- 9 MS. HARKEY: A longer term. 10 MR. GAU: -- a little longer duration. 11 Thank you. That's exactly what I was gonna 12 say. 13 And we have -- 14 MR. RUNNER: To stop the confusion here, 15 would it be better if we just dropped redirection 16 and just discussed loan? 17 MS. HARKEY: I think so. 18 MR. GAU: I -- I would agree. 19 MS. HARKEY: Because I think -- 20 MR. RUNNER: Okay. Let's do -- let's do 21 that. 22 MS. HARKEY: -- redirection is only used -- 23 MR. RUNNER: Right. 24 MS. HARKEY: -- in connection with the -- 25 MR. RUNNER: So let's -- let's not worry 26 about the phrase redirection, and just use the word 27 loan. 28 MR. GAU: All right. So I will just -- we 59 1 will talk about loans and what loans have done. 2 There have been informal loans, there have been some 3 that have been more formal. What we have modeled 4 lately, and we have not done these, uh, in many 5 months. And the last one we did was through a 6 formal memorandum of under -- a memorandum. And it 7 modeled what Legal had done. 8 Member Horton had mentioned the legal 9 process that they had done when sometimes maybe a 10 Member's office is -- and this isn't just Member 11 issues. We do -- just so you know -- we do -- have 12 done loans between departments and other things. 13 But this is where it has really become an issue at 14 some of the Member offices. 15 But we -- we have, uh -- we are trying to 16 model that. We have a draft already of a loaned 17 process. And -- and -- and what you will see when 18 it comes out is where are those -- not to say that 19 loans can't be appropriate on -- in certain 20 circumstances. But what are those circumstances 21 that the Board, and we -- we will make a 22 recommendation, do you agree on -- we'll agree on is 23 what are those kind of work assignments or -- or 24 training development assignments, or where there's 25 an opportunity to gain some knowledge, or maybe 26 something -- and what is the duration. And then we 27 need to abide by those durations. 28 And if -- if that means then somebody -- 60 1 somebody else gets a turn or an opportunity to be 2 loaned, because there could be some value in that, 3 then somebody else gets that. 4 So that's what I would like for us to bring 5 that I would like to propose to the Board. 6 MR. RUNNER: Okay. And you can do that. 7 And when you say propose to the Board, do you mean 8 in terms of a -- at a -- at a -- at our next 9 meeting, or would that be something that you would 10 just go ahead and do memo to the Board saying this 11 is the policy in regards to the loan. 12 MS. HARKEY: I think it needs to be an 13 Issue Paper. 14 MR. RUNNER: Well, that's what I'm -- 15 I'm -- what would your intent be? 16 MR. GAU: Well, I think that we've got a 17 pretty good understanding of those -- those areas. 18 And I would welcome thoughts on it. And I'll talk 19 to our staff, too. 20 Um, I -- I could put it out there, and if 21 you -- if you, uh, want to bring it to the Board, 22 you certainly can. I mean, that's the Board's 23 prerogative. 24 MR. RUNNER: Cause here's the -- 25 MR. GAU: So, I would -- I would welcome -- 26 MR. RUNNER: -- here's -- I'm with -- I'm 27 with Member Horton on some of this stuff. 28 MR. GAU: Yeah. 61 1 MR. RUNNER: I don't -- I don't -- I mean, 2 if we know -- if we know the solution now -- 3 MR. GAU: Right. 4 MR. RUNNER: -- I don't necessarily think 5 we need to wait, uh -- 6 MR. HORTON: Yeah. 7 MR. RUNNER: -- you know. 8 MS. HARKEY: Okay. I -- if I may -- 9 MR. RUNNER: And so -- let me -- 10 Member Horton. Go ahead. 11 Actually, Member Harkey. 12 MS. HARKEY: I -- I just -- my problem is a 13 lot of this stuff we don't see again. We don't even 14 know if it's fixed. We don't hear about it. 15 We have a public hearing, bring it to the 16 Board, show us what's up. You know, I mean, we have 17 to get back to these Issue Paper. This is where 18 we're doing it, this is where we think it works, 19 this is gonna be our BEAM policy, and here it is. 20 And I -- we need to see it, because we -- 21 we lack communication and education. I'm not 22 sitting in Sacramento 24/7 that I can just roam 23 around over to headquarters. I need to get some 24 information when I come to the hearings. 25 MR. GAU: Okay. So thank you. That is 26 exact -- and I -- and I spoke about a government's 27 process recently at a hearing. And -- and it is 28 really starting to gain momentum. 