1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 7 8 REPORTER'S TRANSCRIPT 9 JUNE 14, 2016 10 11 12 13 14 ITEM P 15 OTHER ADMINISTRATIVE MATTERS 16 ITEM P1 17 EXECUTIVE DIRECTOR'S REPORT 18 1. REPORT ON ESTABLISHING LOCATION OF OFFICES 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 16 Equalization Staff: David Gau Executive Director 17 Wayne Mashihara 18 Chief Field Operations 19 Department 20 Susanne Buehler Deputy Director 21 Business Tax and Fee Department 22 Edna Murphy 23 Deputy Director Administration 24 25 ---oOo--- 26 27 28 2 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 JUNE 14, 2016 4 ---oOo--- 5 MS. RICHMOND: So our next item is Item P, 6 Other Administrative Matters. Item P1 is the 7 Executive Director's Report. Item P1.1, Report on 8 Establishing Location of Offices. 9 MS. MA: Okay. Mr. Gau, Mr. Mashihara, Ms. 10 Buehler. 11 Any other members? 12 MR. GAU: Ms. Murphy will be joining us. 13 Good morning, Chairwoman Ma and Members. 14 With me today is Wayne Mashihara, the Chief of Field 15 Operations, Susanne Buehler -- excuse me -- Deputy 16 Director of Business Tax and Fee. And Ms. Murphy 17 will be joining us. 18 As discussed at the last Board meeting on 19 May 25th, staff reviewed existing documents with 20 respect to the location of BOE's field offices. 21 Several documents, memos, reports, and publications 22 were located as described in my June 3rd memo to 23 you. 24 As noted in this memo, over the last 25 25 years the Board of Equalization has significantly 26 decreased its number of field offices. Further, 27 based on a 2006 report BOE prepared for the 28 Legislature, some of the criteria that have been 3 1 considered when evaluating whether a field office 2 should be relocated, expanded, or even closed 3 include such things as: 4 A cost benefit analysis, and that includes 5 things like looking at staff relocation costs, 6 increased travel time, and a decrease in audit or 7 collection revenue; 8 Demographic data is also looked at, and 9 that includes things like area growth, proximity to 10 other offices, taxpayer number and profile or type; 11 And then we also look at some of the 12 business criteria, the budget and equalization 13 district impact. 14 We were unable, however, to locate really a 15 direct field office policy that had been approved by 16 the Board. 17 My plan is to have staff develop an issue 18 paper containing a recommendation and alternatives 19 and bring that back to you for discussion and 20 approval at a future Board meeting, tentatively in 21 September of 2016. 22 As part of this effort, we will be looking 23 at how other revenue and governmental agencies 24 operate, including those in other states. We want 25 to look at how they organize and locate their field 26 offices as well. We also are in contact and will be 27 consulting with the Department of General Services 28 as well. 4 1 And then afterwards, we will focus on 2 preparing a comprehensive report on the Board of 3 Equalization's physical office space and its current 4 usage as required by supplemental reporting language 5 that's being proposed in the budget right now. That 6 report's due the 1st of February of 2017. 7 Staff and I are here to answer any 8 questions you may have. 9 I guess I would just like to point out in 10 the memo you -- that I provided to you, we -- we, in 11 this short amount of time we had, I think we found 12 basically 10 attachments to that memo that talk 13 about a number of, whether it is testimony that was 14 in front of the Redistricting Commission, our Board 15 of Equalization Administrative Manual, a number of 16 reports and memos that went to the Board. So it was 17 our collective gathering of what we could find that 18 was public and just to kind of put that all into one 19 document for the Board to have discussion. 20 So, thank you. 21 MS. MA: Okay, Members, discussion? 22 Ms. Harkey. 23 MS. HARKEY: Hi. Thank you very much for 24 putting that together. It was very, very useful. 25 I did look up the last attachment, number 26 10 -- 27 MR. GAU: Mm-hmm, yes. 28 MS. HARKEY: -- and where it described, you 5 1 know, roughly where the -- you know, what number of 2 permits, what level of staff. And that, I believe, 3 was approved at a Board hearing in 2012 by the 4 Board. 5 This was something that went out into a 6 book of the new Members. 7 MR. GAU: Correct. 