1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 7 8 REPORTER'S TRANSCRIPT 9 MAY 24, 2017 10 11 12 13 14 15 ITEM R 16 BOARD MEMBER REQUESTED MATTERS 17 18 19 20 21 22 23 24 25 REPORTED BY: Jillian M. Sumner 26 CSR NO. 13619 27 Kathleen Skidgel 28 CSR NO. 9039 1 1 P R E S E N T 2 3 For the Board of Equalization: Diane L. Harkey 4 Chairwoman 5 Sen. George Runner (Ret.) Vice Chair 6 Fiona Ma, CPA 7 Member 8 Jerome E. Horton Member 9 Yvette Stowers 10 Appearing for Betty T. Yee, State Controller 11 (per Government Code Section 7.9) 12 Joann Richmond 13 Chief Board Proceedings 14 Division 15 For Board of Equalization Staff: David Gau 16 Executive Director 17 Amy Kelly Acting Chief Counsel 18 Sandra Mayorga 19 Chief Human Resources Division 20 Brenda Fleming 21 Chief Deputy Director 22 23 ---oOo--- 24 25 26 27 28 2 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 MAY 24, 2017 4 ---oOo--- 5 MS. RICHMOND: Item R, the Board Member 6 Requested Matter that we continued from yesterday. 7 Item R2, Operational Issues for Information and 8 Discussion. 9 MS. HARKEY: Okay. Item R2. 10 And it appears, Member Horton, while I've 11 got a couple cleanup items, we will let you take the 12 floor. These are your items that we have remaining 13 to deal with. I want to thank you for bringing them 14 forward. 15 MR. HORTON: Thank you, Members. 16 Let me start off by saying, Members, thank 17 you very much for the discussion yesterday. I think 18 it was a healthy discussion. I think that we had an 19 opportunity to not only educate ourselves about 20 certain -- the existing policies and procedures. The 21 efforts of codifying them and placing them in one 22 centralized location, I believe, will be helpful at 23 some point, I guess. 24 The -- and so many of the -- many of the 25 recommendations that I have set forth were addressed 26 as it relates to a policy issue, which was the 27 discussion. I still have the issues that I'd like to 28 discuss today kind of centered around -- more around 3 1 enforcement and compliance, and somewhat of a 2 procedure as it relates to each one of these issues. 3 The concern, Members, is that codifying 4 existing policy is a good thing. Modifying language, 5 semantics, I think is a good thing, because it brings 6 clarity. But without enforcement and without some -- 7 some clear compliance measures, then we're right back 8 where we started. 9 Because many of these policies existed, and, 10 to some degree, the allegations are that they were 11 circumvented, and that they're still remains to be 12 problems. And so whereas we may feel that, you know, 13 we've accomplished something, based on my 14 conversation with the Legislature, I doubt very 15 seriously if they think that we've completed our 16 job. 17 So in that regards, the first recommendation 18 is to CA -- CEA -- dealing with the CEAs. For some 19 time now we've, you know -- we've -- I've asked, and 20 the Board has also asked that we provide the CEAs the 21 same level of security or awareness that currently 22 --that we discussed yesterday for the Executive 23 Director, which I think was appropriate. And that is 24 an annual evaluation. 25 So with the motion that we -- we amend the 26 resolution conferring powers to require the 27 Executive Director to provide the CEAs with an annual 28 performance. 4 1 The other, on the compliance side, in the 2 event there are allegations that the CEAs have been 3 threatened with the presumption of three votes, that 4 we have three votes, and, therefore, you're on the 5 list, and you can be terminated. I believe that 6 presumption -- I mean, that allegation has some truth 7 to it. I've had opportunities to talk to the CEAs. 8 And so I think in order to provide them a 9 means in which to communicate their concerns and 10 articulate their concerns, and hopefully find 11 some -- some resolution, if you will, to -- to those 12 concerns, is that under the resolution conferring 13 powers, that we allow the Chief Counsel to be the 14 point -- the Chief Counsel in concert with the EEOC, 15 to be the point in which the CEAs can actually 16 articulate their concerns. 17 That provides a method or point in place 18 where those concerns can be evaluated and determine 19 if they're meritorious, and then transfer to the ED 20 for his action and his -- and his concerns. 21 Those are the two recommendations as it 22 relates to that matter. 23 MS. HARKEY: Member Horton. 24 MR. HORTON: We should have the input of 25 Members on that. 26 MS. HARKEY: I'm -- I'm trying to follow 27 which document you're referring to. I have a new one 28 that I got today. But I did have one that you put 5 1 out yesterday. And are you -- are you dealing with 2 any of the issues that were on the PAN, or is this 3 something new? Cause I don't -- 4 MR. HORTON: These are all the issues that 5 were on the PAN. None of them are -- are -- are new. 6 MS. HARKEY: These were on the PAN. 7 Okay. So what is it? I've got "Policy for 8 Filling Vacancies, Policy Requiring Annual Vacancy 9 and Retirement, CEA Policy." 10 MR. HORTON: This would be under the CEA 11 Policy. 12 MS. HARKEY: Okay. 13 MR. RUNNER: Yeah, I'm -- I'm trying to find 14 the right document, too. 15 MS. HARKEY: Salary increases is on this 16 one, but now you're talking about, I think it's the 17 new document that I just received that said that 18 issue performance evaluations of all CEAs. 19 Just for clarification, I don't have any 20 problem with the ED issuing performance evaluations. 21 I think what we -- what we did yesterday was give the 22 ED -- minus the Chief Counsel -- the ED the authority 23 that all of the CEAs do. 24 He -- he hires them, and they report through 25 him. He always did have the ability to review them 26 and replace them as it were. That was never a Board 27 function. I think there was some confusion by simply 28 the fact that we appointed. We don't appoint 6 1 anymore. We don't request appointment, I guess is 2 what the term was. We don't request appointment 3 anymore. It always was within the ED's hands. 4 So what you want to add to the conferring 5 powers, then, is to request that he issue annual 6 performance evaluations on all the CEAs on his team, 7 with the exception of the Chief Counsel. 8 MR. HORTON: Yes. 9 Mindful, Members, you know, for all the 10 other employees, this is a standard requirement. To 11 date, it's my understanding that the Board of 12 Equalization has not provided these annual 13 performances for the CEAs. And I think it would just 14 be a wise thing to do to provide them with that 15 benchmark on their performance. 16 MS. HARKEY: Can we ask Mr. Gau if, in 17 fact -- or Chief Counsel, if, in fact, they do 18 provide performance evaluations and what would be the 19 process for that if you don't? 20 MS. KELLY: Should Sandra speak to the 21 process? 22 MR. GAU: That would be fine. We would ask 23 our Chief of the Human Resources to respond to the 24 evaluation of the CEAs. 25 Currently, we have not. We have been asked 26 to. We've been working on a process, internally, to 27 do that. We've kind of held off given all of -- some 28 of the issues that have been going on around it, 7 1 including conferring powers in the discussion we're 2 having today. 3 But I think Ms. Mayorga will speak to the 4 actual process that's used for. 5 MS. HARKEY: Okay. Thank you. 6 MS. MAYORGA: Good morning, Chairwoman 7 Harkey and Honorable Members. 8 Currently, right now, BOE does not have a 9 formalized performance for its Executive Team. We 10 are looking at proposals to provide some sort of 11 feedback to the CEAs on an annual basis, which I 12 think is a good thing. Very similar to what the 13 discussion was yesterday on the ED performance, you 14 know, being able to provide feedback to all the 15 Executive Team is appropriate. 16 So we are looking at that and hope to get 17 something established very soon. 18 MS. HARKEY: Is there -- is there any 19 problem with the performance evaluation on a CEA? Is 20 that -- does that -- does that create a situation 21 that changes the dynamic somehow? 22 MS. MAYORGA: I don't believe it does. I 23 think all employees should be provided an opportunity 24 to hear from their Executive on how they're doing. 25 It could be in the form of, you know, "How are they 26 meeting the Department's business plan?" "Are we 27 meeting our strategic initiatives?" "How are we 28 doing in the way of progress?" 8 1 I think it's always good to provide 2 employees with that feedback. 3 MS. HARKEY: I don't want to get into any 4 legal issues or -- or replacement issues that I might 5 not be aware of. 6 Yes. Ms. Stowers. 7 MS. STOWERS: Thank you. I appreciate what 8 you just said, Ms. Mayorga. 9 So it sounds like the Executive Director is 10 already looking into establishing an annual 11 performance of the CEAs. I see this as part of his 12 duties conferred on him in conferring powers to 13 manage in day-to-day operation. 