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 25, 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 17 David J. Gau Executive Director 18 Michele Pielsticker 19 Chief Legislative and Research 20 21 ---oOo--- 22 23 24 25 26 27 28 2 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 MAY 25, 2016 4 ---oOo--- 5 MS. MA: Ms. Richmond, next item. 6 MS. RICHMOND: Our next item is item is 7 Item M Other Chief Counsel Matters, M1 Further 8 Discussion of Resolution Conferring Powers on the 9 Executive Director. 10 MS. MA: Thank you, Mr. Ferris. 11 MR. FERRIS: Randy Ferris, Chief Counsel. 12 This is further discussion with respect to 13 the resolution conferring powers on David J. Gau as 14 Executive Director that the Board adopted on April 15 26th. And the issue is whether or not there should 16 be further amendment to that document with respect 17 to the Board's oversight and approval of leases with 18 respect to real property. 19 And there is a proposal that would -- and 20 language that was provided linked to the PAN that 21 would expand Board approval to a new office space 22 for district offices. So that's the initial 23 proposal. 24 MS. MA: Okay. Mr. Runner. 25 MR. RUNNER: Yeah. I -- I -- I don't have 26 any issue at all with the proposal. I'm just 27 concerned in regards to the language itself in 28 regards to -- in terms of just trying to understand 3 1 some of the -- what's in and what's out, I guess, is 2 the best way to phrase that. And as I reviewed 3 that, I have no difficulty with it at all, with our 4 Board approving all real estate leases and just 5 making it quite basically that simple, so that then 6 we don't have to decide what's in, what's out. And 7 so I did ask Mr. Ferris to actually come up with 8 some language would be simpler and do that. 9 So I guess I'd like to at least have him 10 read that language and then talk about the way that 11 we would do that. Or if there's some parts of it 12 that people feel like shouldn't be approved by the 13 Board, but that's kind of where I would suggest. 14 So, Mr. Ferris? 15 MR. FERRIS: Okay. So in terms of the 16 proposed amendment that's reflected in the document 17 that you have before you, to expand it to all 18 leases, I think the best language would be: 19 "The Executive Director shall regularly 20 report on significant changes to the use of 21 existing lease space and shall obtain 22 approval of the Board prior to the 23 execution of any lease documents with 24 respect to real property." 25 So that would include new office space. 26 That would include leases that are being renewed for 27 existing office space. That would include any 28 amendment to a lease, and it would be all lease 4 1 space, regardless of its function. 2 MR. RUNNER: Can I just ask in regards 3 to -- tease out for me the idea of the phrase 4 "significant." 5 MR. FERRIS: Well, that has to do -- 6 MR. RUNNER: Because what I don't want to 7 do is open a door that, you know, all of a sudden 8 becomes something that -- 9 MR. FERRIS: Yeah, the reporting aspect of 10 the -- of the first part of the -- of the sentence 11 is just dealing with -- with our existing leases. 12 If there's some change in how we're using lease 13 space that's significant in the sense that, you 14 know, if somebody moves from one office to another, 15 that is a change in our use of lease space. I don't 16 think the Board needs to hear or wants to hear every 17 time somebody changes their office or -- 18 MR. RUNNER: Moving from cubicle A. 19 MR. FERRIS: -- cubicle -- 20 MR. RUNNER: Right. 21 MR. FERRIS: -- or something got 22 rearranged. But if there's some sort of significant 23 change in how the Board is -- the agency is using 24 existing lease space. So it has nothing to do with 25 new leases or extensions of leases or amendments of 26 leases. That's just our ongoing day-to-day 27 operations of how we're using lease space. 28 The desire was if there's some sort of 5 1 significant change with respect to how we're using 2 the space, that we have -- that would be reported 3 on. 4 MR. RUNNER: Would that be like if a 5 department was moving from one leased space to 6 another that you already had, you know a whole -- a 7 whole big department change or something like 8 that. 9 MR. FERRIS: Right. Or -- or if we had to 10 do some remediation within headquarters and we had 11 to use swing space to move a unit from one floor to 12 another, something like that, that would be a 13 significant -- 14 MR. RUNNER: Okay. 15 MR. FERRIS: -- change in use. 16 So that -- but that's all about reporting, 17 just on ongoing day-to-day operations, how we're 18 using our space. 19 MR. RUNNER: Right. It's not an approval. 20 MR. FERRIS: It's not an approval. 21 MR. RUNNER: Okay. 22 MR. FERRIS: And what I understand you to 23 be interested in is perhaps expanding the Board's 24 oversight and approval with respect to a broader 25 category of leases and amendments to leases and 26 extension of leases on existing office space, that 27 type of thing. 28 MS. MA: Ms. Harkey. 6 1 MS. HARKEY: I kind of prefer the language 2 that was suggested by the Chairwoman. I -- what I'm 3 afraid of doing is getting into a rabbit hole where 4 we are micro managing the ED's position. 5 I do think we have a problem with Members 6 deciding what they're going to do and costing the 7 State money. I think that's very obvious in our -- 8 in our budget negotiations. 9 And so what I have asked for is actually a 10 Master Plan of Facilities so that we can plan going 11 forward. And that would not -- it would -- because 12 we're planning for an agency. I mean we all have 13 our constituents that we need to serve, but we are 14 planning for an agency, and as a Board those are the 15 decisions we should be making so that we don't end 16 up with an office here, an office there, 17 overstaffing here because another office opened up 18 here and the accounts went and the people didn't go. 19 I mean, you know, we've got to manage this like a 20 real agency. 21 And so, I like the language that the 22 Chairwoman has suggested. I'm not so sure that I 23 want to see every lease or switch, you know, moving 24 a department in and a department out. I don't want 25 to see that. Let me be perfectly clear. 26 I think Mr. Gau is -- we hired him to do 27 that job and I expect him to do that job. I don't 28 think where Mr. Gau is concerned is where we're 7 1 going to have the problem. But I think where we've 2 had the problem is when we've had like redistricting 3 and other things come up where, you know, it's 4 questionable. And -- and I understand, but I do 5 think we could probably handle that without any 6 politics involved if we did something on a master 7 scale for the State, and we all reviewed it. 8 Because when something happens to one Member up 9 here, it happens to all of us. And I think that's 10 the point that's not really understood. 11 We can all sit here and torpedo this idea 12 and go to the public arena and do this and do that 13 and throw the dirt here, but the bottom line is is 14 the agency suffers and every Member up here suffers. 15 And I think that a lot of what's happened has been 16 excellent. I think there are some questionable 17 issues. But I think we -- those of us that are new 18 have had a hard time getting our hands around 19 everything all at once; but I do plan on doing so. 20 But one of the things that I really think 21 we need to address is the office and the location. 22 And I think if we had something like that, we would 23 have much more credibility with the Legislature to 24 let them know that we understand and that we are 25 responsible as constitutional officers for the 26 administration and that we will, you know, see to it 27 that we're sticking to some kind of overall plan and 28 not just a political plan. 8 1 So I think that's -- that's the point 2 they're making is, Do we really need all this? And 3 I'm not sure that any one of us actually can justify 4 everything that's going on in everybody else's 5 district. We probably know what we need for ours. 6 But I think since if there's somebody that is -- 7 anything that's in question, we all have to answer 8 for it. 9 So I would like to see a Master Plan of 10 Facilities be on the agenda and also some kind of 11 staging as to where we think we're going to have 12 needs. 13 I can tell you that right now in my 14 Riverside office we've been waiting months for 15 elevators to be repaired. Those are DGS buildings. 16 I'm not so sure we should all be in DGS buildings. 17 I, quite honestly, think that if we can't get the 18 repairs that we can get on the outside from the 19 public, which we can -- our buildings that we lease 20 outside are absolutely well maintained, fabulous. I 21 think that the State buildings were probably, most 22 of them are well maintained initially, but we have 23 problems getting lights replaced and, like I said, 24 the elevator in Riverside has been out, off and on, 25 for months. We have three elevators. Our staff is 26 on the 10th and 11th floor and we have one working 27 elevator. 28 And a couple -- I guess a few months ago, 9 1 or maybe even a year ago, my District Administrator 2 was stuck in an elevator, broken, for two hours. So 3 that's not acceptable. And we're trying to deal 4 with DGS to get this fixed, but it doesn't -- I 5 don't know what the progress is today, but I can 6 tell you it has not been quick response. 7 And in those instances, we ought to at 8 least know about it as a Board and we ought to be 9 able to, I think, hire an outside contractor, get it 10 done and send someone a bill because this is a 11 problem. And it's -- and I know our Santa Ana 12 office that we now carry on our books for eight 13 years that's in terrible repair, not ever going to 14 lease, but we're paying lease on this, that we 15 really ought to be able at some point say, "Hey, 16 State, this is not ever going to lease. It's got 17 issues. There's no repairs been made. We moved out 18 of it because it was so bad." 19 So at what point do we -- are we able to 20 relinquish that lease and let the State dispose of 21 the property? Because as long as we're under an 22 obligation to keep paying the lease payments to DGS, 23 well, it's been eight years. 24 So what I'm saying is I think we need to, 25 as a Board, because I didn't understand all this 26 before and I'm sure not everybody did, but as a 27 Board, we need to know what our facilities are, 28 which are active, which aren't. And then, as a 10 1 Board, we could probably negotiate better with the 2 State to, like, take these buildings back, dispose 3 of them, repair them, do this, do that. And that's 4 my -- those are my thoughts. 5 MS. MA: Mr. Horton. 6 MR. HORTON: Thank you, Madam Chair. 7 Members, the Board of Equalization has a 8 long history in addressing these issues that have 9 been permeating -- 10 (Phone ringing.) 11 MR. HORTON: As the phone rings. 12 In, um -- 13 MS. HARKEY: It's pretty. 