62 1 MR. RUNNER: Okay. 2 MR. GAU: And we talked about silos. This 3 process has people throughout all departments in the 4 agency participating. So you will get that robust 5 input that we need to make the -- bring the Issue 6 Papers forward with a strong staff recommendation. 7 I th -- we -- I -- in my heart, that's what I 8 believe we need to do. 9 MR. RUNNER: Okay. 10 MR. GAU: We need to come back and get back 11 to strong staff recommendations and Issue Papers 12 with alternatives. 13 MR. RUNNER: Okay. 14 MR. GAU: And, uh, we can -- we will do 15 that. 16 MR. RUNNER: Okay. 17 Member Horton, you were -- 18 MR. HORTON: Thank you, Mr. Chair. 19 Members, I think there's a lot of wisdom 20 in, um -- in -- in -- in defining the problem. I 21 think it's important to define the problem, um, 22 instead of allowing, you know, others to define the 23 problem with the Board of Equalization. We need to 24 define it, publicly discuss the problem. 25 And, I mean, as I see it, loan position are 26 throughout the agencies. There are a number of 27 areas where loan positions -- and there is a process 28 in each one of these. Each position that has been a 63 1 loan, someone in the agency has signed off on them, 2 there's been an approval process. 3 We have our T & D assignment, which we're 4 all familiar with, training and development 5 assignment, that dates back to -- to my 6 recollection, Board Member Fong, years ago, who had 7 T & D assignments in the Member's office, and those 8 assignments continue to exist. 9 Internship programs throughout the agency 10 where we're bringing individuals in, and they're 11 actually working in the Audit and Compliance 12 Department as interns under a six-month program with 13 an agreement with the universities. 14 The Legal Department has a number of 15 positions that theoretically are loan position by 16 the length of their term, and so forth. 17 So these loan positions exist in the 18 agency. We need to identify them, put them on a 19 sheet of paper, say, "Here's where they all are," 20 and then make an evaluation of the cost benefit. 21 Is it -- is it beneficial for this loan 22 position to be there? And if it's not, take it 23 away. 24 And I believe that the Executive Director 25 has that authority on the conferring powers, and all 26 that needs to happen is the execution of that 27 authority. It exists. The policies exist as well. 28 But to Member Harkey's, um, comment, I 64 1 think it's important that we discuss these policies 2 publicly. And -- and an informational hearing, we 3 don't need to approve it. 4 MR. GAU: Right. 5 MR. HORTON: But in an informational 6 hearing, come forth, tell us what our existing 7 policies are. Tell us, you know, what, you know, 8 after you've corrected the things you need to 9 correct, um, this is the way it looks now. This is 10 how the org -- organizations look now, these loan 11 positions. 12 And if you feel -- present to us if you 13 feel that these positions are productive for this 14 agency. You know, we're in a very fortunate 15 position that this agency, for every dollar invested 16 in the agency, we generate $252. The most 17 productive agency in the nation, if you ask me. 18 Most efficient agency in the nation from that 19 perspective. 20 And so we're talking about -- I mean, if 21 you look at the evaluation, it look -- they looked 22 at $2.6 million. Thousands of dollars in $2.6 23 million certainly wasn't their intent. If you keep 24 things in perspective, and say, "Perspectively, this 25 is the real issue." The issue is having the 26 governance as -- as the Executive Director of the 27 place, the institutional structure, which -- and 28 making sure that people know about these policies. 65 1 You know, it is -- it is -- the 2 administration has the authority, it has the 3 responsibility, if you ask me, to evaluate and so 4 forth. And I'm just simply saying, do your thing, 5 you know -- 6 MR. GAU: Right. And so -- 7 MR. HORTON: -- make it happen 8 MR. GAU: Thank you. And what I would like 9 to do, obviously we have issues that would be 10 appropriate for the -- whether it's the -- the 11 Property Tax Committee, Business Tax Committee, Leg. 12 Committee, Customer Service, there's also an 13 opportunity, I believe, in the agenda. 