14 I do not think that we need to provide any 15 additional direction in the conferring powers that he 16 must evaluate the CEAs, because that's within his 17 scope of duties already. And they are working on 18 something now. So I think it's in process, and 19 nothing else is needed at this time. 20 And sounds like evaluating CEAs, perhaps it 21 would be similar to how the ED is going to be 22 evaluated on a self-evaluation. We won't have any 23 problems there. 24 MS. MAYORGA: Correct. 25 MS. HARKEY: Thank you. 26 MR. HORTON: Madam Chair, if I may. 27 I appreciate that it's in process. I mean, 28 it's been in process for the last 18 months. And I 9 1 certainly appreciate that. 2 Clearly, Members, the point of the 3 discussion among the Members is to provide direction 4 and to provide clarity, not only to the staff, but 5 also to the -- to the Executive Director and the 6 Executive Team as to what the consensus of the Board 7 is relative to the governance of the operation. 8 Without direction from this body on this 9 issue -- which is a pertinent issue that was 10 discussed not only in the evaluation by the 11 Department of Finance, will probably be discussed in 12 subsequent dates as well, as been discussed by the 13 Legislature, the Senate Committee, and so forth -- 14 failure to take, in my opinion, or give direction as 15 to what this body believes. 16 I mean, I appreciate the Executive Director 17 and his Executive Team working with it. I've been 18 interfacing with them as well. 19 And so the purpose, as I understand it of 20 this, is for the Board to provide some direction. 21 How that is accomplished, I would certainly defer to 22 the Chief Counsel, who I have trust in able to figure 23 out how to address that, and the Executive Director, 24 how to figure out how the best process in order to 25 have that information flow. 26 In my mind, Members, this is really not 27 about the Executive Director, Chief Counsel, and so 28 forth. This is more about providing a process in 10 1 which -- a process that provides a clear delineation 2 between the Board Members, our staff, and how we are 3 to engage with the Executive Team and the CEAs. 4 It also provides a -- a means in which for 5 the Executive Team and the CEAs to advance their 6 concerns to the entire body and to the entire Board 7 of Equalization. 8 It's not about their -- it's not about 9 the -- the administration not addressing these 10 issues, per se. It's about providing the 11 administration a means in which they provide clarity 12 to their staff. And, quite frankly, a level of 13 security that their issues can be addressed 14 irrespective of the presumption of three votes having 15 some presumed authority or power that simply doesn't 16 exist relative to provision. I mean, the power of 17 conferring powers, which simply says the ED has sole 18 authority in this area. 19 MS. HARKEY: Okay. I'd just like to say it 20 might be -- rather than amending the resolution of 21 conferring powers, since it's assumed in the 22 conferring powers, that we would, you know -- that 23 we -- that we as a Board recommend that the ED use 24 his appropriate power within the resolution of 25 conferring powers to issue annual performance 26 evaluations in whatever form he deems necessary. 27 MR. HORTON: I would agree with that. 28 MS. HARKEY: And so we wouldn't have to 11 1 amend the resolution, we would just issue this 2 statement here, take a motion on it, and be sure that 3 it's understood. And that way we could say to the 4 Governor or the Legislature, whatever, that that was 5 within his -- we have reaffirmed -- reaffirmed that 6 it's within the ED's resolution of conferring powers 7 to issue annual performance evaluations on all CEAs 8 and -- 9 MR. HORTON: Apologies, Madam Chair. 10 Reaffirming, I -- I believe is going to happen. But 11 I think the more direct statement is that to direct 12 the Executive Director to -- to -- to -- 13 MS. HARKEY: To exercise. 14 MR. HORTON: -- exercise this and issue 15 these in the way that he deems necessary -- he deems 16 appropriate, in consultation with Chief Legal 17 counsels and Department of HR, to come up with a most 18 appropriate way to do it based on their expertise. 19 MS. HARKEY: Is there -- I -- that's a 20 motion. 21 MS. STOWERS: Before you -- 22 MS. MA: Can I -- yeah, can I -- 23 MS. HARKEY: Sure. Sure. 24 I'll second it just for discussion. 25 MS. MA: So this whole thing kind of bubbled 26 up because there were some CEAs that were getting a 27 minimum amount of raise, some of them were getting 28 more. And I had to do the chart, because I couldn't 12 1 get the information from the Executive Team at the 2 time. That was the last one. And there was no rhyme 3 or reason why some got what they got and others 4 didn't. 5 And, you know, I appreciate Mr. Gau as the 6 Executive Director coming to us when the CEAs are 7 gonna get above and beyond because they've done 8 something extraordinary or taken on new duties. But 9 in my mind, if everybody is doing their job out here, 10 they should all be treated equally. There shouldn't 11 be some that get 2 percent and some that get 12 12 percent. 13 That is not acceptable in an organization 14 without some sort of performance review or some sort 15 of matrix or some justification of why some people 16 get more than others. 17 So that's kind of how this whole thing came 18 about. I don't know what it is that the Executive 19 Director is gonna do to reassure us that we're not 20 gonna get future complaints about this favoritism 21 occurring. 22 But, you know, that has to be justified 23 somehow, because it is just not acceptable. And I 24 don't know when, you know, other agencies come in, 25 how you're gonna justify how some people get less and 26 why some people get more. 27 MS. HARKEY: I -- I think there is an 28 explanation -- a bit of an explanation. 13 1 MR. GAU: If I may. 2 First of all, you know, with the Board's 3 direction, my commitment is we will do -- we are in 4 the process, and we will do CEA evaluations. It is 5 the right thing to do. So we are working on that 6 appropriate process to work. 7 I would just also maybe like to point out 8 that I've provided the Board a confidential memo on 9 September as far as what I committed to as far as any 10 future salary adjustments that would be limited to a 11 five percent. And if it was going to be anything 12 greater than that, I will approach the Board 13 beforehand to explain if there's any justification. 14 But that is what I've committed to. 15 MR. HORTON: Member Ma, although I have 16 concern about any wholesale salary increases, as 17 opposed to salary increases that are based on 18 individual performance and evaluation of all CEAs, as 19 opposed to a wholesale arbitrary increase based on 20 study, I have concerns about that. But that's not 21 just the only issue facing these CEAs. That's not 22 the only issue that they're -- at least what has been 23 shared with me. 24 But I think that providing the direction to 25 the ED, and providing -- I would augment the motion, 26 if you will, Members, to provide a means in which to 27 direct the ED to develop a means in which the CEAs 28 can articulate to him through some process, through a 14 1 process that includes an evaluation by HR, an 2 evaluation by Legal, and an evaluation by the EEOC 3 Department of these concerns. And a confidential 4 evaluation that is exclusive to you. 5 And to the point that you deem it necessary 6 that it has merit and has an issue, that you bring it 7 to the entire -- that you're obligated to bring it to 8 the entire body for our consideration. 9 MS. HARKEY: Okay. Member Horton, that is a 10 different motion. I was just going to make this real 11 simple and try to get you a 5-0. But I'm not so sure 12 that's happening. 13 Member Runner. 14 MR. RUNNER: Yeah, let's stay focused on the 15 motion itself, which is -- which is fine. 16 I think we ought to go ahead and encourage 17 an outline -- and ask an evaluation to be put in 18 process for CEAs. It's important to remember that 19 actually most of the CEAs do not directly report to 20 the ED. So their evaluation is actually probably 21 done by somebody else in that process, too. 22 MS. HARKEY: But through the ED. 23 MR. RUNNER: Right. But I think it's -- 24 they'll be other people engaged in that process. 25 MS. HARKEY: Mm-hm. 26 MR. RUNNER: So I think it is an important 27 step that we -- that we put into place. I do not 28 believe it's specific, and I think -- don't think we 15 1 should be as specific as we can -- that in the 2 conferring powers. So I support the motion on that 3 issue. 4 And then if we want to talk about the second 5 issue, that's fine. But just dispose of the first 6 one here. 7 MS. STOWERS: Madam Chair. 8 MS. HARKEY: Yes. 9 MS. STOWERS: I mean, he's already indicated 10 that they have -- they are work on something in 11 place. Mr. Gau has the ability to run this 12 organization. You guys have reconfirmed him to run 13 this organization. And the conversation that we're 14 now having to direct him to do evaluations is really 15 showing this Board infringing on the day-to-day 16 operation of the organization. 17 And I quote Controller Yee that she believe 18 that this Board is -- the Board Members are 19 encroaching on the day-to-day operations, ask not 20 that the Board micromanage the organization. 