14 MR. HORTON: Thank you. 15 MS. HARKEY: Spa time. 16 MS. MA: Very soothing. 17 MS. STOWERS: Very soothing. 18 MR. HORTON: You know -- 19 MS. MA: It's like a spa. 20 MR. HORTON: -- it's my -- it's my daughter 21 and she has -- she's on top of technology, and so no 22 matter how many times I can push it to say stop or 23 go off, she's figured out a way to make it keep 24 ringing. 25 So, anyway, my apologies, Madam Chair and 26 Members. 27 You know, I like the amendment that Madam 28 Chair has provided. I also like the conversation, 11 1 the expression of -- philosophical expression by 2 Member Harkey. And I think it's important that we 3 give staff specific direction. 4 But before doing so, let me share that the 5 perception that Members have control over some of 6 these things is just a false perception. There are 7 significant State laws that the agency has to 8 follow. There's rules and procedure that the agency 9 is required to follow in concurrence with the law 10 and the highest bid of transferring property, the 11 authorization. And, for the most part, DGS has the 12 final say in many of these transactions, not the 13 Member, despite what may have been reported in the 14 press. 15 And then, of course, at the end of the day, 16 the Chair, the office, whatever, actually belongs to 17 the people of the State of California. 18 The -- the inherent challenge is, is that 19 we have somewhat deviated from existing policy. And 20 so I think it's important that staff be given 21 direction basically to return to current policy. 22 And under current policy, as I understand it is, is 23 that if we incorporate in the amendment that the 24 Director shall develop proposals based on 25 operational need, workload, permits, distribution of 26 permits based on taxpayer's proximity to current 27 district office, cost benefit and related factors 28 that determine the overall benefit to the State in 12 1 order for us to establish any facilities whatsoever, 2 distribution of permits. 3 And understanding, trying to get back to 4 what I think we attempted to establish some years 5 ago, is this concept of One BOE. And that is, is 6 that we are just one organization serving -- we're 7 not five -- four different organizations wherein 8 policy is established in one organiz- -- one group, 9 different from a policy in another district. That's 10 a violation of existing law to do that, to have that 11 inconsistency. 12 And, you know, my belief is that our 13 greatest assets are our employees, and our greatest 14 defense against that is the truth. And so when we 15 use both of those as a premise for making decisions, 16 as opposed to our political desires or political 17 boundaries and so forth, at the end of the day I 18 think we get the results that's in the best 19 interests of California taxpayers. 20 They have no idea about what we think as 21 Board Members and so forth. And that's why the 22 Legislature has established laws to ensure that 23 continuity and the treatment of the taxpayers, to 24 ensure that a taxpayer can go from San Francisco 25 down to Los Angeles and expect that the Taxpayers' 26 Bill of Rights and the existing laws will be adhered 27 to by every employee of the Board of Equalization. 28 And in my, I guess 30 years of experience, 13 1 97, 98 percent of the time that is the case, is that 2 the employees are following the rules, all of them 3 are doing the best they can possibly do. And their 4 goal is to do a good job, go home and spend time 5 with their family, come back to a wonderful place to 6 work. 7 And that's their goals and objective. Do 8 the best they can while they're here, think about it 9 a little bit on the way home, forget about it when 10 they sit down for dinner, start up again the next 11 morning. 12 And starting at this organization at the 13 age of 18, I've learned to value that experience. 14 And I think if we return to that, what we extract 15 that -- I don't want to politicize it, but you 16 extract that perception that there are different -- 17 different laws that apply in different districts, 18 different people in different districts, and somehow 19 it's going to make a huge difference. It's just not 20 true. It's tantamount to saying that legislators 21 make laws for the districts that they oversee. They 22 don't. They function as a cohesive body to address 23 the overall issues. 24 And so I think if we incorporate language 25 that gives the Executive Director some direction -- 26 and I also feel that the Legislature has been clear 27 that it's their desire that the Board of 28 Equalization conducts a cost benefit analysis to 14 1 determine if we have established this office based 2 on these criteria -- they've all but said that -- 3 foot traffic, operation needs, workload, things of 4 that nature. And I think there's a whole lot of 5 wisdom in following the direction of those folks 6 that set your budget. You know, I think there's 7 even more wisdom in following the common sense 8 knowledge that has been established over the 137 9 years of this organization's existence. 10 And so if we go back to that One BOE 11 philosophy, what we end up with is some very, very 12 talented policymakers. Each one of these 13 individuals are extremely talented and have skills 14 that they bring that are very valuable, I think, to 15 this process in a policymaker environment. And then 16 we create an environment where the Executive 17 Director can administer this organization and the 18 conferring powers all of a sudden have value, they 19 have significance, and there is no interruption of 20 that authority. 21 And so I think we ought to basically return 22 to those policies that have served us well over the 23 years. 24 MS. MA: Okay. So I would just like to 25 make a couple comments. I mean we just got here. I 26 just got here. And I think the district offices, we 27 do a great job in doing outreach, education, you 28 know, voluntary compliance; you know, I'm very, very 15 1 impressed with that. 2 I think when I got here, you know, I 3 understood, you know, who works in my district, how 4 many employees we have, how much our leases are. 5 But I wasn't really privy to the whole agency, which 6 is what I had a problem with, is not understanding 7 the One BOE, right? And so I spent a lot of time 8 trying to understand and ask for the One BOE number 9 so that we could actually understand how many 10 offices we have, how many leases we have -- in 11 total, right -- how many employees, what everyone's 12 doing, like even here at headquarters. 13 We were not privy to that. And so I would 14 really like to go back to that, if that's how it 15 was, to give the Executive Director the authority 16 and the power to be more transparent. 17 I appreciate the Legislature, the Assembly, 18 and the Senate now, because I think they also didn't 19 understand what is really happening with the agency. 20 And so that's why they're putting a lot of pressure 21 on us is because we are not giving them information, 22 we are not transparent. And I don't know whether 23 we've been keeping that information or not, but we 24 really should, you know, let them know and we won't 25 have these problems with the Legislature. 26 So in terms of, you know, the building and 27 the leases, you know, whatever the conferring power 28 is, you know, everybody should know here in this 16 1 agency how many buildings we have, where all the 2 employees are, how much it's costing us, instead of 3 just this, you know, district-by-district 4 need-to-know basis. 5 So I'd like to get back to that if that's 6 how it used to be. I think it's healthy for the 7 organization, otherwise it creates a lot of 8 suspicion in terms of what one district is doing and 9 another. It causes a lot of, you know, confusion, 10 you know, jealousy, you know, rumors. But if 11 everything is put out there in the public, then we 12 don't have to second-guess what is going on, you 13 know, either in the districts or in headquarters or 14 even amongst our districts. 15 MR. RUNNER: Let me just -- couple 16 responses. One is, we had a Master Plan of 17 Facilities. That's what -- they were all -- all the 18 offices that we could establish were part of a 19 Master Plan of Facilities, I think. Well, actually 20 not all, but by far most of them. That was part of 21 a problem in regards to, I think, why we need to do 22 a new one. 23 The Master Plan of Facilities was done as a 24 result of redistricting. And as a result of that, 25 this Board was presented a plan which included then 26 where offices need to go, which ones needed to be 27 changed. And, as a result of the presentation of 28 the Master Plan of Facilities, then at that point 17 1 then that was then used to be the doc- -- or the 2 plan then for the document that talked about then 3 how do we do -- what's our staffing model? 4 And so then we used those facilities to 5 then drive then the staffing model. And the 6 staffing model then was based upon accounts. And 7 the accounts were then put -- were then by 8 districts. And that's how we decided how many 9 accounts or how many staff we would have because 10 that's how many accounts we would have, and that's 11 where they offices were. 12 All of that was presented to this Board. 13 All of that was there. So the idea that somehow 14 none of that took place just is not true. All of 15 that was a very public discussion and a very engaged 16 issue. 17 So, again, not this -- I don't mean this 18 Board. I mean the prior Board, excuse me. 19 MS. HARKEY: Oh. 20 MR. RUNNER: Although I do believe -- 21 although I do believe the staffing plan -- model 22 actually was a part of -- beginning of this Board. 23 The Master Plan was certainly. 24 So one of the things that I've continued to 25 ask for is a new Master Plan. I think it's very 26 important. I think it's important for a couple 27 things. Number one, I think it's important because 28 we need to know not only what's happening in 18 1 California, but I've got some concerns about what's 2 happening out of state. And so I think we do need 3 to have a plan for that. 4 For instance, in the Master Plan that was a 5 part of what it is that was talked about before was, 6 you know, the idea of moving some offices around. 7 We were going to go ahead and -- we have two offices 8 in Riverside. The idea of doing a Rancho office 9 meant that we were going to close the annex office 10 because we wouldn't need it. I find out that that 11 was never closed. 12 MS. HARKEY: What annex? 13 MR. RUNNER: There's two offices. There's 14 an annex. 15 MS. HARKEY: There's one in Palm Desert and 16 there's one -- 17 MR. RUNNER: No, no, no, no, no. 18 MS. HARKEY: -- in Riverside. 19 MR. RUNNER: No, no. Not -- not -- we have 20 a -- we have a headquarters annex office in 21 Riverside. 22 MS. HARKEY: Oh, we have -- we have -- 23 yeah. 24 MR. RUNNER: Right. Right. And so -- 25 MS. HARKEY: It's not part of -- 26 MS. MA: The fact that we all don't know 27 what's really happening, I mean -- 28 MR. RUNNER: No, no, it's not in your 19 1 district. 