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 26, 2016 10 11 12 13 14 ITEM M 15 OTHER CHIEF COUNSEL MATTERS 16 M1 RESOLUTION CONFERRING POWERS ON THE 17 EXECUTIVE DIRECTOR 18 19 20 21 22 23 24 25 26 27 REPORTED BY: Kathleen Skidgel 28 CSR NO. 9039 1 1 P R E S E N T 2 3 For the Board of Equalization: Fiona Ma, CPA 4 Chairwoman 5 Diane L. Harkey Vice Chair 6 Jerome E. Horton 7 Member 8 Sen. George Runner (Ret.) 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: Randy Ferris 16 Chief Counsel Legal Department 17 18 ---oOo--- 19 20 21 22 23 24 25 26 27 28 2 1 5901 GREEN VALLEY CIRCLE 2 CULVER CITY, CALIFORNIA 3 APRIL 26, 2016 4 ---oOo--- 5 MS. MA: Ms. Richmond, next item? 6 MS. RICHMOND: Our next item are Chief 7 Counsel matters. Item M Other Chief Counsel 8 matters. M1 Resolution Conferring Powers on the 9 Executive Director. 10 MS. MA: Okay, thank you. 11 Welcome, Mr. Ferris. Please commence your 12 presentation by introducing yourself. 13 MR. FERRIS: Good afternoon, Madam 14 Chairwoman. Randy Ferris, Chief Counsel. 15 The appointment of David J. Gau as 16 Executive Director necessitates the adoption of a 17 resolution conferring on Mr. Gau the authority to 18 act for and on behalf of the Board in the capacity 19 of Executive Director. 20 Government Code section 15604 authorizes 21 the Board to appoint its secretary, or Executive 22 Director, and prescribe his or her duties. The 23 proposed resolution accomplishes this goal and 24 delegates to the Executive Director specific duties, 25 powers, and functions to be exercised under the 26 general direction of the Board and in accordance 27 with policies enunciated by the Board. 28 Based on various questions and requests for 3 1 clarification from the Members after the proposed 2 resolution was publicly distributed, I would like to 3 recommend a few amendments that will align the 4 resolution with current Board practice and provide 5 additional clarification. 6 I am distributing now a document that 7 reflects the proposed amendments for the Board's 8 consideration. This document will also be linked to 9 the Public Agenda Notice by the Board Proceedings 10 Division as a record of this discussion. 11 With the Chairwoman's permission, I will 12 now go over these proposed amendments. 13 MS. MA: Yes, please. 14 MR. FERRIS: So on the first page, under 15 (a)(2), I'm recommending that it be revised to read 16 as follows: 17 Through -- 18 And this is resolved -- this is pertaining 19 to items that the Board is reserving unto itself and 20 is providing more direction, specific direction to 21 the Executive Director. 22 So I'm proposing that (a)(2) would -- would 23 read as follows: 24 "Through the appropriate Assistant 25 Chief of Field Operations, provide advance 26 notice to the Member in whose District any 27 District personnel appointments are to be 28 made;" 4 1 This change would delete the former 2 provision that allowed a Member, at their 3 discretion, to approve District personnel 4 appointments. 5 I'm also recommending that (a)(3) be 6 amended to add the words "and report on significant 7 personal transaction trends" so that the entire 8 (a)(3) would read: 9 "Notice at least monthly the Board of 10 all other personnel appointments and report 11 on significant personnel transaction 12 trends;" 13 I'm also recommending that in (a)(4) the 14 Department of Personnel Administration be replaced 15 with the current entity, "California Department of 16 Human Resources." There was a reorg. that occurred. 17 On subdivision (c), I'm recommending that 18 the words "provide weekly reports on all contracts 19 over $50,000 under consideration and" be added. So 20 the entire in context would read: 21 "Prior to the execution of such 22 documents" -- referring to contracts for materials, 23 services, and supplies. 24 "Prior to the execution of such 25 contracts, the Executive Director shall 26 provide weekly reports on all contracts 27 over $50,000 under consideration and obtain 28 Board approval for any contract in which 5 1 the amount of the contract exceeds 2 $1,000,000." 3 For (d), I'm recommending that it -- 4 subdivision (b) be revised to read as follows -- 5 it'd be too hard to -- there's too many 6 interpolations, so I'll read it how I recommend that 7 it be amended. 8 "(d) Execution of any and all leases 9 with respect to real and personal property. 10 The Executive Director shall regularly 11 report on significant changes to the use of 12 existing lease space and, prior to the 13 execution of such documents for any new 14 office space for a Member or a Member's 15 District, the Executive Director shall 16 obtain approval of that Member and Board 17 approval for all other new office space 18 relating to the headquarters operation." 19 Your approval of this resolution as 20 proposed to be amended is respectfully requested. 21 MS. MA: Any discussion, Members? 22 Ms. Harkey. 23 MS. HARKEY: I just want -- I did clarify 24 with our Chief Counsel that new office space, 25 though, we would regularly, as a Board, kind of 26 review. Because the problem that we have is that if 27 something happens in one District, it does tend to 28 reflect on all of us, one way or another. 