8 MS. HARKEY: So that would be probably 9 myself and Ms. Ma. But this policy, we did try to 10 find where that came from because we assumed that it 11 wouldn't have been printed without Board approval 12 somehow, and it was. 13 I -- I really -- the data that we're 14 getting and the information we're getting, I think, 15 is really, really important, especially since we're 16 under so much scrutiny. And we've got a limited 17 budget. We get our budget from the -- from the -- 18 Legislature determines and the Governor determines 19 our budget. 20 I have passed out some spreadsheets, 21 because I'm a number-cruncher and that's the only 22 way -- I don't like to read. I like to see the 23 data. And I just want to walk you through slowly 24 and then let the Members review this stuff and -- 25 and digest it. 26 The first sheet of the grouping is what it 27 takes -- the first -- first category's what it takes 28 to open a district office. And basically the level 6 1 of management is roughly $477,000 if you use this 2 kind of a midlevel salary. So it's a huge chunk of 3 change to open just on personnel. 4 And then if you -- a branch office, though, 5 is different. You can have one or two or whatever. 6 And so that could be anywhere from 73 to, let's say, 7 a combo of $150,000, so -- or maybe even a little 8 more. But there's a huge difference when you're 9 making a decision. 10 And I think because of our PY accounts, 11 those are actually dollars, not bodies in the seats. 12 But our PY accounts, I think it's going to be very 13 important for us to pay attention to this so that we 14 don't have too many high level in one area where 15 they're maybe not needed. So I think the Board can 16 look at that. 17 The principals to supervisor comparison by 18 district, this is just some more data that shows the 19 Audit Principals, Compliance Supervisors; and some 20 of the minimums of a supervisor to a principal 21 should be like 3 to 1. Large in-state and 22 out-of-state offices have 6 to 8 teams. And 23 these -- this ability to train supervisors, a 24 supervisor at this level actually helps promote 25 potential, you know, moving up the management chain, 26 which I think is -- is really important to have. 27 And it was suggested by one of my audit 28 people that principals, additional principals, if 7 1 you have more than one principal in a large office 2 it probably is -- is more confusing because there 3 can only be one leader in a department. And just 4 wondering if some of the offices couldn't be 5 combined. 6 I know when Santa Clarita was built, it 7 was -- it's in a high growth area and a lot of need, 8 I think, in Santa Clarita area. It seems to be 9 positioned with a lot of other -- probably closer 10 than Rancho Cucamonga. But I'm just wondering if we 11 couldn't beef that office up more and maybe diminish 12 some others if we're looking forward. Because I 13 think that there's a lot of concentration in the 14 southern area, but Santa Clarita truly was a high 15 growth LA area. Maybe even potentially some 16 Glendale stuff, I mean I don't know. I'm just 17 looking at geography. We also have to consider 18 commute times, I understand that; that, you know, 19 when you get in a highly congested area, the commute 20 times are sometimes, even though they're just 21 geographically a few miles, they can take hours. 22 The next sheet is a summary of staffing by 23 office and you can all review that. I've pulled 24 together data so you can see who's where, what the 25 level of audit staff is. 26 And then the next sheet is -- I think this 27 is really important -- the office rents and the 28 walk-in taxpayer visitors. And you can see that if 8 1 you go down to the bottom of this page, you can see 2 that in 2010 and '11 we had roughly walk-ins of 3 close to -- well, almost 300, 300,000, two 4 eighty-two three ninety. And now our walk-ins in 5 '15-'16 are down to a hundred and seven two-oh-five. 6 So I think our automation is working as we 7 intended it to do, I'm sure. I wasn't here, but I'm 8 sure it was intended that we reduce the need for -- 9 for walk-ins. 10 And so the office rents, I think, is really 11 key. And I don't think the BOE has a lot of say in 12 much of this. I think the offices that we lease 13 separately, we do. We negotiate really good strong 14 leases. But I will point you, again -- and I hate 15 to keep doing this, but I point to the Riverside 16 office where we've had so much trouble even getting 17 repairs for elevators, $168,000 is huge. And I 18 understand that's a JPA that is arranged. There's 19 no say in it, it's just done. And it's a 20 State-owned building and so we have the pay for 21 that. And that's not $168,000 space. It is -- it 22 is very, very poorly maintained. 