2 MS. MA: -- that's kind of part of the 3 problem right here. 4 MS. HARKEY: It's not a district. 5 MR. HORTON: Madam Chair, if I may. 6 MR. RUNNER: No, no, no. No, no. No. Let 7 me finish. 8 MS. MA: Mr. Runner. Mr. Runner. 9 MR. RUNNER: I don't mean to imply that 10 there's an extra office out there. What I meant to 11 imply was we didn't have enough space and we needed 12 some di- -- we needed some headquarters space and so 13 there was an ex- -- there was an additional office 14 then identified as an annex headquarters office 15 in -- in -- in Riverside. 16 MS. HARKEY: Right. 17 MR. RUNNER: So the idea was that if you 18 were going to go ahead and do then -- in the Master 19 Plan that we had done, if you were going to go ahead 20 and do then a Rancho office, you would close that 21 office, because then there would be enough place to 22 put then the other staff into those existing 23 offices. And the problem is, my understanding, is 24 that just was never done. 25 So, I think that's why we need to stay, not 26 only have a Master Plan, but we need to stick to the 27 Master Plan in regards to that. 28 So, to me, that's -- that, to me, is 20 1 where we -- where we got and how we got offices, how 2 they were done. Again, all those offices were done 3 not only then -- not only then by our Board in the 4 sense of those reports, but then those went to DGS, 5 they went to the Department of Finance, and all 6 those were on the record. 7 So the idea that anybody did anything that 8 nobody was aware of just is not the case. That's 9 why I believe the problem is one of perception. So 10 I believe that's kind of why I kind of would like to 11 say, "Hey, let's do all offices." 12 The concern I have with this particular 13 issue is, in this particular example Members' 14 offices are not approved by this Board. I think 15 Member offices should be approved by this Board. I 16 don't think there's anything wrong with that. 17 MS. HARKEY: It says it. 18 MR. RUNNER: No. See, and that's why the 19 language is hard. If you read this it says: 20 "The Executive Director shall obtain 21 all approval of that Member and Board for 22 all other office leases." 23 And so it's -- so the problem is that 24 doesn't include Members' offices. And I think that 25 if we open up that door, it just -- it opens up -- 26 it doesn't appear that we want to be transparent. 27 MS. HARKEY: Well, let me -- 28 MR. RUNNER: So that's why I like the 21 1 clarity of just making it all leases. It just seems 2 to me then there's no debate, there's no discussion. 3 Now, I do agree, in fact the first sentence 4 is exactly the same as this one. And that is: 5 "Executive Director shall report all 6 significant changes to existing leases." 7 So, the proposal that, at least I put on 8 the table, is exactly the same as this in that item. 9 I'm not asking for changes of uses of facilities to 10 come before the Board. It's exactly the same 11 sentence. So that's why I think that's important. 12 Now, the other issue I want to -- I would 13 say I'd like to bifurcate the discussion a bit. And 14 that is, I would like for us to talk about 15 facilities. I think it's a very big discussion to 16 have and I think it's one that everybody would be 17 fully prepared for as to how accounts are assigned. 18 I think that's a second decision -- discussion. And 19 I think it's an important discussion and it ought to 20 be -- and, you know, if a Member wants to put that 21 on the agenda, then it ought to be put on the 22 agenda. 23 But -- because, again I -- let me step back 24 a little historical again. Because I have been here 25 at least a little longer. Not as long, but a little 26 longer. And that is, when I got here, we had 27 assign- -- basically accounts were still assigned by 28 district, and I think there's a good reason for 22 1 that, because those are the people who voted for me, 2 and therefore I think that makes sense. 3 But at the same time we had some issues of 4 convenience where Members had agreements with one 5 another in regards to for convenience of the 6 taxpayer, you know, in terms of location, I'll take 7 those accounts in my office. And those were -- 8 those agreements were done between -- for instance, 9 prior to me, with Mr. Leonard and Ms. Steel in 10 regards to sharing of -- in terms of where those 11 accounts would go, in that particular issue. 12 It was also an agreement that was done 13 between Ms. Yee and -- and -- and me at that point 14 followed up in regards to accounts in -- in -- in -- 15 MS. HARKEY: Northern. 16 MR. RUNNER: Yeah, it would be Santa 17 Barbara, because Santa Barbara came way down there. 18 So those were agreements, but those were agreements 19 that Members made. Because what they were -- again, 20 my feeling, and that's why I really don't want to go 21 on this, is I think it's something -- my basic 22 feeling is, I believe that we are elected by our 23 constituents. And if I need to be engaged then as 24 to where those -- those accounts are and then if I 25 feel like for convenience of taxpayers then there's 26 an agreement between Members, then at least I'm 27 engaged in that. And that's the history. 28 Now, again, I -- I -- let me just, again, I 23 1 would rather have that discussion later because I 2 get really confused if we're going to do it by 3 proximity, because I'll give you an example. I mean 4 Simi Valley is closer to Santa Clarita. Do we think 5 all Simi Valley accounts should be transferred to 6 Santa Clarita? I don't think so. 7 And so, you know, those -- that's why I get 8 concerned about -- because you're going to have 9 to -- you're going to create a line somewhere. And 10 that's why I think I just as soon have that 11 discussion secondary because I don't think it really 12 needs to be a part of the discussion here in regards 13 to how we deal with leases. 14 MS. HARKEY: No. But what I think right 15 now what we're talking -- 16 MS. MA: Ms. Harkey. 17 MR. HORTON: Well -- 18 MS. MA: Ms. Harkey. 19 MS. HARKEY: What -- what we're talking 20 about right now is adding language that gives the 21 Executive Director some authority. And so to the 22 extent we can add the phrase that the Chair has 23 suggested, I think it's clear. I think it's limited 24 and it allows for that further discussion. I do not 25 want to see every lease, but I do want to see a 26 Master Plan of Facilities. 27 MR. FERRIS: Yes. 28 MS. HARKEY: And I think along with once we 24 1 get a Master Plan of Facilities, then we can have 2 that secondary discussion on the accounts. 3 MR. RUNNER: Mm-hmm. 4 MS. HARKEY: I think that that's part of 5 the second part. This is right now just conferring 6 powers. 7 MR. RUNNER: And, again, I'm actually okay 8 with this language if we can include Members' 9 offices. I'd be okay. 10 MS. HARKEY: Well, it says: "Shall obtain 11 Member and Board approval for all other." 12 MR. RUNNER: "Other." See the key word 13 there is "other." 14 MS. HARKEY: So it probably should be then 15 "Members' offices." 16 MR. RUNNER: Right. And see -- and I 17 think if -- I'm okay with -- 18 MS. HARKEY: All -- just say "all offices." 19 MR. RUNNER: That's basically what I think 20 my -- 21 MS. MA: I would agree. All offices. 22 MS. HARKEY: All offices. 23 MS. MA: I mean it shouldn't be this office 24 or that office. 25 MS. HARKEY: Yeah. 26 MS. MA: And like contracts right now, we 27 are getting each month contracts let out for I think 28 $50,000 or more. And at least we get it. You know, 25 1 our offices are looking at it. If we have 2 questions, we can call. But more information is 3 better than less information -- 4 MS. HARKEY: Right. 5 MS. MA: -- in my opinion. 6 So I'm okay with having "all offices," any 7 significant changes in any leases to any -- 8 MS. HARKEY: Okay. 9 MS. MA: -- anything that's in our 10 budget. 11 MS. HARKEY: So the second -- I'm sorry. 12 But, so the second -- the second line: 13 "The Executive Director shall regularly 14 report on significant changes to the use of 15 existing lease space and, prior to 16 execution of such documents for any new 17 office space for a Member, the Executive 18 Director shall obtain approval of that 19 Member and Board approval for all new 20 office space." 21 MR. RUNNER: Yeah. The other thing -- 22 MS. MA: For any new office space, 23 period. 24 MR. RUNNER: I would -- 25 MS. HARKEY: Yeah. 26 MS. MA: The Member or districts, 27 headquarters -- I mean -- 28 MS. HARKEY: Yeah, it's just "all." 26 1 MS. MA: All. 2 MS. HARKEY: All new office space. So if 3 we're going to go out as a -- if we're relocating a 4 division -- 5 MS. MA: Yeah, we should know. 6 MS. HARKEY: -- we need to know. Because I 7 just found out about U Tax being in Riverside, 8 what -- well, probably six months ago. But there is 9 an annex there for headquarters and they do -- 10 there's something else that's there with U Tax. 11 So I think -- I think just kind of 12 generally knowing where everybody is would be really 13 nice. 14 MS. MA: Okay. 15 Ms. Stowers. 16 MS. HARKEY: Especially when you're in the 17 neighborhood. 18 MS. STOWERS: Okay. Thank you, Ms. Ma. 19 Just a couple of quick comments. 20 I do support your suggested amendment. And 21 you just made a comment about contracts over 50,000. 22 I just want to just say, clarify, that yes, we are 23 receiving those contracts over 50,000 for reveal, 24 and we've been receiving those since March of 2015. 25 We put that into the conferring powers last month, 26 just to formalize that process and basically 27 formalizing existing policy. And I wanted to make 28 that clear that it was not something that was new. 27 1 With respect to Mr. Horton's comment to 2 have the Executive Director to develop a process so 3 that offices are open/closed based on operational 4 needs, workloads, and cost benefit, it's my 5 understanding that that is existing policy as well 6 and we should be following existing policy today and 7 on a go-forward basis, until the Board decides to 8 change that policy. 9 So I would like to see this process that 10 Mr. Horton talked about as part of the conferring 11 powers so that everybody knows that this is our 12 policy and we should be following it. 13 If Mr. Horton could restate what he said. 14 MS. MA: And is our conferring document on 15 the Internet? Is this document on the Internet? 16 MR. FERRIS: This is linked through the 17 PAN, yes. 18 MS. MA: Huh? No, but is it on our 19 website? 20 MR. FERRIS: Oh, yes. 21 MS. MA: Okay. 22 MR. RUNNER: The one that's in place. Once 23 it gets in place. 24 MR. FERRIS: Yes. 25 MS. MA: Okay. All right. 26 Mr. Horton. 27 MR. HORTON: Thank you, Madam Chair. 28 Members, without this language, we are -- 28 1 even though it's a good idea to include the Members' 2 offices and I'm supportive of that, but we're 3 returning to the status quo. Having the Board 4 authorize it without a conditional qualifier, you're 5 returning to the status quo. The authority should 6 be placed properly, so I think in the -- in the 7 Executive Director. 