21 MS. HARKEY: Okay. Let me just clarify. 22 I think what Member Horton is trying to do, 23 just to bring this around, is respond to some of the 24 issues that have been raised in the evaluation that 25 we got from Finance, as well as maybe some of the 26 comments through the Senate Committees, and things 27 that the committees and the Legislature are looking 28 at. 16 1 So I don't think this is imposing, we're 2 just making a motion to request him to do so. He 3 said that he is willing to do so, and is looking at 4 it. We have not put any constraints on it, nor am I 5 willing to tell him how to do that, or advise him how 6 to do that. I think that's within his purview. 7 I think it's just a simple motion that it's 8 already within his conferring powers. And we would 9 just like to encourage him to do so, so that we can 10 say to the Legislature, "Yes, we've covered this." 11 And I think that's -- we're trying to be -- 12 we're trying to manage our issues that we have in the 13 Legislature. And I think this might be a -- just an 14 easy way to do it. 15 So, respectfully, I don't think we're 16 interfering. We're already telling him that -- we're 17 just kind of trying to coordinate between the 18 Legislature, as I said, and the evaluation. 19 And some of the comments, if you've listened 20 to those hearings down at the Legislature, you will 21 know that staff definitely did not paint us in a good 22 light. And had the Governor staff done that, I 23 question. But we're not governors. So I just -- I 24 want to be sure that we're answering those questions. 25 So I think that's the only light in which 26 it's done. So -- 27 MS. MA: Ordinarily, I don't think we don't 28 need to make motions. But because we're in the 17 1 situation where we are asked to take some corrective 2 action, and some of these things -- issues have been 3 around for two years, and nobody wants to make that 4 decision for some reason or another. So that's why 5 we're here. 6 Ms. Stowers, I think doing something 7 proactive and trying to get certain things done to 8 give the staff the guidance to either move forward or 9 not, you know, for some reason things get held, 10 they're being worked on, they're being studied, 11 they're being -- I don't know what they're doing. 12 But that's why we're kinda here. 13 And we don't want to encroach on the 14 day-to-day activities, but they need guidance to move 15 on. Because these things haven't been done. 16 MS. HARKEY: Okay. So we have a motion and 17 a second. 18 Any objection? 19 MS. STOWERS: Abstain. 20 MS. HARKEY: Okay. Any objection? 21 Do we need to take roll if there's just an 22 abstention? 23 MS. RICHMOND: I think we're okay. 24 MS. HARKEY: Okay. So -- 25 MR. HORTON: Madam Chair, the second 26 item -- I'd like to sort of hear from Chief Counsel 27 or the ED, his preference as to what might be the -- 28 first, let me thank the Members for supporting that 18 1 effort. 2 And let me clarify, it is the responsibility 3 of the Board to set policy. We're not proposing to 4 micromanage how it gets done, but this is just a 5 basic policy. 6 And so what this would be is how -- based on 7 your experience, how would -- what would be the best 8 way to ensure the CEAs -- maybe HR can actually speak 9 to this -- to ensure a process by which they can -- 10 their concerns can be addressed, can be evaluated to 11 determine if it's meritorious, and then move through 12 the appropriate channels? 13 MR. GAU: Maybe I'll start. Because we've 14 already started having the discussion and seeking a 15 broader spectrum than just the CEAs. Because of some 16 of the concerns that have been brought forward 17 anonymously, as we heard it at hearings and different 18 places, what we are trying to, as an Executive Team, 19 evaluate is -- is what kind of an internal process 20 through more informative and broader communications 21 can make people aware of current processes to follow 22 to make their complaints known to get to the highest 23 level within the organization as soon as possible, so 24 that we can address these issues. 25 As I travel around, I become aware of things 26 as well. And so we had -- we had even had that as a 27 discussion item last week. 28 And so we are looking to internally develop 19 1 a -- whether it's a hotline, or some kind of 2 mechanism to just make people aware they have an 3 opportunity to make their concerns known to us. 4 MR. HORTON: All right. 5 MS. HARKEY: May I just -- may I just ask, 6 does the staff not understand their chain of command? 7 MR. GAU: I think they -- they do understand 8 their chain of command, but I think sometimes that is 9 of a concern to some people. 10 MS. HARKEY: Okay. Well, I just thought -- 11 MR. GAU: So that's what the -- part of the 12 education that I think we need to go through. And so 13 we're looking at whether it's an HR role, or an EEO 14 role, or investigation, wherever we need to have this 15 point of contact that we can then surface these 16 issues as soon as possible. 17 MS. HARKEY: Okay. I'm just -- I'm fearful 18 of everything kind of arising to the top here. This 19 is a huge organization. And I think that, you know, 20 your first line of contact is, of course, your 21 supervisor. And then I'm sure there's process after 22 that. 23 But I just don't want to get too bogged 24 down. Because we've been -- we've heard a lot 25 of -- a lot of issues that, quite honestly, had staff 26 just said, "I'm not comfortable doing that, please 27 refer to so and so," issue done. They don't have to 28 take pressure. And I think they should know that. 20 1 And I think that if they have an appropriate 2 supervisor relationship, and they know who does their 3 performance evaluation and who schedules their time, 4 they know who they report to, that's their first line 5 of command. 6 MR. GAU: Yes. 7 MS. HARKEY: Because I, you know -- we get 8 these from all levels, I believe. At least from what 9 I see. And I think that might be a problem. We just 10 need to clarify what their first point of entry is, 11 who they go to, and that they do have the ability. 12 And, you know, to just say, you know, "I'm 13 not comfortable. Please speak to the ED, speak to 14 whatever." I mean, if it's with a Member, speak to 15 the ED. If it's with their current work situation, 16 speak to whoever it is that they report to, be it 17 their district administrator or whatever. You know, 18 they have to have some understanding of the way that 19 works. 20 MR. GAU: They do. And you're correct. And 21 I think Mr. Horton has made the same comment as far 22 as, you know, a lot of these things are already the 23 policies and procedures that are there. 24 We just need to make sure that -- and 25 educate staff, and make sure that they just are aware 26 of how to elevate issues. And so that's really the 27 conversation that we're having. 28 MR. HORTON: I think it's also important, 21 1 Madam Chair, if I may. 2 Sorry, Member Ma. 3 MS. MA: That's okay. 4 MR. HORTON: I think it's also important 5 that we provide a distinction as to who reports to 6 the Members, who works for the Members, and who don't 7 work for the Members. I mean, there's a presumption 8 that everybody in the agency works for the Members, 9 and, therefore, if -- if -- you know, if someone says 10 something to someone, there's a presumption they're 11 saying it on behalf of the Members. I think that's 12 important. 13 The other -- the existing policy provides 14 the rank and file and opportunity to either go 15 directly to the EEOC, they can file through the State 16 Auditor their concerns, and they can go to their line 17 management and express their concerns there and try 18 to get them worked out. 19 The CEAs don't necessarily have -- they have 20 similar opportunities, but the objective here is to 21 try to resolve these issues, try to put them in a 22 place as -- as developed by your team, put it in a 23 place where they're sure that HR is looking at it and 24 making that assessment from their expertise. Legal 25 is taking a look at it and making their assessment 26 from their expertise. 27 Because not only is it the allegations, it's 28 also the false allegations that we need to control to 22 1 ensure that we don't end up on the other side of the 2 fence advancing false allegations that leads to, you 3 know, counter lawsuits and all that type of stuff. 4 We don't want to get into that either. 5 So I think that if we have a means in which 6 to mitigate and address and resolve, what happens is 7 is that I believe what will come out of this is the 8 CEAs become comfortable in expressing their 9 professional opinion. And that's all I really want. 10 Not their professional opinion -- I mean, not just 11 their opinion -- personal opinion that may be 12 subjective based on what they're thinking and trying 13 to satisfy what they think I think. 