14 And we'll look -- what I would like to 15 offer is the Executive Director's report. Make more 16 use of the Executive Director's report to bring, not 17 decision-making kind of items, but things that we 18 believe are good policy, and -- and for the public 19 assumption in a hearing, for us to -- for me to be 20 able to explain what we're doing with certain things 21 in the agency. 22 MR. HORTON: Another direction you can go, 23 Mr. Gau, is that you can utilize the Board's policy 24 as far as amending being. Although -- although -- 25 and so that has required to go through the Board 26 when you've amending BEAM to that extent, maybe one 27 of the ways you can kind of communicate and engage 28 us in that process and have a public discussion 66 1 about it, go through that entire process and say, 2 "Okay. We're going to amend BEAM. We're gonna have 3 the interested parties -- " 4 I would extend it to interested parties, 5 even though, traditionally, you may not. So 6 that -- so that folks who are interested, you know, 7 really, really interested in government have an 8 opportunity to take a look at the existing policy 9 and whatever recommendation the -- it comes to the 10 Board, another public discussion. We confirm the 11 amendment to BEAM. 12 Um, and I know I'm being redundant to this. 13 I mean, I must have read BEAM 100 times. So I think 14 it's all there. 15 I think that this organizations's been 16 around since 1879. And -- and the issues facing 17 this organization didn't just happen over the last 18 two years. 19 MR. GAU: Right. 20 MR. HORTON: You know what I mean. 21 So the structure's been in place, it's been 22 functioning, and it's there. We just need to make 23 sure everybody knows it's there, and everybody 24 complies with it. 25 MR. GAU: What I would like to, um -- if I 26 may. With respect to -- 27 Chairman, if I may. 28 With respect to BEAM, it is a -- it's a 67 1 very valuable manual. There's -- Mr. Ken Thomas 2 helps head that up. I -- what I would like to see 3 us do is go through that. It needs to be updated in 4 certain areas. It -- maybe we need new policies in 5 certain areas. But we need to make, uh -- do some 6 rigger on going through the BEAM manual. 7 MR. RUNNER: Okay. Let me just back up 8 there, and then -- then in regards to Item 3, do you 9 feel like you have adequate direction, then, from 10 the Board in terms of moving forward with those 11 issues? 12 MR. GAU: I do. 13 MR. RUNNER: Okay. 14 MR. GAU: And I -- we have thoughts on what 15 we need to do for the long -- 16 MR. RUNNER: Okay. 17 The last item is Item 4, establish a 18 clearance process for videos, webinars, telephone 19 town halls, which utilize similar processes that are 20 already in place for print and in-person activities. 21 This is one, I think, that, um, was brought 22 to us in regards to the concern that we -- we 23 have -- some things are pretty clear in terms of 24 steps and processes; but some aren't. 25 And so this is the idea of asking -- basic, 26 I mean -- these are basically, through Outreach, 27 developing a policy that would encompass these other 28 kinds of programs and approval processes. 68 1 For instance, right now I think -- for 2 instance, on videos, we get a script approved, but 3 there's not necessary approval of the end product. 4 Well, the end product may be very different from the 5 script. And so we need to re -- to me, that's why 6 we need to come up with a policy to review that. 7 MR. DESIO: Yeah. I've heard some 8 frustration, too, Chairman Runner, that the agency 9 can do its own webinars, and the Board Members feel 10 like they're held to a different standard. And we 11 need to work on that a little bit. Flush that out a 12 little bit. 13 MR. RUNNER: So this should be, again, the 14 staff coming back -- or looking at establishing the 15 policy and the process -- 16 MR. DESIO: Yes. 17 MR. RUNNER: -- and coming back with an ED 18 report or something back to us to establish what 19 that policy is. 20 MS. HARKEY: Right. 21 MR. RUNNER: Discussion on that, Members? 22 MR. HORTON: Mr. Chair. 23 MR. RUNNER: Yes, Member Horton. 24 MR. HORTON: Thank you, Mr. Chair. 25 You know, webinars are communications. 26 They all fall under the same existing policies. 