8 The issue is, is that there are no lines. 9 There should be no lines drawn. I certainly believe 10 that elected officials ought to be able to represent 11 the constituencies. But Member Runner ought to be 12 able to represent his constituencies whether they 13 are in New York, visiting New York and want to visit 14 an office in there, he ought to be able to call and 15 have some influence -- which he does, I believe -- 16 in every office in the State of California. 17 We begin to draw these lines is where we 18 inherently get away from the One BOE concept and we 19 create a concept that says because you have elected 20 authority, that also gives you authority over the 21 offices. And we should not have that authority. 22 We should not have the hiring authority 23 over the employees. We should not have that 24 management authority over those employees. We 25 should not set policy in those district offices. 26 That should be all done collectively by the entire 27 Board via the Executive Director. 28 And so the Master Plan that was drawn, 29 1 there was dispute about it at that time. What 2 happened was is that we deviated from our policy; 3 because if we didn't deviate from existing policy, 4 we would not have district offices with 22,000 5 permits. We would not have district offices with 6 foot traffic of basically three people a day. I 7 mean that wouldn't exist under the policies that 8 have been driven by this agency over the years that 9 I've been here. 10 And so the inherent challenge in having 11 elected officials is, is that if you don't empower a 12 buffer between us, and that buffer being empowering 13 the Executive Director, what happens is when the 14 Executive Director engaged with us individually we 15 basically say, "This is what we want." You know. 16 And, you know, Executive Director has to kind of 17 negotiate around that. 18 And so I believe if we give him policy, 19 we'll establish the buffer in order to protect our 20 employees and protect this body. That's inherent in 21 any government agency. 22 So I believe it's important that we 23 establish that policy that says every office -- 24 well, first, says we need to evaluate our existing 25 footprint to determine if we have been consistent 26 with existing policy and determine the operational 27 needs, the workload needs, and the proximity as it 28 exists now. 30 1 Because, as much as we sort of believe that 2 the nine million people we represent actually know 3 us and actually care where we are located, they're 4 more interested in where the closest office is, and 5 they're more interested in can they get the service, 6 not, Am I crossing a line? 7 I just don't think that people in Santa 8 Barbara, when they cross the line to go to Ventura 9 they say, "Oops, I'm outside of -- I'm in Horton's 10 district, so let me -- you know, let me turn around 11 and go up to San Jose." It doesn't happen. That's 12 not the real world. 13 And so, I think it's in the best interest 14 of our customer. It may not be in the best interest 15 from a political perspective, but it is in the best 16 interest of our customers, which is California 17 taxpayers, to have the offices located based on 18 their convenience, which is indicative of how they 19 use those particular offices. Which is the reason 20 that I think it's important that we give them -- we 21 set that policy, or reset as Member Stowers 22 indicated, reset the policy, establish that. And 23 regardless of these political boundaries, eliminate 24 the boundaries altogether. 25 And these are administrative offices that 26 are ran by the administration and not by the elected 27 officials. If we do that, we end up with a One BOE, 28 we end up with an organization that is managed by an 31 1 Executive Director. We end up with an organization 2 where talented elected officials are establishing 3 policy that is consistent with California law, that 4 is uniformly applied throughout the State of 5 California, has consistency, continuity and synergy. 6 And I believe if we do that, we are 7 adhering to existing law. If we don't do that, we 8 are in violation of the Taxpayers' Bill of Rights 9 and a number of other laws that I believe we could 10 cite. 11 So let me reiterate this part: I think 12 it's important that elected officials, if they have 13 a constituent, but in -- I mean I've been assigned 14 the Sacramento out-of-state office. What does that 15 mean? You know what I mean? 16 If any other Members have a constituent 17 that's interfacing with the Sacramento State office, 18 go visit it. Go and engage. Do what you have to do 19 for that taxpayer. 20 There are five offices that happen to be -- 21 or three or four, whatever, happen to be in my 22 district, elected district. Your constituent comes 23 over there, the executive -- the district 24 administrator, the employees, they're not following 25 the law? As a policy, as a group, we need to then 26 make sure, through the Executive Director, that 27 that's happened. 28 And so, again, let me just reiterate. I 32 1 think it's important to establish that the offices 2 will be set up. We will evaluate based on the 3 operational need, workload, permits, taxpayer's base 4 of proximity. Only -- the base of proximity only 5 because it's their convenience that I think, you 6 know, not mine, you know. Their convenience, 7 wherever is closest for them is where they should 8 go. 9 And if they don't get the services there, 10 we should deal with the Executive Director to make 11 sure that that does happen. But if you look at the 12 customer service data for this organization, you'll 13 find that this is an extremely responsive 14 organization and that customers are receiving the 15 service. It is an anomaly that a customer's not 16 getting quality service with the Board of 17 Equalization. Every study, Little Hoover Study, the 18 Hill Study, every study says the Board of 19 Equalization is an exceptional organization 20 statewide. One of the best in the nation. And 21 there is no distinction. There is no line, and 22 there shouldn't be. 23 MS. MA: Okay. Mr. Ferris. 24 MR. FERRIS: Just to -- to clarify. The 25 current language of the resolution, as adopted in 26 April and as proposed to be amended, completely 27 empowers the Executive Director with respect to 28 lease decisions. That's why the power of execution 33 1 is in the Executive Director, not the Members. 2 And so it is the Executive Director, 3 pursuant to whatever overall oversight, direction 4 the Board wants to give with respect to criteria. 5 And we've been talking about existing policy, and 6 under the leadership of the Executive Director staff 7 is preparing an update to Facility Master Plans and 8 will be engaging in -- in a public meeting with the 9 Board on the criteria and some of these other issues 10 about accounts and One BOE. And this -- this very 11 good discussion is all going to be part of that 12 public discussion that will happen within months 13 as -- as that document is prepared and deliberated 14 on by the Board. 15 But this language here that we're talking 16 about is just a check-and-balance. The Executive 17 Director is empowered to do this and to execute 18 these documents. But as a final step, after the 19 Executive Director has made decisions and has a 20 proposal on lease space, based on Board policy, the 21 final check-and-balance is for the Members to 22 approve it. 23 MR. RUNNER: Yeah. 24 MR. FERRIS: So -- 25 MS. HARKEY: Right. 26 MR. FERRIS: I want that to be clear. This 27 language completely empowers the Executive Director, 28 and the Board is functioning in an oversight 34 1 check-and-balance with the final approval. 2 And it sounds like, to harmonize everything 3 that I've been hearing, it sounds like the most 4 elegant way to amend the Chairwoman's language would 5 be to strike the word "other." 6 MS. HARKEY: Right. 7 MR. FERRIS: Right? And I think for 8 reading comprehension, even though it's not 9 grammatically required, I would add a comma on the 10 last line -- on the fourth line after "Member." 11 So, uh -- so it would read, leading into 12 it: 13 "The Executive Director shall obtain 14 approval of that Member . . ." 15 That's for personal Board office space. 16 MR. RUNNER: Right. 17 MR. FERRIS: Comma. 18 ". . . and Board approval for all new 19 office space." 20 MR. RUNNER: Yeah. 21 MR. FERRIS: So that would be my 22 recommendation for amending it in terms of the -- 23 the discussion I've heard. 24 MS. HARKEY: Yeah, this is just a 25 conferring powers. This is not an overall goals, 26 objective, policy. 27 We have an existing policy as Chairman -- 28 or Chair Emeritus Horton has said, we have an 35 1 existing policy. So when we come back with our 2 Master Plan is when we can have further discussions 3 on the rest of all of that. Because I think -- I 4 think right now our policy is it's based on need and 5 permits and whatnot. But I think the problem has 6 been is that, as -- as we have Executive Directors 7 change, so does their feeling of a mandate. 8 I mean we cannot -- we cannot just ignore 9 that this is not a political office. It is. The 10 people that serve us served by the vote of three or 11 more. And I don't think we can just throw that on 12 the carpet and say, "Okay, well, he's just going to 13 do what he's going to do." 14 Because if David Gau does not do what the 15 Board likes, the Board will replace him. If Randy 16 Ferris doesn't do what the Board likes, the Board 17 will replace him. And so I think we cannot ignore 18 that. 19 And so I think when we're -- when we're -- 20 we want to be sure that we have the success of the 21 people that we think are good representatives for 22 the organization, good management material, good 23 administrators, we want them to be successful. And 24 I don't want to completely tie their hands and have 25 them going like this (indicating). I want them to 26 know specifically what they are to do. 27 And with this Board right now, the best 28 thing specifically is to bring it back to the Board. 36 1 Because otherwise, it'll be in the newspaper 2 somewhere. 3 So what I'm trying to do is save all the 4 chaos. And I think that, you know, we can go into 5 something that might be different because what -- 6 what Ms. Bridges saw as her duty to do as opening 7 offices might be different than Mr. Gau's right now. 8 So, all I'm saying is that I think the 9 existing policy is in place that Chairman Horton, or 10 that Member Horton wanted, it's already there. I 11 think that Ms. Bridges probably thought that she 12 followed that policy. 