14 Because oftentimes, as I use this analogy 15 often, President Kennedy said, "I want to go to the 16 moon," and all of the sudden people started spending 17 money until Congress stepped in and said, "Hold up, 18 you may need time to go to the moon." 19 When we as elected officials make these 20 statements, intentionally or unintentionally, or the 21 staff, there has to be a process to -- to address 22 that. And that's all -- and I'm comfortable 23 deferring to the Executive Director and his team, and 24 developing that process, and reporting back to the 25 Board what that process is, and ensuring the CEAs 26 that it does exist. 27 MS. HARKEY: Member Ma. 28 MS. MA: So Member Horton brings up the 23 1 EEOC. I've asked, you know, many times before why 2 EEOC is under the Taxpayers' Rights Advocate's 3 Office. I don't know what the normal process is for 4 other state agencies where EEOC is, but I don't 5 believe that that's the proper place for our EEOC to 6 be. So if you can take a look at that. 7 No. 2, I do believe there has to be an 8 outside agency where the complaint hotline also 9 resides. I know Member Horton mentioned the State 10 Auditor's Office. I don't know if it's CalHR or SPB. 11 Because when I first got here I was like, 12 you know, "Are there any complaints?" And the 13 Executive Management team said, "No. No complaints." 14 Well, obviously now there's a lot of 15 anonymous complaints coming out. And so where have 16 all these complaints been going? I know when I get a 17 complaint, I send it to David, and I send it to 18 Sandra. 19 But there should be some outside agency that 20 is also doing their own independent investigation, so 21 that it isn't, maybe, retaliation, but it is really 22 based on real facts of what's happening. 23 And if enough complaints are going to some 24 place, either you guys or an outside agency, then 25 they are going to investigate. Because it does 26 potentially seem like a big problem that needs to be 27 addressed immediately. 28 So I don't know when you're looking at, you 24 1 know, your complaint hotline, but there has to be an 2 outside check and balance also. It cannot just be 3 internal where, you know, it may not rise to the 4 level it should, because we're doing our own internal 5 investigation. But outside the agency also needs to 6 have the ability to really monitor and look at 7 whether this is a persistent problem that we're just 8 not addressing or able to address internally. 9 MR. GAU: Thank you. 10 And -- oh, I'm sorry. 11 MS. HARKEY: Don't we have a whistle blower 12 hot line? 13 MR. GAU: I was just going to explain that, 14 you know, depending on the accusation, assertion or 15 whatever, there are different appropriate agencies 16 that people have the right and should refer out to 17 outside of our agency. 18 And I think that's part of what we were 19 discussing is -- is making sure that employees know 20 these outside agencies, depending on what it is they 21 see is an infraction or an impropriety, and how to 22 report it. 23 There's also things internally that we want 24 to -- I think it's incumbent upon us as good leaders 25 of this agency, that we need to be aware and head off 26 or deal with things as soon as possible that we need 27 to be aware of as well. 28 So I think that's -- it's a -- it's a very 25 1 important issue that we already started discussing. 2 It has outside agency ramifications and 3 appropriateness. And we're going to try to put all 4 of that together, and give it an educational 5 opportunity, I think, for our employees to make sure 6 they know their rights and where to report 7 improprieties. 8 MS. MA: And I think this should be 9 displayed on our Web site as well. 10 Because I know when people have complaints, 11 I don't know where to go or where to send them. And 12 I have to call Sandra and ask, "Hey, what is the 13 process? Who should they be calling?" 14 So if I can't figure it out easily, I don't 15 think the employees can figure it out, or the public, 16 easily. 17 So I think that would be a good control, and 18 a good mechanism for us to actually promote so 19 that -- 20 MR. GAU: And I think as we start to 21 develop, and for those that have either staff 22 meetings, professional development days, any 23 opportunity where we can directly meet with employees 24 to have these kind of things as agenda items. 25 Because we have been -- in addition to doing the 26 online and the e-mail and the Web site, I think when 27 you really present to people directly, it also has 28 more of a direct impact. 26 1 MS. HARKEY: Okay. Thank you. 2 MR. HORTON: When do you think that such a 3 report can be brought back to the Board? 4 MS. HARKEY: I'm not -- I -- I quite 5 honestly don't know that we need a report brought 6 back to the Board. I think we need -- we can have an 7 update in the ED -- in the -- 8 MR. GAU: Yes, I will continue to update. 9 And, again, it is a very important and broad 10 issue, so we want to appropriately -- 11 MS. HARKEY: These are just a lot. 12 And on the EEOC, I'm a bit -- I was looking 13 at audits, and I looked at our last audit, and EEOC 14 seemed to be the area where we scored really high. 15 We did not score high in other areas in the HR audit 16 that we had. And I don't know if that was done by 17 state audits or whatever. 18 So when you look at that, let's be sure 19 we're not -- because EEOC -- I looked at the audit, 20 and I got a spreadsheet of all the audits that had 21 been done, and ones that have been completed. I'll 22 ask for certain ones. There's a whole list. And 23 maybe that might be -- that audit sheet might be made 24 available to the Members, so that they can refer to 25 everything we've been audited on. Because it is -- 26 it is pages. 27 And we have some that are on continuous, 28 because of our delegated powers -- which we don't 27 1 have any more, but we hopefully will eventually get 2 back -- and there are some that just are spot. 3 So maybe -- I requested that audit sheet, 4 and maybe you might want to get that matrix out to 5 all of the Members so they can just see what we've 6 done and request certain ones to see where we were. 7 I think the one on HR was done in 2015. 8 And, anyway -- 9 MR. RUNNER: Madam Chair. 10 MS. HARKEY: Yes. 11 MR. RUNNER: I'm comfortable with us having 12 this discussion. I think what is very clear is we 13 are directing the staff to take a look at this. 14 Obviously there's a majority of the Board -- 15 MS. HARKEY: Right. 16 MR. RUNNER: -- that's concerned in regards 17 to the process. I think that we have a lot of the 18 processes already in place. Not only they're our 19 processes, but they're all within the proper codes 20 and the understandings between -- with our 21 relationship with the employees. 22 I -- what I would say -- I would appreciate, 23 then, would be -- I appreciate the idea of bringing 24 them all together. I don't necessarily need a report 25 back to the Board here like this, but I do think 26 briefing each Board Member is important so that they 27 understand that. And it's an item that has been up 28 for discussion a long time, so I do believe it should 28 1 be something that should be prioritized in order for 2 us to get there and address those issues. 3 But, again, I think there's a lot of 4 options. And maybe people just don't understand all 5 their options that they have, and we need to 6 communicate those. 7 MS. HARKEY: Well, we have some new people, 8 some that have been around, and some that just maybe 9 have forgotten. So I do appreciate all these things 10 being brought forward. And I do think -- I do think 11 that the overall audit matrix will help Board Members 12 know where we've had problems and where we're working 13 on other things. 14 We're -- Sandra has been working on a lot of 15 the issues that were addressed in the HR audit. But 16 this particular issue seemed to be like it was 17 working okay. So I'm -- I'm just -- I'm just opining 18 on what I saw. 19 MS. STOWERS: Madam Chair. 20 MS. HARKEY: Yes, ma'am. 21 MS. STOWERS: Thank you. 22 To the Executive Team, I do appreciate you 23 guys are working with explaining to -- to the staff 24 their rights. And my understanding in the past 25 there's been something, "Know Your Rights, Know Your 26 Resource" campaign. 27 MR. GAU: There is. 28 MS. STOWERS: Can you speak to that, 29 1 please. 2 MR. GAU: I don't have all the detail. I 3 don't know if the staff -- I'd have to get back to 4 you on the details. 5 MS. STOWERS: Okay. I would just encourage 6 you to refresh staff and -- 7 MR. GAU: It's kind of (inaudible) 8 sometimes. 9 MS. STOWERS: -- and let staff know about 10 their rights -- 11 MR. GAU: Yes, we will. 12 MS. STOWERS: -- and continue to make sure 13 all the details are in place. 14 MR. GAU: To all the offices, I will provide 15 that detail. 16 MR. HORTON: A couple of comments, 17 Madam Chair. 18 To the issue of report back to the Board a 19 report, Executive Director, I don't really want to 20 get into semantics, but I think it's important that 21 we be as transparent as possible. And whatever's 22 happening, whatever the agency comes up with, that we 23 share that -- part of educating our staff would be 24 through this process. And however you deem it 25 appropriate to bring it back to the Board to -- it's 26 not necessarily to the Board, it's more to the 27 public. And I think we ought to be as transparent as 28 possible with that. 30 1 MR. GAU: Thank you. 2 ---oOo--- 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 31 1 ---oOo--- 2 MR. HORTON: And to the Taxpayers' Advocate, 3 I think it's important that -- that -- that you -- 4 that the -- that the agency share with the Board why 5 it's currently structured. 