23 And so to the extent we can have a little 24 more say, maybe, with DGS and whoever it is that 25 negotiates where we go, because especially since 26 the -- since the Legislature is saying we need to 27 move to more of the State buildings, well, you can 28 see here that we are paying for Irvine, a beautiful 9 1 space, $73,000 as opposed to 168,000 for something 2 that we're having trouble getting to elevator and 3 it's on 10th and 11th floors, and it's not in good 4 condition. 5 So I think as we start looking forward, if 6 in fact we are supposed to move to State buildings, 7 we need to cut ourselves a better deal. 8 I also don't know where Santa Ana is. But 9 I do know we're paying for Santa Ana and have been 10 for the last eight years, and I don't know if 11 there's any storage, if anybody's paying to store 12 items there. Perhaps that should come as a credit 13 to the BOE. Because I know we're paying for the 14 lease rates there. 15 And if in fact it needs asbestos removal or 16 whatever it is, maybe we need to get doing that and 17 unload that building. 'Cause I think we need to 18 find out how long it is the BOE is supposed to carry 19 these buildings on our balance sheet because -- or 20 on our expense, because you know our budget is 21 whole. We get -- we get one budget. And if in fact 22 they're going -- you know, the Legislature thinks 23 we're spending too much here or spending too much 24 there, if we're spending a lot for lease space that 25 we're not even occupying for years, that's taking 26 from the budget for the employees, in my mind. And 27 I think we need to -- we need to work on that and 28 see if we can't find a better solution or work with 10 1 DGS, work with the governor's office and figure out 2 what we do with these buildings. 3 The next one is just permit accounts by 4 district, equalization districts, and I think that's 5 pretty -- pretty clear. 6 So these are just items that I was looking 7 at because I think that all of these will be -- need 8 to be taken into consideration when we're deciding 9 how we budget and how we go forward and how we -- 10 how we formulate a plan for, let's say, the next 10 11 years or whatever it is we're doing. 12 So -- and I appreciate Mr. Horton's memo 13 here. I haven't had the time to really digest it, 14 but I think it pretty much encapsulates a lot of 15 what I -- a lot of the data I've got here. 16 I have a ton more spreadsheets, but these 17 are the most basic. And as I get analyzing them 18 more, I'll be happy to share with the Board. But I 19 think they're probably more for the management 20 people to look at and when they're -- when they're 21 offering us some solutions. 22 Thank you. 23 MR. GAU: Thank you. 24 MS. MA: Okay. Mr. Runner? 25 MR. RUNNER: Yeah, just a couple of 26 observations. 27 I -- I -- you know, as we -- as we went 28 through the -- the -- I appreciate the review of the 11 1 process that we -- that the staff went through. 2 Obviously a discussion in regards to offices, 3 assignment of accounts and whatnot, is important for 4 everybody to kind of get a good historical handle 5 on. 6 And I -- and I think there is absolutely 7 good reason for us to always be trying to take a 8 objective understanding view as to where we are, how 9 we got here, and what's the future look like. I 10 think that's a reasonable issue for us always to 11 respond to. 12 And so as we -- as we move to the next 13 point, just to clarify, it seems to me the next 14 point is indeed, as I think Mr. Gau said, to kind of 15 have this discussion and then have the staff come 16 back to us at a meeting in the future. I don't know 17 if that's probably in 60 days or 90 days or exactly 18 when that is, but in some meeting in the future to 19 come up with some alternatives and recommendations 20 in regards to the issue of office designations, 21 account assignments, those kind of issues. So I 22 think those are all reasonable issues for us to -- 23 to -- to address. 