13 Now we're looking at going, maybe we might 14 want to make some changes to interpretation, so we 15 want a Master Plan so we can all see it. But in the 16 meantime, we want our -- our Executive Director to 17 be able to function and to know what his marching 18 orders are. And his marching orders in this are 19 very clear that, you know, if a Member wants to open 20 an office, he's to -- he's to go to that Member and 21 then come to the Board for approval. If -- if -- if 22 all office space that he chooses to lease from this 23 point on, come to the Board for approval. So right 24 now that's where we're at. 25 MR. RUNNER: Right. And none of those 26 would be a surprise because they all should be then 27 part of a Facilities Master Plan. 28 MS. HARKEY: Right. And then the 37 1 Facilities Master Plan will get into -- we can get 2 into, you know, determination. And that's where I 3 think we're already -- we're already -- as I 4 understood you to say, Member Horton, we've already 5 got that policy. It's existing policy. So I don't 6 think we need to -- 7 MR. HORTON: Well, Member Harkey -- 8 MS. HARKEY: -- enumerate it. 9 MR. HORTON: -- I mean as the Chief Counsel 10 has articulated, that's the status quo. 11 MS. HARKEY: Right. 12 MR. HORTON: We're not changing it. The 13 status quo is the Executive Director has that 14 authority currently. We're not doing that. 15 The challenge that we have is that the 16 Executive -- the Executive Director is placed under 17 the political pressure to adhere to the will of 18 elected officials within their own respective 19 districts. 20 MS. HARKEY: Always is. 21 MR. HORTON: The way we alleviate that is 22 give the Executive -- give specific directions by 23 this body as to how that assessment should be made 24 and then give him the professional courtesy, 25 discretion to be able to make those decisions and 26 evaluation. 27 Otherwise, what we see is, what comes 28 before us is he's had a discussion with a Member, a 38 1 Member expressed his desire and those desires are 2 now coming before us without any -- any sort of -- 3 of conditions or policies that has been established 4 by the Board. So we're back to making decisions on 5 a transaction-by-transaction basis, when in -- when 6 if we were to say we are just going to adhere to 7 existing policy, then we -- we -- we are no 8 longer -- otherwise, we are caught in the status quo 9 where we have an Executive Director that is 10 following the direction of individual Members. 11 Those Members make a decision. That decision is 12 codified and then brought to the entire body and 13 we're discussing those decisions every time. 14 If we make those decisions based on 15 established rules and criteria, as we have done 16 historically, and then the Executive Director has 17 direction, he has a policy that he can adhere to, he 18 has a policy that protects him from the political 19 pressures and he no longer has to, you know, comply 20 with that. 21 Now this is, as it relates to district 22 offices -- I mean as it relates to procurements and 23 things of that nature, there are a whole 'nother set 24 of laws that -- and that's why I don't think the 25 procurement issue is an issue that the Board needs 26 to look at on a regular basis because all we need to 27 say is that, "Follow the law." 28 And so, being engaged -- currently, I'm not 39 1 engaged in that process. You know, I have no idea 2 what DGS has signed off on, and I don't feel that 3 that's my responsibility. I'm a policymaker, not an 4 office -- in charge of acquiring offices and 5 furniture and all that type of stuff. 6 The existing law is clear; it provides them 7 those directions. Without that, these amendments, 8 in my opinion, is just restating the status quo and 9 creating an environment that we're currently dealing 10 with. 11 The other inherent challenge we have, 12 Members, is that we've got to -- I think, we've got 13 to create a level of credibility where the 14 Legislature believes that we're going to govern 15 ourselves. And if we don't do that, then the 16 perception is we need governing. 17 And so the Legislature has -- from my 18 perspective, they're clear. And I think we ought to 19 just have this -- go back to the policy of saying, 20 "Our best defense is the truth and information." If 21 we provide that, every time they're asked, this 22 organization is an organization where every 92 cents 23 invested in this organization we generate a hundred 24 dollars, $60 billion for the State of California. 25 Any corporation that's on the stock 26 exchange, we would be concerned, you know, about, 27 you know, you're opening an office -- in the case of 28 Mr. Runner's office, you open an office, it costs 40 1 lease amount, X amount of dollars, but that's an 2 efficient office in his district. It's generating 3 billions of dollars for the people of the State of 4 California. It's servicing constituents. It's 5 handling and dealing with constituent's problems 6 that the Legislature is sending us all the time and 7 creating all the time. 8 So, is that an issue? Or is the greater 9 issue the productivity, the effective and the 10 efficientness and the responsiveness of those 11 agencies? And if we're not clear, if we defer this 12 and say we're going to bring it back, we're going to 13 discuss it, we're going to negotiate, and it's going 14 to come back a month later, two months later and all 15 this process, this is -- from my perspective, we 16 need a policy in place. And even though I believe 17 the existing policy does exist, in the read of the 18 one document that I could find that articulated 19 these policies, it actually said both. It actually 20 says this is one way and this is another way. 21 And so I think we need to provide a level 22 of clarity in -- in addressing that. I mean, I 23 would make a motion that we amend this to have this 24 extra language in there, because I think it's 25 important to provide that direction and policy 26 security for the agency. 27 MS. MA: Thank you. 28 So, I also think, you know, this language 41 1 is still confusing. Why can't you just make it 2 simple? Like -- 3 MR. RUNNER: Like start with the one I 4 gave -- 5 MS. MA: -- all -- 6 MR. RUNNER: -- you wrote for me. 7 MS. MA: Yeah. I mean basically all 8 leases, period. 9 MR. FERRIS: All leases -- 10 MS. MA: Significant leases. If you want 11 to call significant -- 12 MR. FERRIS: -- extension of existing 13 space. 14 MS. MA: -- it just has to come to the 15 Board. That's it. I mean, forget about comma, 16 Member's offices comma, headquarter comma; I don't 17 know what all that is. 18 MR. FERRIS: So that -- 19 MS. MA: It's not ducky bunny to me -- 20 MS. HARKEY: I -- well, this is not -- 21 MS. MA: -- let me put it that way. 22 MS. HARKEY: Believe me, when we start 23 looking at this, it's not going to be so ducky bunny 24 either. 25 I just want to interrupt. 26 I don't want to see extension of leases; I 27 really don't. And I would object to that. 28 MS. MA: Okay. 42 1 MS. HARKEY: We have to have some powers 2 conferred on the Executive Director. He has to be 3 able to function. This Board is not going to be 4 able to review everything while one Member's out 5 doing campaigning, the other Member's out taking a 6 vacation, something else going on, these guys are 7 sitting at their desk trying to function. 8 And so what I want to see is conferring 9 powers that are conferring powers. Okay? You have 10 the authority to renew leases; David Gau should have 11 that authority. 12 We need to -- and I don't think this is 13 stepping it at all by saying bring it back. 14 I don't see the language that Mr. Horton is 15 trying to propose. I would like to see it before I 16 say, "Yeah add it in." Because I don't necessarily 17 think it belongs in conferring powers. I think it 18 belongs in a policy. And he says it's already in 19 the policy. 20 MR. HORTON: I think that's -- 21 MS. HARKEY: So -- 22 MR. HORTON: I think that's fair, Member 23 Harkey. 24 MS. HARKEY: That's what I want to do. I 25 would like to take this second language, and so "all 26 new office space," that's what I am proposing. And 27 I will make a motion for that, to use that second 28 language. 43 1 MR. HORTON: Well -- 2 MS. HARKEY: And just to get this moving. 3 And then we can -- if we don't like the -- if we 4 don't like all of the ins and outs of what the 5 existing policy is for deciding -- I don't think any 6 of us are planning new office openings right now, 7 but -- since the Legislature's questioning our 8 budget and axing us. But if we are, I think that 9 that would fall under here, we'd give a look at 10 it. 11 MR. FERRIS: Yes. 12 MS. HARKEY: So when we get our Master 13 Plan, our actual Master Plan, then we can have the 14 big discussion as to where -- how we want to situate 15 these, what this Board would like to do, and what 16 extra powers we would like to confer on the ED based 17 on a new Master Plan. 18 And if the existing policy is in fact 19 existing policy, please bring it back to us next 20 meeting so I can read what existing policy is and 21 where it's conflicting, maybe one place or the 22 other. Maybe at that point we can put something 23 together that makes sense, that meets Mr. Horton's 24 request, and the rest of us, and Ms. Stowers. And 25 that's a separate topic for me because I just 26 don't -- I don't want to get into adjusting a whole 27 new policy right up here. 28 MR. HORTON: Well -- 44 1 MS. MA: Okay. 2 MS. HARKEY: We don't have data. And so I 3 want existing -- 4 MS. MA: And I would also like to say, I 5 have not seen the Master Plan. Nobody has given it 6 to me. 7 MS. HARKEY: Well, we're doing a new. 8 MR. RUNNER: Yeah. 9 MS. HARKEY: We're doing a new one. 10 MR. HORTON: Well, the -- 11 MS. MA: Okay. But I'm just suggesting 12 that when new Board Members come, if we are 13 following some policy or plan, that we have an input 14 in it. And I have not seen it. 15 You know, we got the staffing model that I 16 couldn't really understand with lines and arrows and 17 dots all over it. I mean that, to me, was not an 18 acceptable way when I came in to say, "This is the 19 staffing model. You know, follow it." 20 Well, we didn't really have any sort of 21 input in it. We didn't understand the 22 justification, how -- you know, how everything is 23 happening in the BOE. So that's how we kind of got 24 to a lot of the confusion and the tensions among us 25 is because it wasn't transparent. We don't see the 26 big plan. We don't know what passed in the last 27 Board and what people are following and whether 28 these policies are being followed. I mean all we 45 1 know is we're voting on a conferring document right 2 now; so that's what we're doing based on what we 3 think the Executive Director should or shouldn't do 4 or what their powers are. 5 We're talking about policies and Master 6 Plans; I mean I wasn't here, so I'm not sure what 7 the plan is. And we would like to see it again, and 8 I think it's healthy to have that discussion here in 9 the Board chambers, amongst everyone, since we can't 10 talk to each other for Bagley-Keene reasons. But 11 then the staff, also, that are sitting out there and 12 watching, they also understand what's going on. 13 So, you know, if there's a Master Plan, 14 bring it. If it's -- if there's no Master Plan, 15 then someone has to develop it, right? I mean -- 16 MS. HARKEY: Right. 