6 One of the -- one of the challenges I think 7 we face is the lack of historical perception, 8 knowledge of what's going on. And even myself, you 9 know, it would be helpful to -- to kind of learn. 10 My understanding is the EEOC, taxpayers' 11 advocate, is the only stat -- only body that's 12 established by statute to have independence, some 13 level of independence from the Board and from the 14 agency and, therefore, previously historically deemed 15 to be the appropriate place to place it. But that's 16 not to say that that doesn't warrant discussion. 17 It's only to say that I'm supportive of the way it 18 is. 19 MS. MA: So I mean, Madam Chair, I would 20 like to see some deadline, not just, "Hey, come back 21 whenever," because I think the Legislature wants us 22 to develop certain guidelines -- 23 MR. GAU: Yeah. 24 MS. MA: -- and come up with certain policy, 25 corrective action, so -- 26 MR. GAU: And are you speaking specifically 27 to the EEO issue? 28 MS. MA: EEO complaints, you know, Know Your 32 1 Rights campaign. 2 MR. GAU: Right. Okay. All right. Very 3 good. 4 MS. HARKEY: Come back with a memo and give 5 it to the Board and then report on anything in your 6 next -- 7 MR. GAU: That's what I was going to offer. 8 MS. MA: When? 9 MS. HARKEY: June. 10 MR. GAU: June is a little quick. 11 MS. FLEMING: That's pretty quick. 12 MS. KELLY: July. 13 MR. GAU: July. 14 MS. KELLY: July is feasible. 15 MS. HARKEY: July's good? 16 MR. GAU: Thank you. 17 MS. HARKEY: Perfect. 18 MS. MA: Okay, perfect. 19 MR. HORTON: Members, the -- 20 MS. HARKEY: July's a good month. 21 MR. HORTON: -- second issue was centered 22 around full disclosure and information. 23 Yesterday we discussed the budget and 24 finance committee and, I believe appropriately so, we 25 were advised that some -- some committee would be 26 established under the ED, call it the budget finance 27 or something, in order to assure that the agency is 28 working, not responding, but proactively engaging the 33 1 Legislature and the public on an ongoing basis. 2 There are those who believe that our budget 3 and finance people should be meeting with Department 4 of Finance, weekly almost, and I know that to be the 5 case, that they're doing an exceptional job there. 6 But, um, I think it's -- one of the -- one of my 7 concerns is that -- and the concerns that I've heard 8 in conversations with the Legislature was, is that, 9 "Why didn't the BOE provide this information during 10 the process?" And my articulation was, is that the 11 BOE was given five days to respond to three years of 12 assessment and evaluation. And hopefully it will be 13 forthcoming. 14 Um, and I think it's important that, as a 15 policy, that the Board adopts a policy that says that 16 we will respond with the most accurate and complete 17 information; not that we don't do that when we do 18 respond. But there are times that the agency takes a 19 position not to respond, which -- to certain issues. 20 And I don't necessarily think that's -- has proven to 21 be fruitful. I think we ought to respond whenever 22 there is information that may be incorrect; 23 information, for example, the $47 million, and that 24 was allegedly -- well, that was appropriated to the 25 wrong county for a short period of time and then it 26 was corrected. And this is something that has 27 happened over the history of the agency. 28 The legacy project, the legacy computer 34 1 program, sometimes that software makes a mistake. 2 Sometimes there's garbage in, garbage out. And as a 3 result of that, we end up with these misallocations. 4 But if we don't respond to the misallocations, the 5 presumption is, is that there's -- there's -- that 6 our system isn't working, that we don't have the 7 internal controls. 8 When that occurs, I think it's important 9 that we respond immediately about the internal 10 controls, irrespective of what, you know, the 11 politics may be around that. I think it's the 12 agency's responsibility to disregard that and just 13 respond immediately. 14 The presumption that -- that we -- Board 15 seemed to have cleared up yesterday about the 16 authority of the ED to terminate CEAs, a lot of our 17 Executive Team was aware of that, but many of them 18 weren't, many of them expressed. Well, I -- I don't 19 think that was the case until we kind of fleshed it 20 out and it became a public issue. 21 The approval process that was questioned in 22 the DOF audit on the approval of being able to -- 23 Provision One and other issues, I just think it's 24 important that we respond immediately and that we 25 take away the -- the option of not responding, 26 unless -- and I would defer to the ED on this, I 27 would also defer to legal counsel on this from a 28 legal perspective, when to and when not to from a 35 1 legal perspective, and the Executive Team. 2 But once you've gone through that analysis 3 that it's most legally to do it and we have the facts 4 and the facts are wrong, we ought to respond. Or 5 even when they only gave us five days to respond to a 6 three-year evaluation, we still should have 7 responded. Responding may have cleared up a lot of 8 the misconception that currently exists in the 9 Legislature. 10 In May -- I mean many members of the 11 Legislature, to a person have said, "We don't trust 12 the BEO -- the B -- B -- B -- BOE." "We don't trust 13 the BOE." For the last five years some have said 14 they have not. And I defended the agency in every 15 one of those discussions. But when you have one or 16 two that you can't defend, then it sort of feeds into 17 that argument. 18 MS. HARKEY: Okay. So what are you -- what 19 are you suggesting here? That you want -- you want 20 to -- what's your -- do you have a motion? 21 MS. STOWERS: We already did it. We already 22 referenced the committee yesterday. 23 MS. HARKEY: Yeah, we -- we did -- we did 24 reference a committee with the budget and finance. 25 Is that -- 26 Yes. 27 MR. GAU: My quick note from yesterday was 28 that we were going to come back with a recommendation 36 1 on how to address this and establish such a 2 committee. 3 MS. HARKEY: Okay. 4 MR. GAU: If there's -- 5 MR. HORTON: Okay. Well -- 6 MS. HARKEY: Thank you. 7 MR. HORTON: I'm -- I'm good with the 8 establishment of the committee. I just think, as a 9 policy, I'd like to hear from the Executive Team a 10 policy that we will respond and we will respond in a 11 timely fashion, accurate and correct information. 12 MS. HARKEY: I -- I think -- 13 MR. GAU: I think we always try -- 14 MR. RUNNER: I think our problem -- 15 MS. HARKEY: Excuse me. Excuse me. 16 I think that before you respond, I think 17 that the, uh -- the staff tries to respond. There 18 was a lot of data in this other evaluation. There 19 were a lot of emails coming in. They had to sift 20 through them. Audit staff, or audit -- our internal 21 auditor was working with other people, and there were 22 just -- there was a lot of things in that that they 23 couldn't -- they -- they -- they said they could not 24 respond affirmatively to it one way or the other. So 25 I think that your -- your -- the finance, the 26 committee that we recommended, I believe you're going 27 to come back when, Mr. Gau? 28 MR. GAU: I think we had -- 37 1 MS. KELLY: July. 2 MR. GAU: -- July as well. 3 MR. HORTON: July. 4 MS. HARKEY: In July, okay. So in July 5 he'll have a report and let you know how that will 6 happen. 7 MR. HORTON: The third item, Members -- 8 MR. RUNNER: Hang on, hang on. 9 MS. HARKEY: I'm sorry. 10 MR. RUNNER: Yeah. 11 MS. HARKEY: Okay. 12 MR. RUNNER: I -- I -- I think part of the 13 concern is I think we don't need to direct people to 14 respond. I think, number one, that is why we have an 15 ED and we're going to have a performance evaluation. 16 And if you think that there's something that needs 17 to be corrected, then that's where you deal with it. 18 I also think that at times we -- I think a 19 lot of this discussion isn't whether to respond or 20 not. It's disagreement in what the response was, and 21 I get that. But then that's a discussion to have 22 with the ED in regards to that. Because, again, good 23 people can dis -- can, uh, disagree over facts, and 24 that's okay. 25 And so I think it's important for us to -- 26 to communicate here. I think -- I would think that 27 the staff has gotten the message that we need to make 28 sure we respond, we respond accurately at that point. 38 1 But, again, I wouldn't want to see us place any kind 2 of a specific -- a specific directive to say, "Let's 3 respond." 4 MR. HORTON: Well, Members, I'm not 5 directing how to respond. I'm not saying you've got 6 to say what I think you should say or what the 7 Members think you say. 8 In fact, what I am saying is, is that there 9 should be a -- a -- a fire wall between what the 10 Members think you ought to do. And so to the extent 11 that Members feel this is what your response should 12 be, I don't think you ought to be governed by that. 13 I think you should be governed by the facts and the 14 evidence and that you ought to respond. 