24 You know, I think one of the issues that, 25 again, I would -- and again, we'll talk through more 26 of this -- but obviously one of the issues that is a 27 part of anything that takes place in regards to 28 offices today also bears some then look into the 12 1 future in regards to what we are doing with moving 2 some headquarters responsibilities out to the 3 district, which then changes then some of the 4 formulas, how it is the seating, the -- the 5 supervision oversight, the numbers of people. You 6 know, whether it's things that we've already done, 7 such as dual determinations, you know, things that 8 we're looking at, offers in compromise, DMV desk 9 audits, use tax administration, all those are now 10 being able to be moved to the -- to two district 11 offices which then, you know, in my opinion and I 12 think the opinion of -- as we move forward with 13 those helps get those issues, A, closer to the 14 taxpayer, and then also then helps expand the base 15 of opportunity within those district offices. 16 And so I think that's another part of the 17 formula as we look at those issues, which are very 18 different than what formulas were done, you know, a 19 couple of years ago. Which is why I think, as -- as 20 Vice Chair Harkey said, you know, it's good for us 21 to go ahead and take a look ten years into the 22 future to see what these are going -- these are 23 going to be looking like. 24 So I think all of those are relevant 25 discussions, you know. I think that, again, the 26 material that was laid out made pretty clear in 27 regards to the justifications or how assignments 28 were made or how accounts were assigned. But, 13 1 again, this Board gets to decide that again. Or 2 actually, as Mr. Gau said, gets to decide it, since 3 there is apparently nothing, nothing but what has 4 been the operational norm, I guess, in the past. 5 And so now it becomes the decision in 6 regards to whether or not the Board would -- it 7 seems to me is ready to make a decision in regards 8 to whether or not that operational norm in regards 9 to assignment of accounts, you know, within -- 10 within -- within constituent boundaries is -- is -- 11 is to be formally adopted or if indeed there's other 12 ways to which accounts can be -- can be construed, 13 or some combination of that. 14 And I think those are all things that then 15 are relevant to the discussion and certainly, I 16 think, need to be a part of a more in-depth 17 discussion in regards to our justification. 18 If anything, I think what I found 19 concerning in regards to what it is that we were 20 dealing with in regards to the questions that were 21 asked by the Legislature at the time is that we were 22 not able to articulate concisely why we do what we 23 do. And so I think, if anything, this helps us then 24 formulate that particular justification for why we 25 do what we do. 26 MS. MA: Mr. Horton. 27 MR. HORTON: Thank you, Madam Chair. 28 To the team that made the presentation, 14 1 David and so forth, thank you so very much for your 2 presentation. We certainly appreciate that you're 3 going to be looking at this and coming back with 4 several different recommendations, and particularly 5 with the anticipated audit and the recommendation by 6 the Legislature. 7 As we do this, though, it's -- I want to 8 encourage us to do a couple of things. One, let's 9 take a look at some -- relocating some offices 10 requires legislation and -- or if you're opening -- 11 if you're going to shut down an office or move an 12 office, then sometimes it requires legislation; 13 similar to the time when we sought to relocate the 14 San Diego office, we actually needed to go forth and 15 get legislation in order to accomplish those 16 objectives. So let's make sure that we take a look 17 at that criteria. 18 In a general sense, I think it's important 19 that we look at the organization as one 20 organization, one BOE, and that the decisions are 21 predicated based on the -- the employees' needs and 22 the citizens' needs. 23 And in this case the citizens are more 24 better defined as the businesses that we represent, 25 the businesses that we serve; not necessarily those 26 who vote, but those who actually have a business and 27 those that we serve. Because oftentimes a person 28 can have a business that's located in one district, 15 1 but they actually live and vote in another district. 2 But if we look at the organization as one 3 BOE, then we -- and the concerns of our employees, 4 then we're able to, I think, make a better 5 determination as it relates to the cost of operation 6 and that we focus on what's most efficient and most 7 effective for the organization. 