17 MS. MA: -- that's kind of what we're 18 trying to say. 19 MS. HARKEY: Okay. Let me wrap this up and 20 make a motion and see. And I'll bifurcate it in 21 three parts. 22 MR. HORTON: Well, before that, Ms. Harkey, 23 let me just share that -- 24 MS. MA: Mr. Horton. 25 MR. HORTON: -- share that, you know, it 26 seems like this is going somewhat in the right 27 direction from my perspective. I don't want to 28 create a facade by saying I'm amending the 46 1 conferring powers in accomplishing anything that 2 hasn't already been accomplished. The existing 3 conferring powers confers these powers to the 4 Executive Director. These amendments become a 5 facade that we're actually addressing a policy issue 6 or a policy concern. And I don't think it's 7 inherently wise for us to -- to -- to perpetuate 8 that. 9 So I would suggest that we just put this 10 whole -- the Executive Director has these powers 11 already, no matter what we write in here. The only 12 power that the Executive Director does not have, to 13 my knowledge, is the -- as it relates to the 14 Member's own office, and so we want to confer that 15 power. I think there's some wisdom in that. And 16 even that, the Executive Director has the power. 17 The Member just participates in the selection. He 18 has the power to make the decision. 19 And so if you want to -- if you want to 20 eliminate the authority for Members to participate 21 in that, there's a lot of wisdom in that, too. 22 Because, why should it matter? I mean it actually 23 belongs to the people of the State of California, 24 not to us. 25 But to -- to -- to -- to tinkle with this 26 or ducky bucky with this at this time, maybe we put 27 it over until we can have that policy discussion. 28 MS. HARKEY: I don't want to put this 47 1 over. 2 MR. RUNNER: No, I don't want to put this 3 over. 4 MS. HARKEY: I -- 5 MR. RUNNER: This is -- this is -- 6 MS. HARKEY: We -- we already assigned -- 7 we already assigned powers and we're trying to amend 8 it so it's a little more -- 9 MR. RUNNER: We want to get this off the 10 table. 11 MR. HORTON: Why don't we ask the Chief 12 Counsel. 13 MR. RUNNER: Well, here, let me -- let 14 me -- 15 MR. HORTON: Does he have these powers 16 already, or are we -- are we accomplishing anything 17 new? 18 MR. FERRIS: What -- what this language 19 does is right now the full Board has to give final 20 approval to an Executive Director's decision with 21 respect to new office space for headquarters 22 operations. Right? 23 The full Board did not have to give the 24 final approval with respect to district office 25 space. That was -- that was left -- there was -- 26 the check-and-balance was the individual Member for 27 that district would have to give the approval. But 28 the full Board didn't have to give the approval. 48 1 So the language that's being proposed here 2 would -- and as amended by -- proposed to be amended 3 by Vice Chair Harkey, it -- it also brings in the 4 Board Member's personal office space as well for 5 Board approval and district office space, for -- for 6 new office space. 7 And the complicated language, you know, 8 that's there that we're talking about with commas 9 and things like that, what that does is it would 10 prevent -- and I would assume you guys would 11 appreciate this -- it would prevent a majority of 12 the Board from deciding to give what the personal 13 office space is going to be for an individual Member 14 over that individual Member's objection. Right? 15 So -- so the way that this is -- so if a 16 Board Member's getting personal office space, they 17 have to sign off on it, too, personally. But then 18 the full Board also has to approve it. 19 MS. HARKEY: Right. 20 MR. FERRIS: So that's -- that's what's 21 happening in this language. It is a change. It's a 22 substantive change. It's not -- it's not a facade. 23 MS. HARKEY: It's an important change, I 24 believe. And I belive -- 25 MR. HORTON: I mean I would-- 26 MS. MA: Mr. Horton. 27 MR. HORTON: I'm supportive -- I'm 28 supportive of -- of that, as Member Harkey has 49 1 articulated. The facade is, is that we're actually 2 solving the issue of the policy that establishes 3 these district offices. 4 MR. RUNNER: That's another decision. 5 MR. HORTON: And we're not. And so we -- 6 MS. HARKEY: We're not. 7 MR. HORTON: -- we -- we see these reports 8 that, "Oh the Board took immediate action to address 9 a policy that has been existing for almost two 10 years." Laws that have been in place, and that 11 gives off the impression as if though something is 12 inappropriate or something was done wrong. 13 MR. FERRIS: Yeah. 14 MR. HORTON: And so let me be clear about 15 that. 16 MR. FERRIS: Right. 17 MR. HORTON: I mean as it relates to the 18 changes, the good changes, I believe that should be 19 existing policy. I believe that should be the 20 policy that we should have been following all along. 21 But if you want to codify it somehow in this 22 document what exists, in my mind I'm okay. And I 23 would second that, Member Harkey. But to do that 24 without addressing the policy issue that has been 25 expressed here is a facade. 26 MS. HARKEY: Okay. Let's -- let's clear up 27 the facade. 28 MR. HORTON: And I would hope that we would 50 1 bring it back -- 2 MS. MA: Thank you. Yes. 3 MR. HORTON: -- and deal with it. 4 MS. MA: So let us bring that policy 5 discussion back, put it on another agenda and have a 6 full discussion. But right now we're talking about 7 the conferring powers document because it has been 8 confusing. People have different interpretations. 9 The press has interpreted -- interpreted it 10 differently. 11 So, do you have another motion, Ms. Harkey? 12 MS. HARKEY: Yes. I have a motion that to 13 adopt the language: 14 "The Executive Director shall regularly 15 report on significant changes to the use of 16 existing lease space and, prior to the 17 execution of such documents for any new 18 office space for a Member, the Executive 19 Director shall obtain approval of that 20 Member and Board approval for all new 21 office space." 22 MR. HORTON: Second. 23 MR. FERRIS: Are you willing to add a comma 24 after "Member" on line four? 25 MS. HARKEY: Yes. Yes, comma. 26 MR. HORTON: I would second that motion 27 with the caveat that we provide some -- 28 MS. HARKEY: Yeah. Well, that's -- 51 1 MR. HORTON: -- specific direction. 2 MS. HARKEY: Now that's -- I'm going to 3 make a second motion. 4 MR. HORTON: Okay. 5 MS. HARKEY: Okay. So that's -- that's 6 number one. 7 MR. RUNNER: Well, can we vote on that? 8 MS. HARKEY: You want to vote on that? 9 MS. MA: Yeah, why don't we vote on that. 10 MS. HARKEY: Okay. Motion so made. 11 MS. MA: Does everyone understand the 12 motion? Yes? 13 MS. STOWERS: Say it again, please. 14 MS. MA: What does that mean? In plain 15 English, Mr. Ferris. 16 MR. FERRIS: In plain English -- 17 MS. MA: With the comma. 18 MR. FERRIS: It means that all new 19 office -- leases for all new office space have to be 20 approved by the full Board. And whenever a Member 21 is getting personal office space, that individual 22 Member also has to approve it. 23 MR. RUNNER: You know, let me tell you 24 there's another public advantage here. And that is 25 when we -- because, again, it's not only us Board 26 and some of the criticism that -- that is sometimes 27 coming. It's not only us Board that approves it, 28 but that means the public is aware of it. That 52 1 means the Legislature is aware of it. 2 So when we talk about it being, you know, 3 kind of the open transparency issue, it's not just 4 transparency for us. 5 MS. HARKEY: Public. 6 MR. RUNNER: It's transparency for the 7 public at that point as then these things move 8 forward. And I think that's the advantage of it 9 being in -- in -- as part of the policy issue. 10 MR. HORTON: And part of the discussion 11 should also be that -- I mean it's the intent of the 12 Board to -- to -- to move out of this building, to 13 have a campus. 14 It is not the desire, in my opinion, of the 15 Board to have these different spaces all over the 16 place. We would prefer a Franchise Tax Board type 17 facility, wherein it's not been the Board that has 18 prohibited that. It has been, you know, because we 19 require legislative authority in order to accomplish 20 that objective. 21 So I think it's -- I think it's important 22 that we go forth with that conceptually as well. 23 MS. HARKEY: So do we want to vote on the 24 first? 25 MS. MA: Okay. So the first motion, are 26 you okay with it? 27 MS. STOWERS: Yes. 28 MS. MA: Okay. So, Ms. Harkey made a 53 1 motion, Mr. Horton second, for that amended 2 language, that paragraph with the comma after 3 "Member." Right? 4 MR. FERRIS: Striking the word "other." 5 MS. HARKEY: Striking the word "other." 6 MS. MA: And striking "other." Okay. 7 MS. HARKEY: The second motion I will make 8 is for a -- for staff to bring back for Board 9 discussion on the next agenda of the policy for 10 establishing offices that Mr. Horton has so 11 referenced. And if there's any confusion in any 12 other part of a manual anywhere, to please bring 13 back and we will try to reconcile that. If we could 14 have it before Board hearing date so that we can 15 look at it and gather input of staff's 16 recommendation if there needs to be changes. 17 So my motion is to bring back the policy on 18 location of offices and requirements for office 19 space. Is that -- 20 MR. RUNNER: Well, let me -- I think, is 21 the office space part of a Master Plan of 22 Facilities, do you think? 23 MS. HARKEY: Well, then we're going to -- 24 then I'm -- my third motion is that the -- that the 25 staff continue to prepare, which is undergoing, the 26 Master Plan of Facilities and bring that back as 27 soon as possible for the Board review. 28 MR. HORTON: Yeah. Members, I don't 54 1 think -- I'm speculating here. My apologies, 2 Mr. Runner, if -- you know, if I'm not right. 3 I don't think we can have a Master Plan 4 without giving some directions on how to prepare 5 that plan. And so inherently the discussion about 6 the policy -- 7 MR. HORTON: -- whether or not -- 8 MR. RUNNER: Okay. 9 MR. HORTON: -- districts -- 10 MS. HARKEY: That makes sense. 11 MR. HORTON: -- should be established based 12 on political boundaries or based on operational 13 needs, workload, and proximity for the customer 14 convenience is a policy that we need to discuss, 15 because that policy would then guide the ultimate 16 Master Plan. 17 MR. RUNNER: Mm-hmm. 18 MR. HORTON: Which may end up with the 19 consolidation of offices or the creation -- which is 20 something we should probably talk about -- of 21 satellite offices that are far less expensive but 22 yet serves the purpose of having a smaller facility 23 to accomplish -- 24 MR. RUNNER: Yeah. And I agree, and I 25 think the first step that you've got to -- the Board 26 has to deal with is the how do you assign -- how do 27 you assign accounts? I mean I think that's the 28 fundamental first issue. Because I think at that 55 1 point then that does then dictate then office 2 locations, all those other issues. So, I think the 3 idea of having to come back and have a discussion 4 about -- 5 MS. HARKEY: Policy. 