15 In fact I don't necessarily even believe 16 that the Members' input should just be basic input. 17 And I know that. And there are times that for 18 reasons -- reasons that I may disagree with, the 19 agency has decided just not to respond, and I get 20 that. So it's not -- I'm not disputing whether your 21 response is accurate or inaccurate. And this is not 22 even necessarily my view of the world. Although it 23 is, but I'm just sharing with you -- 24 MS. HARKEY: Okay. 25 MR. HORTON: -- that to a person it is the 26 view of the Legislature, because some of the response 27 were obviously -- 28 MS. HARKEY: Not -- not complete. 39 1 MR. HORTON: -- not complete. 2 MS. HARKEY: Okay. So we've got -- got the 3 direction. 4 There was a third item you wanted to bring 5 up. 6 MR. HORTON: Third time is the Provision 7 One. I think we -- we dealt with Provision One 8 sufficiently yesterday. 9 There is, um -- there is, um, a -- a -- a, 10 um, compliance issue that I have some concern with 11 that we might be able to address. 12 The issue is, is that in the education of 13 our taxpayers, under the Taxpayers' Bill of Rights, 14 it requires that every taxpayer receives the same 15 level of education. There are deviations from that 16 when you have specific legislation. But the basic 17 education that occurs to new permittees, basic 18 education, the things that are consistent throughout 19 the agency should be the responsibility of the agency 20 and not necessarily the Members. 21 Currently in District 3, and I believe 22 throughout the state, there are new permittee classes 23 that occur on a regular basis. There are new 24 business classes that occur on a regular basis. 25 Those are -- those are -- they happen differently. 26 There's different methodologies in which to educate 27 folks in each district. And I'm supportive of that. 28 In some districts there -- there are larger 40 1 geographical space which requires -- you just 2 can't -- you have to mail out to that district, and 3 I've been supportive of that. 4 But, um -- the notion that you have 5 education going on by different departments, I think 6 that should be centralized under one department, 7 where all the education flows through one department 8 and that would be the external affairs or education 9 and outreach unit. And that an assessment is made as 10 to what the statewide education is going to occur and 11 what -- and -- and how that's going to occur and to 12 utilize the most effective way to reach the most -- 13 the maximum number of people, with input from the 14 Members. 15 And then the deviations would be the 16 specialty type events that Members deem necessary 17 because of their -- their experience in their own 18 individual district. 19 So the motion would be, or the direction 20 would be, is to centralize all of the education 21 through the education and outreach unit. Although 22 every department can continue to provide education, 23 it's just that that unit is the one that controls it. 24 Otherwise, what we have is decentralized budgets, 25 decentralized approvals, and that's part of the 26 challenge that we're facing is that the district will 27 do education itself and the level of that education 28 is measured by that District Administrator. 41 1 The Department of Special Taxes will do 2 education, and that's determined by them. And I 3 understand that through the Board Executive 4 Administrative Manual that all education is to go 5 through approval process, starting with the -- with 6 the Director of Outreach to sign off on it, Legal, 7 and then the ED. But it's -- that is not necessarily 8 the issue. The issue is what happens down below 9 those areas as it relates to Provision One. 10 If you have the -- the -- the, um, District 11 Administrator signing off on education activities 12 that's under his purview, then he now or she now has 13 to have all the experience and knowledge to be able 14 to do that. If that decision is centralized and 15 codified somehow, I think we can be more efficient. 16 And we can protect our employees. 17 I don't necessarily agree with some of what 18 I've heard that the District Administrators ought to 19 be liable or responsible for Provision One 20 violations. 21 MS. HARKEY: Okay. Member Horton, are you 22 talking Provision One or talking about the program? 23 MR. HORTON: Provision One. 24 MS. HARKEY: Okay. So what I've got here 25 from you is that you would like to see taxpayer 26 education to increasing tax collections. Now this is 27 the latest. And -- and it's got a lot of stuff to 28 it. So I think what we did yesterday -- what we did 42 1 yesterday was say that we wanted budgets for all of 2 this with our outreach program. And I think once we 3 see where everything's going, then we can look at a 4 Board -- as a Board as to maybe what we'd like to see 5 happen with the other. 6 I don't want to just take this like this 7 (indicating), because I don't know what I'm saying 8 yes or no to at this point. I want to see the 9 program going forward and I want to see a budget for 10 each category as to what exactly -- because I think 11 we have three different categories for some kind of 12 mail or outreach. And so that's what I asked for 13 yesterday. 14 I just don't want to go about immediately 15 moving everything to one department. I don't know 16 what that means. 17 MR. RUNNER: Let me -- 18 MR. HORTON: Let me be clear. Point of 19 clarification, if I may, Mr. Runner. 20 I'm not suggesting that the Board vote on 21 doing something this significant based on this 22 discussion. The suggestion is, is that we allow the 23 Executive Director to evaluate, that an evaluation 24 takes place that evaluates the most effective way of 25 accomplishing that and that distinguishes what the 26 agency's role and responsibility is and education and 27 what is not. 28 I received a request which has been 43 1 subsequently clarified -- I want to thank Mr. DeSio 2 for that -- that asked for -- asked me to provide a 3 budget on education in my district. And I reverted 4 back to the hardline that that's not my 5 responsibility. 6 MS. HARKEY: We don't have a -- we don't 7 have an Education Outreach Budget in our Member 8 budget. So I think -- 9 MR. HORTON: So, and I think the Legislature 10 is clear that they want a delineation between agency 11 and Members. And I'm simply suggesting that our 12 Executive Team figure that out for us and then report 13 back to us how the best way to accomplish that. 14 MS. HARKEY: I think one -- 15 Did you have a comment, Member Runner? 16 MR. RUNNER: Yeah. I -- I -- you know, 17 think we've got a lot of stuff before us, a lot of 18 issues that the Board is facing. 19 Quite frankly, education and effective 20 education and how we're doing it is important, but 21 it's not one of the priority issues that we're facing 22 today. 23 And I'm concerned that we not continue to 24 give and pile on a whole list of things, um -- I 25 think we should always be open to make sure what 26 we're doing is efficient and effective. And quite 27 frankly, I think we should be, you know, asking 28 and -- asking those questions all the time. 44 1 But at this point, I'm hesitant to say, 2 "Hey, what we need to do is figure out how to 3 consolidate everything into one group." I probably 4 have a bias toward centralizing education, probably 5 needs to be less education in my head. 6 So I'm -- I hear what you're saying. I 7 think it's always good for staff to be evaluating 8 things. I hope we're always evaluating our education 9 issues. I think, quite frankly, we're pretty proud 10 of our compliance issues because we have effective 11 education. 12 So I -- I -- I guess -- I guess this is a 13 good discussion. I guess I would always ask the 14 staff to always be applying these issues and 15 education issues. 16 MR. HORTON: Let me -- 17 MR. RUNNER: And I just don't want to give a 18 directive of giving them a new responsibility right 19 now. 20 MS. HARKEY: Let me, let me just -- let me 21 just kind of wrap this up because I think we beat it 22 to death. 23 I would like to -- I know that the current 24 process has slowed down tremendously for doing things 25 in the district. I'm just hearing that sometimes 26 it's two months to get approval on something that's 27 just a little word change or something. 28 So I think that that needs to be looked at 45 1 maybe in the immediate. But I think that you can 2 come back with us -- to us in the July hearing when 3 we have our education and outreach plan and budget 4 and deal with whatever issues that we have going 5 forward on this. 6 And maybe at that time, Member Horton, would 7 be the time to make -- to have a really concise plan 8 on what you'd like to do when we have all of that 9 information. 10 Yes. 11 MR. HORTON: Madam Chair, mine is not about 12 the education. So there may be a little confusion. 