8 The other thing I would encourage us to 9 take a look at is the possibility of having one-stop 10 centers. Once, we had such in the past. We may 11 want to look at that again. And so there may need 12 to be some collaboration with the Franchise Tax 13 Board, EDD, and so forth. And as they begin to 14 consolidate as well, their office space and their 15 footprint, possibly there's an opportunity where we 16 can combine facilities where the taxpayer can come 17 in and take care of a lot of different things at one 18 time. 19 And so those are my encouragements. We 20 certainly look forward to your report as it comes 21 back. 22 I thank Madam Vice Chair and the Members 23 for considering the policy as I set forth. It's 24 just a few thoughts that we put down on paper for 25 your consideration as you go through this process. 26 MS. MA: Okay. So where are we at right 27 now? So you've made your presentation. 28 MS. HARKEY: Wrap it up. 16 1 MS. MA: Members? Right. 2 MR. GAU: I guess I would say it's time for 3 us to go back and do our work as far as taking -- 4 we've gathered the documents, we're hearing from the 5 Members their concerns and things that they would 6 like us to address. 7 We will have a group of people that will 8 focus on this effort. I do -- I asked for 9 September, I think, because this is our opportunity 10 to really put some good analysis and thought behind 11 where we -- how we move forward and to bring that 12 solid recommendation and some alternatives back to 13 the Members. So we would really like the time to do 14 our research, look at the data, do our analysis and 15 make a good solid business case recommendation from 16 the -- from the staff. 17 MS. MA: So is there a time limit, next 18 meeting? 19 MR. RUNNER: September. 20 MR. GAU: Well, I was -- 21 MS. MA: September? 22 MR. GAU: I was hoping that at least a 23 report of some kind in September. I think that it 24 just is going to take us that -- we need time to do 25 the analysis and to do it right and do our research. 26 So -- 27 MR. RUNNER: Quick question. 28 MS. MA: Mr. Runner. 17 1 MR. GAU: And just one more thing. I'm not 2 sure -- I'm not -- there's no -- we're not looking 3 at opening -- there's no office opening that's 4 imminent right now. You know, we have some things 5 that are in the pipeline, but I think that'll give 6 us the time to do the right analysis. 7 MR. RUNNER: Yeah. That was kind of my 8 question. Because it seemed to me that this is a -- 9 this is a step that needs to take place prior then 10 to an effective Facilities Master Plan. 11 MR. GAU: That's correct. 12 MR. RUNNER: Right? 13 MR. GAU: It's sequential. 14 MR. RUNNER: Right. So this is the first 15 step moving toward then a Facilities Master Plan at 16 that point? 17 MR. GAU: Right. Because what we'll have 18 to go back and the team will look at is we'll have 19 to look at the lease terms of our offices. 20 MR. RUNNER: Right. 21 MR. GAU: You know, those that are in soft 22 terms or in bad buildings or -- not bad buildings, 23 but buildings that maybe we're not working well with 24 the landlord or something like that or we've 25 outgrown or we've down-sized even, who knows. 26 So, but we need to kind of prioritize 27 those -- excuse me -- get that Facilities Master 28 Plan in shape and bring that back after we have the 18 1 criteria -- excuse me -- adopted by the Board so 2 that we know the analysis that's going to go behind 3 what we're going to recommend for actual moves or 4 relocations. 5 MR. RUNNER: Let me -- just to -- for my 6 edification, because there's been some discussion in 7 regards to State-owned buildings. 8 MR. GAU: Correct, uh-huh. Yes. 9 MR. RUNNER: And I'm trying to recall. I 10 think the recommendation was actually for Members to 11 move into State-owned buildings. I'm not sure it 12 was about the rest of the BOE, I'm not sure. I'll 13 have to review and see what that was. 14 MR. GAU: Yes, that is one of the 15 recommendations that's from the Joint Legislative 16 Conference Committee. 17 MR. RUNNER: Yeah. 18 MR. GAU: Ultimately, that Members come 19 back into a State-owned facility. 