6 MR. RUNNER: -- you know, the discussion of 7 how are accounts assigned is a -- is a good 8 discussion to have. 9 I'm a little concerned about, you know, by 10 the time -- when we say the next meeting, you know, 11 the next meeting means that people are going to 12 start working on this, be prepared and then give it 13 to us 10 days in advance. So that, I'm just 14 concerned about actually being -- 15 MS. HARKEY: I guess -- 16 MR. RUNNER: -- fully vetted in -- in that 17 amount of time. And it seems to me that this is 18 such an important -- 19 MS. MA: Mr. Gau, maybe you should come 20 up. 21 MR. RUNNER: And if this is such an 22 important issue, I'd rather get it right than get it 23 a month early. 24 MS. MA: I think you understand the 25 workflow and priorities and what is on your -- 26 MR. GAU: Yes. Thank you for the 27 opportunity -- 28 MS. MA: -- agenda. 56 1 MR. GAU: -- to talk on this matter, 2 because I have been giving it some thought. And I 3 would like to, I think as Vice Chair Harkey is 4 describing, is to come forward. I think we need to 5 establish what is the criteria currently and do 6 we -- do we have anything? 7 We're looking through historical records 8 and trying to -- to establish all of that. And I 9 think we need that fundamental foundational 10 knowledge and understanding first. 11 And so we could present that to the Board 12 as far as, you know, here's the criteria that we've 13 been able to document. If there is some kind of a 14 Master Facility Plan that was -- you know, I'm going 15 back to 2010 and looking into Board -- what has come 16 to the Board, kind of things, or what has gone to 17 the Legislature. 18 So we are aggressively looking, you know, 19 at these items. And I think that would be a good 20 place to start for the Board to understand. 21 So basically the existing policy, and if 22 there was some kind of a -- if there is -- what that 23 Facility Master Plan might be to set the table. 24 I think that the Members also are talking 25 about a very fundamental, how you're going to 26 establish offices. Is it based, you know, on the 27 current policy or how we've been doing it, foot 28 traffic and those kinds of things. And then or -- 57 1 and then the issue of constituent and 2 equalization-elected boundaries. Those are a couple 3 of fundamental things that I think this Board, you 4 know, should help set the policy on for the -- for 5 the staff. 6 And then ultimately, from those things, we 7 could develop then a Master Facility Plan going 8 forward. Because leases are cons- -- as you're 9 fully aware, constantly either expiring or being -- 10 having to be renewed. We are constantly looking at 11 offices in our -- you know, are they practical? Is 12 it -- is the -- is the State office the place to be 13 or a private building and how are those facilities? 14 Are they current, or do we need something different? 15 A lot of issues. 16 So I think this is basically like a 17 three-step process as Vice Chair Harkey's described: 18 What is current landscape policy and 19 structure; 20 A recommendation then to the Board and for 21 the Board to establish the criteria for doing those; 22 And then going forth with that criteria and 23 looking at what kind of Facility Master Plan we can 24 develop. 25 MS. HARKEY: Okay. 26 MR. RUNNER: The question is how -- 27 MS. MA: How long -- 28 MR. HORTON: Time. 58 1 MR. RUNNER: Yeah. 2 MS. MA: -- will it take? 3 MR. GAU: So, I believe in June we could at 4 least bring the current landscape and what we have 5 established. 6 MS. HARKEY: To start thinking about it. 7 MR. GAU: Okay. And so that will then be 8 very transparent in what's the current lay of the 9 land, so to speak. Okay. So I think that's a fair 10 enough thing to do. 11 I think I have expressed a desire, you 12 know, the criteria -- 13 So I think that would be June. 14 I think July could possibly be where the 15 Board establishes that criteria based on -- you 16 know, that would give the Board time to absorb all 17 of that and to then come back in July with some 18 kind -- a criteria recommendation, and then we could 19 discuss the idea of boundaries and foot traffic. 20 MR. RUNNER: So the idea is in June you'd 21 think you're prepared to bring kind of a historical 22 perspective and a -- 23 MR. GAU: Right, a report. 24 MR. RUNNER: -- kind of that report of 25 where we are. 26 MR. GAU: And I'm not even asking, I don't 27 think at that meeting, for an action item. 28 MR. HORTON: Uh -- 59 1 MR. GAU: It would just be a report, I 2 believe. 3 MR. RUNNER: And then -- and then that 4 would then drive then a discussion item then the 5 following month. 6 MR. GAU: Correct. 7 MR. RUNNER: Okay. 8 MR. GAU: And then, ultimately, I think it 9 would take, from that, some time to develop a 10 Facility Master Plan. 11 MR. RUNNER: Right. 12 MR. GAU: That's going to be, you know -- 13 But, in the meantime, we do have office -- 14 you know, we are going to have to bring forward any 15 leases, if they have conferring powers. If we've 16 got some immediate needs, you know that -- whether 17 offices are getting -- having to change facilities 18 at all, that will be coming forward under the 19 conferring powers. 20 MS. HARKEY: I -- I just want to make one 21 comment. 22 MR. GAU: Yes. 23 MS. HARKEY: Since we're responding -- 24 MS. MA: Member Harkey. 25 MS. HARKEY: Thank you. 26 Since we're responding to the Conference 27 Committee anyway, we're going to have to do that in 28 the Budget Conference Committee. This is all very 60 1 timely. 2 MR. GAU: Yes. 3 MS. HARKEY: And so I think that what we're 4 doing here is important, but how we kind of 5 understand how we organize is going to be very 6 important. And then we're having to provide, in 7 essence, a Master Facilities Plan of what we've got 8 right now to the Legislature. So I think this is 9 all -- it's all dovetailing. It will all help us 10 respond. 11 MS. MA: And if you can also add, you know, 12 all of our bond covenants and all of our obligations 13 like how -- for this building. 14 MR. GAU: For the headquarters facility. 15 MS. MA: Yeah, there's a lot of 16 confusion. 17 MS. HARKEY: Yeah, why can't we move out of 18 here? 19 MS. MA: And then, you know, when we 20 possibly and whether we are possibly talking about 21 other options with other folks currently or not. I 22 mean, we also have to kind of make that decision. 23 MS. HARKEY: So are -- so are we clear on 24 that? That the second is that in the next meeting 25 we'll bring back the policy; that's my motion, we 26 bring back the existing policy. 27 MR. RUNNER: Yeah, report. 28 MR. HORTON: Madam Chair, let me ask -- 61 1 MS. MA: Mr. Horton. 2 MR. HORTON: I see our Leg. Director's 3 here. 4 What's the timeline on the budget process 5 and -- and that entire process? And not to say that 6 the Members -- 7 MR. RUNNER: Budget will be adopted. 8 MR. HORTON: -- not that we have to adhere 9 to that. But just out of -- 10 MS. HARKEY: Yeah. 11 MR. HORTON: -- curiosity. Having all 12 legislators up here, I'm sure we all know. But just 13 to get it on the record. 14 MS. PIELSTICKER: Good afternoon, Mr. 15 Horton and Members of the Committee -- Members of 16 the Board rather. 17 The deadline for passing the budget is June 18 15th, but it's unclear what the timeline is for the 19 Conference Committee to -- to make their decisions. 20 It depends on their level of agreement and -- and 21 the outcome. 22 MR. HORTON: There's a -- there's a 23 constitutional established timeline. 24 MS. HARKEY: June 15th. 25 MR. HORTON: You want to share that? 26 MS. PIELSTICKER: June 15th. 27 MR. HORTON: And so if they go beyond that 28 in finalizing -- 62 1 MR. RUNNER: They don't get paid. 2 MR. HORTON: -- the budget, they have 3 issues they have to deal? 4 MS. HARKEY: Their pay accumulates. 5 MS. PIELSTICKER: Correct. 6 MR. HORTON: So the odds are pretty good 7 they're going to want to -- 8 MS. PIELSTICKER: The odds are pretty good 9 that they'll be done by June 15th. 10 MR. HORTON: June 15th, okay. 11 So there is no -- nothing happening after 12 that. 13 So, I only share that, Members, because I 14 think it's, you know, inherent upon us to be 15 conscious of that given the adjustment to the Board 16 of Equalization's budget. I think we have an 17 opportunity to clarify some of the misconceptions 18 and flat out lies that exist in order to be able to 19 have the Legislature have a much better 20 understanding of the value of this organization. 21 When they're looking at cutting our budget, 22 they should actually be, in my opinion, looking at 23 expanding our budget and providing greater 24 compensation to our employees, which is a discussion 25 for another day. But I think we get there by 26 articulating our value and resolving these sort of 27 issues. 28 So I mean, Madam Chair, you have the 63 1 authority to call a special meeting to allow us to 2 come together. 3 I've -- I've distributed, you know, a -- 4 what I think, you know, a pretty comprehensive 5 proposal and would encourage all Members to take a 6 look at that. I've provided it to the Executive 7 Director. It may be helpful in expediting and can 8 provide you with a copy of all the historical data 9 related to this subject matter, if that would be of 10 any assistance in expediting the process. But I 11 defer to the majority of the Board. That's just one 12 person's -- 13 MS. HARKEY: Well, there's a motion to 14 bring the policy back at the next meeting. Do I 15 have a second on that? 16 MS. MA: Second. 17 MS. HARKEY: Okay. Any objection to that? 18 MS. STOWERS: I was just going to -- 19 discussion. 20 MS. MA: Ms. Stowers. 21 MS. STOWERS: Timing. Timeline. And I 22 think what Mr. Horton is expressing a concern we're 23 just going to bring back the existing policy at our 24 June 14th meeting. We're not going to be taking any 25 action prior to the budget being signed. 26 So are you expressing a concern that we 27 need to take action sooner than later? 28 MR. HORTON: Well, if not -- if not take 64 1 action, I think we need to communicate to the 2 general public what the Board policy may very well 3 be. 4 There are certainly different philosophies 5 out there. I agree with the Legislature's 6 philosophy. I agree with our historical philosophy 7 policy. And if we're going to deviate from that -- 8 which I also agree with the theory of the majority 9 rules and will adhere to that. But if we're going 10 to deviate from that, we ought to communicate that 11 sooner than later. And if we're not going to 12 deviate, we ought to communicate that sooner than 13 later. 14 But if we want to put it over to the 15 14th -- 16 MS. HARKEY: Might I just make a 17 suggestion? 