6 1 And so I want to be sure that we, as a 2 Board, take a look at perhaps maybe where we think 3 we ought to be going and put a plan in place that 4 perhaps the Executive Director could execute based 5 on our review and where we think we need additional 6 space or whatever. 7 MR. FERRIS: Yeah. Thank you, Vice Chair 8 Harkey. And your concern is easily harmonized with 9 the language of subdivision (d). 10 What subdivision (d) is envisioning is that 11 the Executive Director would be making decisions 12 pursuant to a master facility plan or something like 13 that. And so it would be completely within the 14 Board's purview to work with the Executive Director 15 to establish specific criteria that the Executive 16 Director and the Executive Team would be using in 17 order to make decisions about whether to open or 18 close or expand or contract any district office of 19 the agency. 20 And then it does continue the tradition 21 that, in compliance with whatever direction the 22 five-member Board and the -- gives to the Executive 23 Director as the Executive Director is coming 24 forward, the final step of that process, assuming 25 everything is in compliance with the direction of 26 the Board, would be then to speak with the Member in 27 whose District that office would open. 28 But the general direction and the kind of 7 1 recommendation that the ED would be making can be 2 made subject to the guidance and direction and 3 oversight of the five-member Board. 4 MS. HARKEY: Thank you. 5 MR. HORTON: Madam Chair. 6 MS. MA: Mr. Horton. 7 MR. HORTON: First, let me thank you, Mr. 8 Ferris, for bringing this forward, and particularly 9 the amendments. 10 I very much appreciate the amendments 11 relative to the approval process. I, for one, do 12 not believe that we should be involved in the 13 approval of civil servants at all. And I think this 14 language sort of establishes that. 15 On the weekly reports of $50,000, I believe 16 that's a good thing. I think that, Members, we 17 might want -- we might want -- 18 Boy, I apologize, you guys. 19 -- we might want to revisit, providing 20 further clarification to the Executive Director as 21 it relates to the procurement process. Under the 22 existing procurement process, transactions takes 23 place that the Executive Director and the Members of 24 the Board may not have privy to the actual 25 transaction itself. Even though we're still 26 restricted and bound by the procurement process -- 27 it says lowest responsible bidder -- but even in 28 that situation, the Member and the Board and the 8 1 Executive Director may even want to override that. 2 And so I think it's important that we provide some 3 clarification to that as well. 4 I also believe that it's important that the 5 Board have the discussion about the two different 6 sets of philosophies when it comes down to 7 establishing District offices. 8 One philosophy being that the District 9 office should be established pursuant to one's 10 political boundaries. I don't believe that to be 11 the case. 12 The other is that they should be 13 established solely based on operational need, 14 workload, and service, irrespective of our political 15 boundaries. And I think that would be helpful to 16 have that brought forward to the Board in the 17 ultimate approval process. 18 With that, Members, I would move that we 19 adopt this, powers confirmed, Executive Director, by 20 resolution, adopted by the Board April 26, 2016. 21 MR. FERRIS: With the proposed 22 amendments. 23 MR. HORTON: With the proposed amendments. 24 And a request that we bring back to the Board -- the 25 Executive Team bring back to the Board discussions 26 that can bring some clarity to the other three 27 matters in which I articulated concern. 28 MS. MA: Okay. That's for our future 9 1 meeting or next meeting? 2 MR. HORTON: I would defer to you, Madam 3 Chair, in that assessment. 4 I will -- I will, with your permission, 5 Madam Chair, I will assist in formulating something 6 that I think staff can -- as a foundation for the 7 staff's consideration. 8 MS. MA: Okay. Well, our next meeting's in 9 Sacramento. So why don't we bring it back next 10 month for a discussion on the three items that 11 Member Horton would like some clarification on. 12 MR. HORTON: Thank you, Madam Chair. 13 MS. MA: So there's a motion by Member 14 Horton. Second? 15 MR. RUNNER: Second. 16 MS. MA: Second by Member Runner. Moves to 17 adopt the resolution conferring powers on the 18 Executive Director. 19 Without objection, motion carries. 20 ---oOo--- 21 22 23 24 25 26 27 28 10 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 April 26, 2016 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 10 constitute 14 a complete and accurate transcription of the 15 shorthand writing. 16 17 Dated: May 20, 2016 18 19 20 ____________________________ 21 KATHLEEN SKIDGEL, CSR #9039 22 Hearing Reporter 23 24 25 26 27 28 11