20 MR. RUNNER: But let me ask you this, the 21 problem -- I mean, for instance, and I guess this is 22 what I get -- I always get worried about the issue 23 of State-owned buildings because we've got the Santa 24 Ana -- the ghost of Santa Ana with us, right, that 25 we keep dragging along. And then I think the other 26 issue is I've got -- I know -- I know in my district 27 there's an office sitting in Stockton -- 28 MR. GAU: Yes. 19 1 MR. RUNNER: -- which isn't a State-owned 2 building. And so I think it's basically a back 3 office that auditors work out of, and it's only 4 there because auditors would have to then move 5 either to Sacramento or somewhere else, so it's a 6 convenience for the auditors in terms of where they 7 are. And my understanding is because it's a 8 State-owned building, we'd have to pay the lease no 9 matter if we were there or not. 10 MR. GAU: Right. That's correct. 11 MS. HARKEY: That's what's happening to 12 Santa Ana. 13 MR. RUNNER: Right. So I mean that's the 14 same -- that's the same issue. So that's the 15 danger, I guess, of being able to get into 16 State-owned buildings, and I guess we need to look 17 no further than our own BOE headquarters to worrying 18 about State-owned buildings. 19 So, again, I think we need to carefully 20 look at that particular issue in regards to that. I 21 think there was a will of the Legislature for, it 22 seemed to me, that they look at, in terms of 23 Members' offices, that -- and it seemed to me it was 24 particularly issued on offices that were located in 25 the Sacramento area, find themselves into 26 State-owned building. 27 MR. GAU: That's correct. 28 MR. RUNNER: Okay. So anyhow, those would 20 1 be my observations. 2 The other issue is I think you had 3 mentioned that right now this kind of will at least 4 put on pause anything that we're doing right now 5 with any negotiations or anything with the current 6 facility issues? 7 MR. GAU: Yes. I think if there's anything 8 that needs to come in before that, we may have to, 9 based on conferring powers, if there's any new 10 leases, you know, or changes, we will be -- we will 11 be back before you. 12 MR. RUNNER: Okay. Okay. Good. Thanks. 13 MR. HORTON: Madam Chair. 14 MS. MA: And I would also like to just talk 15 about these empty buildings that we're paying rent 16 on. And, you know, I think it's important that you 17 highlight in your report, I think there's a number 18 of different buildings around the State where 19 agencies are paying this money and DGS is -- you 20 know, doesn't really have an incentive to figure out 21 a solution as long as someone is paying the rent; 22 and that obviously is not the right mentality. 23 They should either figure out how to 24 renovate, get people out of it, or utilize it versus 25 just paying rent to an empty space. 26 So, you know, I don't think a lot of 27 Members understand that. I didn't know -- 28 MR. GAU: Yes. 21 1 MS. MA: -- how many buildings are out 2 there that people are paying rent on that are just 3 sitting there idle. But we really need to highlight 4 in that report so that when we got back before the 5 Legislature next year, they actually understand that 6 not all of the rent expenses are, you know, are 7 occupied seats that we are using but a lot of these 8 expenses are also just rent paid to -- 9 MS. HARKEY: No one. 10 MS. MA: -- for nothing. 11 MR. GAU: Right. 12 MS. MA: To no one. For nothing, for no 13 one. And I really do think DGS really does need to 14 address it. I don't know whether other agencies are 15 putting that on their reports and everything, but I 16 think it's important that we let them know that not 17 all the rent we're paying is used for actual bodies. 18 MR. GAU: We will do that. 19 My understanding is that, you know, if you 20 do leave a State-leased facility, you know, there's 21 a requirement that there be a backfill tenant. And 22 if there's not, the agency that leaves that facility 23 is on the hook -- 24 MR. RUNNER: Right. 25 MR. GAU: -- so to speak, for that rent 26 until a tenant. And so is there incentive to get a 27 tenant or not if the rent's being paid? 28 So we will certainly address that and have 22 1 discussions with General Services -- 2 MS. MA: Okay. 3 MR. GAU: -- and highlight that. 4 MS. HARKEY: Ms. Ma? 5 MS. MA: Mr. Horton. 6 MR. HORTON: Thank you, Madam Chair. 7 Madam Chair makes and Mr. Runner makes an 8 excellent point. One of the ways we may want to 9 address this is actually make a proposal for a 10 legislative change so that you change the 11 legislative policy as it relates to the mandatory 12 requirement for the backfill as well as paying the 13 rents. 