27 Legal has to review the initial process of -- of 28 preparing for the webinar for the purpose, at that 69 1 point, more for to assure that we don't get off into 2 something, begin to expend revenue on something that 3 has no governmental purpose whatsoever, or -- or 4 does something that advertises something we 5 shouldn't advertise, and so forth. 6 That's my understanding of the existing 7 policy. Once the -- once the video is signed off, 8 there's another Legal review. That's my 9 understanding as well of the existing policy, to 10 assure that the original opinion issued by Legal is 11 consistent with the final product. 12 And then at that point the designee of the 13 Executive Director -- he probably needs a couple of 14 Chiefs of Staff -- but, you know, the designee of 15 the Executive Director then has to sign off before 16 it goes public. 17 And that's the existing process that's been 18 around for the last 40 years to my understanding. 19 In -- in so -- this is another one of those where I 20 think -- 21 MR. RUNNER: I'm not sure that is the -- 22 that's where Legal -- 23 MR. HORTON: I'm not sure that that's -- 24 MR. RUNNER: That it's being followed 25 maybe. 26 MR. HORTON: No. Or that's the 27 understanding. 28 But to my understanding, that's -- that's 70 1 how it's supposed to work. 2 MR. RUNNER: Maybe the word -- again, we'll 3 let staff deal with this -- but maybe the wrong word 4 is establish, maybe it's the issue to -- is review 5 and implement. 6 MS. HARKEY: Review and advise. 7 MR. RUNNER: Right. So -- 8 MS. HARKEY: If necessary. 9 MR. RUNNER: But, again, I think -- again, 10 I would go back to staff there. 11 I mean, at that point is that instruction 12 pretty clear on No. 4? 13 MR. DESIO: Yeah. 14 MR. GAU: I'm looking at Mr. DeSio. But, 15 yeah, I believe so. 16 MR. DESIO: Yeah, it is. Yeah. 17 MR. HORTON: Mr. Chair, if I may. 18 MR. RUNNER: Yeah. 19 MR. HORTON: Mr. DeSio did bring up a point 20 that I think it's -- I think is important. 21 The, um, the town hall meetings can go 22 astray. I mean, it's a -- it's a live activity, you 23 know, taxpayer comes up and says crazy things, and 24 so forth. Which they're certainly entitled to say. 25 They can go astray to some extent. Maybe someone 26 should be present. I forget what you call them -- 27 MR. DESIO: A delay. 28 MR. HORTON: Pardon? 71 1 MR. DESIO: We often use a delay. 2 MR. HORTON: A delay, but, no -- you 3 have -- there's an individual present who kind of 4 like orchestrates or facilitates a meeting. 5 MR. DESIO: The moderator. 6 MR. HORTON: Just to assist with some 7 experience, knowledge about the agenda. And we stay 8 consistent with the -- with the agenda. 9 Um, and I think these same restrictions 10 should probably apply to -- to information which may 11 address your concern to anything that is developed 12 by the Board Member's office themselves, that we 13 have to submit that information for the same 14 approval process. 15 Because in effect, we are the agency, and 16 go through that same approval process as well. 17 Which is my understanding of the existing law, but 18 may be part of your concern. 19 MR. DESIO: Yeah, we're not far off the 20 mark. 21 I would say that Dan Elliot who works in my 22 shop does a great job working with all of you on the 23 scripts, working with Legal. I think the key words 24 is implementation, consistent. 25 MR. RUNNER: Yeah. Okay. So I think if we 26 understand that process, then I think we're good -- 27 MR. GAU: We do. I just want to make sure 28 we're consistent with -- 72 1 MR. RUNNER: -- gone through our four 2 items. 3 Okay. That brings us to the conclusion of 4 the CSC Committee, and, um, we will adjourn. 5 MS. HARKEY: Good discussion. Thank you. 6 ---oOo--- 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 73 1 REPORTER'S CERTIFICATE 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, Jillian Sumner, Hearing Reporter for 8 the California State Board of Equalization certify 9 that on April 25, 2017 I recorded verbatim, in 10 shorthand, to the best of my ability, the 11 proceedings in the above-entitled hearing; that I 12 transcribed the shorthand writing into typewriting; 13 and that the preceding pages 1 through 73 14 constitute a complete and accurate transcription of 15 the shorthand writing. 16 17 Dated: May 9, 2017 18 19 20 ____________________________ 21 JILLIAN SUMNER, CSR #13619 22 Hearing Reporter 23 24 25 26 27 28 74