13 MS. HARKEY: So yours is -- we did -- we 14 dealt with Provision One yesterday. 15 I'm just trying to wrap this up, you know. 16 I think we get into too many discussions that are 17 really broad up here. 18 MR. HORTON: I think if you allow me like a 19 second or so, I can kind of clarify. 20 Speaking about education, the consolidation 21 of the education, having it flow, some approval 22 process will also -- the purpose is, is to address 23 the Provision One to make sure that that Provision 24 One usage of revenue-generation employees for 25 education, that there's a process by which that 26 occurs. 27 MS. HARKEY: We -- I -- I understand that 28 and I think we addressed that in full yesterday. 46 1 So we made a motion, we wanted you to carry 2 forward. And I think at some time later after the 3 budget process we also said that we would look at the 4 de minimis aspect of Provision One. 5 MR. GAU: That's correct. 6 MS. HARKEY: And then you're going to be 7 bringing back the education and outreach -- 8 MR. GAU: In June. 9 MS. HARKEY: -- in June. Okay, so that's 10 really soon. 11 MR. GAU: Right. 12 MS. HARKEY: And then we'll have our budget. 13 MR. HORTON: Okay. 14 MS. HARKEY: And then we'll be able to hash 15 out these things. Okay. 16 MR. GAU: Then also -- 17 MS. FLEMING: I'm sorry. I just want to 18 make one comment to the point in terms of trying to 19 streamline it, we are already doing that, where we've 20 now got the integrated team that's working on 21 education and outreach, and it's enterprise-wide, 22 agency-wide. 23 MR. HORTON: Good. 24 MS. FLEMING: We're doing that for 25 efficiencies, for cost benefits, etcetera. We're 26 including Provision Ones. So we've got a checklist 27 that makes sure -- 28 MR. HORTON: Excellent. 47 1 MS. FLEMING: -- that it's one 2 comprehensive -- 3 MS. HARKEY: I -- I just -- 4 MS. FLEMING: We will take consideration of 5 looking at it more timely, streamlining it to make 6 it more timely. 7 MS. HARKEY: I just, I know that there's 8 been a bottleneck because of what's happened. But I 9 just want to be sure that doesn't continue. And if 10 we're being asked for a budget, then we need to -- 11 MR. GAU: Thank you. 12 MS. HARKEY: Thank you. 13 MR. HORTON: The fourth item, Members, I 14 believe we addressed that yesterday -- 15 MS. HARKEY: Okay. 16 MR. HORTON: -- the governance committee. 17 The fifth item, Section 15623, I mean I 18 appreciate the discussion that we had yesterday about 19 15623 which is basically the role of Members and 20 the -- in engaging in constituent services, taxpayers 21 activities, and to ensure that Members are not 22 engaging at an inappropriate level. 23 But, quite frankly, Members, based on the 24 discussion and the articulation of what was going on, 25 I still have concerns. And, um -- and, quite 26 frankly, would recommend that we actually repeal 27 15623 and defer that to the -- to -- to -- to the 28 agency. 48 1 And then in doing so, I think that sort of 2 codifies what we discussed request yesterday that we 3 still have all of these tools in which to accomplish 4 our objective. We have the Executive Director. We 5 have Chief Counsel. We have HR. We have all of 6 those. But in repealing it, if not modifying this 7 term -- 8 And let me express why, Members. Because 9 I've been with the agency for a long time and these 10 policies have been in place for a long time. And 11 it's not the interpretation or the wording of the 12 policies. It's the enforcement and the compliance 13 with that. 14 Yesterday we codified a memo that was a 15 regurgitation of previous memos dating back to 2004. 16 But without the enforcement in place, Members, we can 17 agree to whatever we want to agree that we're going 18 to comply with this. But without the hardline 19 prohibition or some level of enforcement, there's no 20 guarantee that -- that the next set of Members or 21 even the current set of Members are going to 22 comply. 23 ---oOo--- 24 25 26 27 28 49 1 ---oOo--- 2 MS. HARKEY: Member Horton and -- and other 3 Members, one of the problems I have seen on this 4 Board is once the Board takes a vote in a direction, 5 Members try to go off the other way, either by 6 passing legislation or doing something else. And we 7 get out of our lane here. 8 I think we have a five-member Board, when we 9 take a vote and provide direction, if you don't get 10 your way, somehow you just maybe need to wait until 11 the Board changes, or make your argument in another 12 way with another Issue Paper somehow. But we can't 13 just go ripping back and forth. 14 Once we voted, we are obligated to -- to 15 work within that framework, because we are a Board. 16 Just like a City Council or a Board of Supervisors, 17 we're no different. 18 And staff needs clear direction. And we 19 can't keep -- we voted yesterday on this and gave 20 clear direction as to what we want to do, and I don't 21 want to be regurgitating it. Because maybe, you 22 know, you have another idea. And I welcome the 23 ideas, but I think this issue we're going to deal 24 with as we voted yesterday. 25 And then if there's anything more that needs 26 to be dealt with, we can -- we can come back. But I 27 don't want to regurgitate repealing, because that was 28 definitely not the vote up here. 50 1 MR. HORTON: Well, I appreciate that. 2 And -- and was just stating my opinion, not 3 necessarily trying to -- 4 MS. HARKEY: I -- I -- 5 MR. HORTON: I -- I -- 6 MS. HARKEY: -- do appreciate that. 7 MR. HORTON: I -- I -- I submit to the will 8 of the -- will of the Board, the majority of the 9 Board as it relates to that issue from a Board's 10 perspective. 11 I'm just trying to figure out if the 12 enforcement mechanisms are in place to assure that 13 what we did yesterday is actually complied with. 14 MS. HARKEY: Going to be followed. 15 MR. HORTON: Going to be followed, complied 16 with. Other than we're saying, "Okay. We've got 17 this new policy now -- which is an old policy, it's 18 not new -- that we're now going to adhere to." You 19 know, it sort of remind -- 20 MS. HARKEY: Let me -- let me explain what 21 we did yesterday. 22 There has been no real policy on 15623. The 23 only thing that that statute says is the Members 24 must, you know, investigate. They're obligated to 25 investigate. If we don't investigate, then we 26 violate the statute. 27 What we did yesterday is put some kind of a 28 framework around what we consider acceptable under 51 1 15623, and that was the discussion that we had. 2 Because to this date, we've had an attorney memo, but 3 that's not binding under law. It's -- it's what we 4 follow. We try to follow that, but that's not -- 5 that's not -- that's not how we wish to really -- it 6 apparently was given to us and maybe not to others. 7 And so we're just trying to codify something that is 8 a procedure, and that we really -- really haven't had 9 formally before. 10 And so I think that's what we did. And I 11 think we need to, you know -- we can, at this point, 12 when we put our structure in place, I think that the 13 ED or the Chief Counsel at that point can go to 14 Members if there's a question on something. You 15 know, I think it's -- it's an important point that we 16 made. Because each Member was truly doing things 17 differently. 18 MR. HORTON: Thank you, Madam Chair. 19 The -- the next item, the "Ex Parte 20 Communication," I think we dealt with that. 21 MR. RUNNER: Mm-hm. 22 MS. HARKEY: Okay. 23 MR. HORTON: I don't want to revisit that, 24 necessarily. 25 Item No. 7, I don't necessarily -- the 26 recommendation that may or may not have been part of 27 a motion and so forth, I don't recall, was to -- was 28 to eliminate the -- the consideration of our elected 52 1 boundaries as a means in which to -- to allocate 2 permits. I don't feel that permits ought to be 3 allocated based on our elected boundaries. 4 Permit holders, the Board of Equalization, 5 each Member represents somewhere around 9 million 6 citizens. And of that, some 3 million actually vote 7 and participate for the Members. Of those 3 million, 8 very few of them in our district actually have 9 permits. The one's that have permits are somewhere 10 around 252,000 individuals that have permits. And of 11 those permits, not all of them vote -- necessarily 12 vote in our district. 13 And I think it's important that we sort of 14 adopt the one BOE concept. The inherent challenge is 15 every time the lines are redrawn, permits then get 16 shifted around. 17 And I appreciate the -- the -- the arguments 18 for this. It's just my recommendation is that we 19 remove that as part of the consideration in 20 establishing offices, and that all the offices and 21 facilities are established primarily based on 22 economic and customer need. 23 MS. HARKEY: Okay. 24 Let me tell you what I have kind of 25 suggested on this, because I don't -- I think the 26 Members are entitled to the permits within their 27 district, but I don't necessarily think that means a 28 building needs to be constructed, or that they have 53 1 to be even relocated. 