18 MS. STOWERS: So my other follow-up 19 question, you indicated that the Chair has the 20 authority to call a special meeting? 21 MR. FERRIS: An additional regular 22 meeting. 23 MR. HORTON: In addition to the regular 24 meeting. 25 MS. STOWERS: To the regular meeting. 26 MR. HORTON: Call it what we want to call 27 it. 28 MS. STOWERS: Okay. 65 1 MS. HARKEY: May I -- may I just make a 2 comment, Chairwoman? 3 MR. HORTON: Madam Chair? 4 MS. HARKEY: Yeah. 5 MS. MA: Yes. 6 MS. HARKEY: See, the problem with calling 7 an additional meeting is that that gives the staff 8 more to do. And right now they are back-pedaling to 9 answer to the Assembly. 10 And I don't mind if we want to get 11 involved, and I have actually requested to fly up 12 here and get involved. And I'm requesting certain 13 items that are being analyzed. I'm personally doing 14 this because I want to see the spreadsheets, I want 15 to understand it, so I can go hoof over in the 16 Assembly and -- and in the Senate, if need be, so 17 that I can, you know, kind of get to the Members 18 that I know and say, "This is the deal. This is 19 where we're going," before it gets to Conference 20 Committee. 21 I'm not -- I'm not going to wait for us to 22 all decide we have time. Because I think each 23 Member has a different -- but right now we're -- 24 we've got four items that we really need to justify. 25 And so I am trying to get all the data on the four 26 items. 27 And so I don't want staff pulled apart to 28 try to prepare something for us and all the Power 66 1 Points that they're going to end up ultimately 2 having to substantiate. I think time is of the 3 essence if we just cut them free to deal with the 4 budget issues. 5 And I will interface with you happily, 6 Member Horton, to be sure that we get the 7 substantiating data and the right things, because 8 I've requested it. 9 So I just want to be sure though that 10 regardless -- because we're not changing a policy. 11 The budget is done. Now we just have to justify 12 what we -- what we need, which is basically bodies 13 and funding that has been taking $11 million. And 14 so those are the four issues I want to concentrate 15 on. 16 The policy, I think we need to have back 17 here because we all need to see it and we need to 18 discuss it. And I think that can readily happen 19 June 14th because that's not going to impact what 20 the Senate or Assembly decides to do with us. 21 MS. MA: And I would also say, since you 22 are interfacing with the Legislature, you know, you 23 also come back and let us know, as a Board and the 24 public, what it is that they've been asking, what 25 information we've been submitting to them. 26 MS. HARKEY: They can do that. 27 MS. MA: Because -- well, no, because it 28 just depends on who's engaging and who's talking to 67 1 you and whether you're going over there for the 2 committee and someone's giving you feedback, but we 3 don't really know what has been submitted as an 4 organization, whether they're approved -- they've 5 approved it, whether they denied it. And, like, 6 what is the real result after, you know, all these 7 budget conferences? 8 Because this year -- you know, last year I 9 know that Senator Runner and I went over there to 10 talk about, you know, the outreach budget, but it 11 wasn't as significant as what is happening this 12 year. 13 And so they're requiring a lot of 14 information from us. You know, I know it's keeping 15 you guys busy, like Ms. Harkey said, so we don't 16 really want to distract you right now because we do 17 have to respond to them regarding our needs, you 18 know, why we're asking for these positions, why 19 they're important, you know, what these people all 20 do, so that they don't cut our budget. 21 But eventually, you know, maybe next month 22 you can bring it back in terms of what it is we 23 presented, put it out there, tell us what the final 24 verdict was in terms of what they decided, what was 25 necessary, what's not necessary. 26 And in the meantime, you know, I know the 27 Board Members are all going to be working 28 individually to, you know, to defend our agency. 68 1 But we also need that backup as Ms. Harkey said. We 2 can't go over there and just say we need 'em. We 3 have to say, "Hey these are what these folks do; 4 it's very, very important. This is why it's 5 justified that they should not cut it." 6 MR. GAU: Yeah. 7 MR. HORTON: Madam Chair, if I may. 8 MS. MA: Mr. Horton. 9 MR. HORTON: Let me also encourage, 10 Members, that we not get out in front of our 11 professionals. That there needs to be one message 12 and that "One BOE" concept needs to be formulated. 13 Currently, there are two messages when it 14 comes to this, and I think we need to be clear about 15 that as well and honest about that. 16 And I think it's also important that -- and 17 I know Mr. Gau is working on this already -- is 18 that, you know, he pulled together his team and his 19 team analyze the concerns and then come up with a 20 comprehensive response to those that provides 21 information such as return on investment, cost 22 benefit analysis of each of, you know, the things 23 under concern. 24 External affairs, for example, the Board of 25 Equalization's greatest enforcement tool is 26 education. Our 97 percent compliance rate, if it 27 goes down 10 percent, that's $600 million lost to 28 the State of California on an ongoing basis. 69 1 So interfere or -- with that -- that 2 delicate formula that exists, and that balance 3 exists in public safety, it exists in taxation and 4 so forth, where you have the combination of 5 enforcement, aggressive enforcement on the 6 underground economy, compliance, assisting taxpayers 7 to comply and avoid penalties and interest, and 8 education, important part. 9 And then incrementally the educational 10 component, I believe, is the most important part, 11 but it's also the least expensive but yet still the 12 most effective part. And historically, the agency 13 has actually reduced the costs of external affairs 14 by virtue that the district offices in the past 15 would do two to three events a month, per district 16 office, and we're nowhere near that, nowhere near 17 that cost in utilizing State facilities. 18 But this is a message that has to be 19 communicated to -- to the legislative process, and I 20 believe if we do it effectively, what happens is 21 with the Members having 12 years instead of a 22 shorter term, the historical knowledge exists. 23 The other thing is, none of these questions 24 are new. These questions have been asked and 25 answered over the last -- for the most part, over 26 the last 10 years or eight years that I've been 27 here, and many years prior me being here, and 28 they've been answered in a way that the Legislature 70 1 has responded with granting BCPs, granting 2 Settlement Division, granting call centers and 3 acknowledging the value of this organization and 4 saying we want to make greater investments because 5 nowhere on the stock market can you get such a deal 6 where you put, you know, 99 cents in and you 7 generate a hundred dollars, an organization that's 8 generating billions of dollars, in my opinion the 9 most valuable organization in the State. 10 So, Members, I think once we have that, 11 that message, then we can carry the message. 12 Otherwise, we're carrying different messages right 13 now as to what we believe is the truth. 14 MS. MA: Okay. 15 MS. HARKEY: There's a motion and a 16 second. 17 MS. MA: Okay. There's a motion and a 18 second. 19 MR. HORTON: The motion is? Repeat, 20 please. 21 MS. HARKEY: The motion is to bring back 22 the policy at the next Board hearing meeting for 23 discussion. 24 MR. RUNNER: Right. 25 MS. HARKEY: Or for presentation and 26 discussion. 27 MR. RUNNER: Right, right. 28 MR. HORTON: Okay. 71 1 MS. MA: Okay. Without objection, motion 2 carries. 3 MS. HARKEY: The next part is for the 4 staff, after the policy, to bring back a Master Plan 5 as soon as practical. 6 MR. RUNNER: That sounds fine. Second. 7 MS. MA: Okay. There's a motion, second. 8 I guess we can talk about dates, realistic dates 9 later on, and then we can agendize it. 10 MR. FERRIS: Yes. 11 MS. MA: Okay? 12 MR. RUNNER: Yep. 13 MS. MA: All right. 14 MR. GAU: Thank you very much. 15 MS. MA: Without objection, motion 16 carries. 17 MS. HARKEY: Thank you. And I would like 18 to add just a comment for this Board that each of us 19 has relationships in the Legislature, and that it 20 would be beneficial for each of us to figure out 21 what -- what area the staff would like. While 22 they're hitting the staff or they're approaching 23 staff, each of us maybe take a Member or two and try 24 to get -- you know, try to create a better 25 understanding of what we do. Because I think we all 26 have relationships over there, and I think it's very 27 important that we kind of repopulate the legislative 28 atmosphere with what it is the Board does. Because 72 1 so many people don't know. 2 Even people in the district don't know. 3 And the Legislature really doesn't know. They 4 just -- they think we're FTB and that's it, you 5 know, and it's just really -- they don't -- I mean 6 most don't understand that when they assign a new 7 tax or a fee, we get to implement and collect it and 8 it takes a little bit of work and it takes some 9 people. 10 And so I think -- I think once you present 11 all of the different items that we deal with, how 12 we -- then the staffing levels become clear, also 13 with the legislative cuts, the whole legislative 14 unit. And I think it's going to be very important 15 for us to explain why it is that -- 16 You know, the legislative unit generally 17 works for the Legislature. They determine the cost 18 of implementation. We provide data to them. We 19 don't necessarily provide it for the Members. We 20 provide some analysis for Member proposals, but the 21 bulk of the legislative unit is really working for 22 the Legislature on the BOE dime. 23 So I think those are the types of things 24 that need to be explained and I will be happy to get 25 into personnel and leaves and stuff like that 26 because I think I really understand that now. And I 27 think we've got a good story to tell, as Member 28 Horton says. I think we all know we have a good 73 1 story to tell. Return on investment's huge, but we 2 are accountable. And so I think it's important that 3 we be able to justify our existence. 4 MS. MA: Sounds good. Can we move on to 5 another item, Members? 6 MR. GAU: Thank you. 7 MS. MA: Thank you very much. 8 ---oOo--- 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 74 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 25, 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 74 constitute 14 a complete and accurate transcription of the 15 shorthand writing. 16 17 Dated: June 15, 2016 18 19 20 ____________________________ 21 KATHLEEN SKIDGEL, CSR #9039 22 Hearing Reporter 23 24 25 26 27 28 75