2 For example, when we had the new boundaries 3 drawn in 2010 it was, Member Runner got some of them 4 from the Riverside office. And until -- until his 5 office was opened, he was handling permits out of the 6 Riverside office. And they were reporting through 7 his chain of command. And I don't know that that 8 created any problem. 9 I think as long as the Member has the 10 responsibility and the reporting requirement for 11 them, it works. I don't necessarily -- I think 12 that's why we asked for Facilities Master Plan. I 13 want to see what we really need. 14 I think, you know, it doesn't matter to, I 15 think, most auditors if they're reporting through one 16 chain or another chain. They don't sit in their 17 offices half the time any way. So I think, you 18 know -- or compliance people. So I think that that's 19 what we -- that's what we did. 20 I agree with you that we don't have to be 21 opening offices. But as far as permits, we'll just 22 kind of think about that. Because I do think, you 23 know, if you're in the district, then you're a 24 company, and you're represented by an area that, you 25 know, you pay your BOE in a certain area, that that's 26 kind of what you go to. 27 So because of the -- the Facilities Master 28 Plan, we can probably discuss that then -- 54 1 MR. HORTON: Mm-hm. 2 MS. HARKEY: -- and decide at that point. 3 Because I'm going to be the only one probably here 4 other than Member Yee. Everybody else seems to be 5 exiting. And I don't want to mess with it at this 6 point, because I want to see what there is -- what 7 there really is, what consideration it is. 8 MR. HORTON: Thank you, Madam Chair. I look 9 forward to that. Because permits being -- when you 10 allocate -- our entire system is based on the 11 allocation of permits. When you shift permits, not 12 only are you shifting permits, you're also shifting 13 staff, you're also shifting positions. And when 14 those positions are shift, then you're also creating 15 a situation where there's a vacuum or vacancies that 16 exist in the physical space. 17 And so developing a strategy where Members 18 have some relationship with what they perceive to be 19 their permit holders -- I don't perceive permit 20 holders to be mine, quite frankly. I -- I have -- 21 I -- I mean, I have no issue with representing permit 22 holders as a collective body, or those who come and 23 have conversations. I have a tendency to defer those 24 to the Members in which they're located. But I think 25 the taxpayer has a right to come to any of us. 26 But, um, as long as that's considered, and 27 you can come back with a means in which to -- you 28 consider the fact that -- 55 1 MS. HARKEY: See, I -- I don't think we have 2 to have a physical relocation of permits or people. 3 I think -- I think maybe just the report, chain of 4 command, kind of solves all of that. 5 So let's come back with the Facilities 6 Master Plan, and then we can see what that looks 7 like, what we -- what the suggestions are from the 8 Board. And if there's still something going forward, 9 we can take it up probably then. 10 Now, the next one you have -- 11 MR. HORTON: Um, you know, Members, I think 12 historically we sort of dealt with this. And, quite 13 frankly, I think the agency may have this one under 14 control as it relates to the Board of Equalization. 15 The interest in the mass-mailing provision 16 is to deal with a couple of issues, though. And this 17 is just conversation with the -- with the Executive 18 Team, deal with the prohibition currently as far as 19 electronic mail is concerned. I think on the 20 electronic mail side that the -- that the agency -- 21 that utilizing electronic mail in order to educate, 22 in order to communicate, is a valuable resource. And 23 we need to revisit how we accomplish that. 24 I do think it's important to codify the 25 blackout period, legislatively. But I think that, 26 maybe, a call for the next set of Board Members, or a 27 call for the Legislature, such that we've addressed 28 that here. And I wouldn't want to tie the hands of 56 1 the -- of my successors, necessarily, in determining 2 what the circumstances are two or three years from 3 now. 4 So -- and I do believe as we begin to sort 5 of look at that, is that we ought to -- in 6 distinguishing what is agency and what is Member, is 7 that information that is communicated to our 8 taxpayers that is agency tax returns, things of that 9 nature, that we have only -- we -- the Board has no 10 real role in -- in addressing that other than 11 informational purposes. That our names -- is not 12 necessarily that our names are placed on those 13 documents. And if it is, then it's placed on there 14 for informational purposes. "This is your Member in 15 District 1, 2, and 3, and 4," and that be the end of 16 it. That there is an agency-related type mail. 17 So I think as we go through the assessment 18 of outreach and education, my request is that we just 19 take a look at distinguishing what is agency mail and 20 what is mail that's prevalent to us as elected 21 officials in fulfilling our constructional role as 22 elected officials, and draw a clear distinction 23 between that where our names aren't -- aren't on that 24 for any other reason than informational purposes. 25 MS. HARKEY: Okay. 26 MS. STOWERS: Madam Chair. 27 MS. HARKEY: Yes. 28 MS. STOWERS: On this item, Mr. Horton -- 57 1 Member Horton, you had a comment here regarding pay 2 warrants and deposit receipts. 3 MR. HORTON: I don't think that's Board of 4 Equalization. 5 MS. HARKEY: I don't think he wants to bring 6 that up today. I think his choice was not -- was to 7 kind of have a conversation about this. At least 8 that's what I just heard. 9 So, anyway, are we finished? 10 MR. GAU: Just -- so we have a lot on our 11 plate, obviously, to come back and work on. I think 12 one of the things that we're proud of is putting some 13 of our -- we have -- we have an Executive Team that's 14 got a breath of experience, some newer, some have 15 been around for a while. We were jelling. We have a 16 governance process that we're putting into place. 17 Our commitment has been and continues to be 18 to deal with issues in a -- in an honest and 19 transparent way. So I think as a rep -- as Executive 20 Director, the team, we -- you have our commitment to 21 do all of those things. 22 MS. HARKEY: Thank you. 23 I just want to say, before we adjourn, I 24 have -- we have adjourning memories, but I just want 25 to thank this Board. 26 I think that there has been so much work put 27 into this. And I know that staff doesn't necessarily 28 like all the ideas germinating, but I do. Because I 58 1 think it shows that we're actually, you know, 2 involved, engaged. And each one of us has a very 3 major concern with how this agency is viewed and how 4 it's run. And I think that's a good thing. 5 Now, all Boards aren't as engaged. We 6 happen to have a type-A Board. I think each and 7 every one. And that the energy levels are sometimes 8 really hard to -- I think hard to manage. But I'd 9 rather deal with that than Members that don't care. 10 And so I'm very, very pleased to be -- and I 11 feel honored, each and every one of you, to be 12 working here with you. Because this is truly a high 13 level of inlet that we deal with almost every issue. 14 And so I want to thank you all for the 15 opportunity, quite honestly, to serve with you. I 16 think this is very special. And I appreciate the 17 staff and all your efforts. I think we have good -- 18 we have a good management team in place. 19 I'm just -- you know -- as much as it -- 20 I'll lose sleep over it, and I'm pained over a lot of 21 the stuff, and I read the stuff in the paper, and it 22 just irritates me. I do have to tell you I get a 23 great deal of pleasure, I think, as to what we are 24 actually accomplishing here. And I'm hoping we can 25 get these things through to the end and just be 26 better -- better for it. 27 So thank you one and all. 28 ---oOo--- 59 1 REPORTER'S CERTIFICATE 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, Jillian M. Sumner, Hearing Reporter for 8 the California State Board of Equalization certify 9 that on May 24, 2017 I recorded verbatim, in 10 shorthand, to the best of my ability, the proceedings 11 in the above-entitled hearing; that I transcribed the 12 shorthand writing into typewriting; and that the 13 preceding pages 1-31 and 50-59 constitute a complete 14 and accurate transcription of the shorthand writing. 15 16 Dated: June 15, 2017 17 18 19 ____________________________ 20 JILLIAN M. SUMNER, CSR #13619 21 Hearing Reporter 22 23 24 25 26 27 28 60 1 REPORTER'S CERTIFICATE 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, Kathleen Skidgel, Hearing Reporter for 8 the California State Board of Equalization certify 9 that on May 24, 2017 I recorded verbatim, in 10 shorthand, to the best of my ability, the proceedings 11 in the above-entitled hearing; that I transcribed the 12 shorthand writing into typewriting; and that the 13 preceding pages 32-49 constitute a complete and 14 accurate transcription of the shorthand writing. 15 16 Dated: June 19, 2017 17 18 19 ____________________________ 20 KATHLEEN SKIDGEL, CSR #9039 21 Hearing Reporter 22 23 24 25 26 27 28 61