14 At the same time, we may want to 15 reintroduce, if you will, a strategy as it relates 16 to the Sacramento offices. We attempted to 17 consolidate, to develop one campus -- 18 MR. GAU: Yes. 19 MR. HORTON: -- where the entire BOE could 20 be located, somewhat out of necessity because of the 21 issues that we faced here with the building. But 22 also out of economic wisdom, if you will, because 23 it's just wise for us to be able to do that for a 24 number of different reasons. But it's something 25 that basically requires legislation. 26 We went through that process. They 27 recommended that -- they found that the BOE was not 28 at the top of the agenda. But we also studied that. 23 1 I believe Ms. Murphy did an exceptional job in 2 taking a look at that and coming up with a 3 recommendation where some of the -- some of the ones 4 that were at the top could move into this building, 5 or they could move two or three of those into this 6 building, which would free up an opportunity for the 7 BOE to consolidate by virtue of our size as much -- 8 we're much larger than some of the smaller 9 operations that could locate right here in this 10 building once it has been refurbished. 11 You know, and as we go through this 12 process, we're -- we're considering employees and 13 our customers. But in doing so, one of the things 14 that I think we ought to begin to take a look at to 15 explore next year is, What is the Board of 16 Equalization's optimum efficiency as it relates to 17 staffing and employees? 18 I think, based on the numbers that we 19 looked at, is that we ought to be able to actually 20 expand our staff in such a way to be even more 21 efficient to the extent that it generates more 22 revenue for the State of California, to the extent 23 that it reduces the number of penalties, the number 24 of -- the amount of interest the taxpayers are 25 having to pay, and that we are leaving some things 26 on the table that we actually could do even a more 27 efficient and effective job of addressing. So I'd 28 like for us to consider that as -- as well. 24 1 The other thing, and I think the other 2 Members have sort of touched upon this, in -- in 3 reviewing what the Legislature has said, you know, I 4 think there's a level of semantics there where they 5 use the term "State offices" and so forth. I think 6 what they're really saying is is that they want a 7 report that said, "This is the most efficient and 8 effective way to accomplish the objective, goals and 9 objective of the organization." 10 They're not establishing, at least my 11 discussion with the Chair of the Budget Committee 12 and the Subchair, they're not establishing hard 13 lines necessarily. They're saying come back with 14 your best professional recommendation as to where 15 and how you can be -- you can be as efficient and as 16 effective as one organization and not four different 17 organizations, four different districts and so 18 forth, as one organization functioning as one BOE. 19 Thank you, Madam Chair. 20 MS. MA: Ms. Harkey. 21 MS. HARKEY: I just have a clarification. 22 I was asking why we were number 16 on the list. And 23 I think that what I was told, which may or may not 24 be true but it came from a very reputable source, 25 somebody who does DGS items, told me that basically 26 it's because the others -- we have a sprinkler 27 system for fire, whatever, and some of these 28 buildings don't. They were built prior, and that's 25 1 why they're further on the list. 2 And also, it was -- it was mentioned to me 3 that maybe, you know, the Legislature's going to be 4 redoing their annex and maybe they might need some 5 swing space as well, you know. So maybe they want 6 to come join us. 7 MR. RUNNER: Move the legislators to the 8 BOE headquarters. 9 MS. HARKEY: Yeah. I mean if it's 10 available. 11 Anyway -- before our lease is expired, why 12 not? I'm not making a joke. I'm saying, you know, 13 it's a State-owned building and, you know, it's not 14 that far off the beaten path. It's right down the 15 street. So, it's an option. 16 MS. MA: Okay. All right. So September? 17 MR. GAU: We'll be back. 18 MS. MA: Okay. By September hopefully 19 that'll give you enough time and you can report next 20 month how things are going, if you need more time. 21 But, otherwise, we'll expect a report by September 22 meeting. 23 MR. GAU: Right. If there's any issues, we 24 will let you know and get back in front of you. 25 MS. MA: Okay, great. Thank you very much. 26 So this was an informational item only, so 27 no vote required. 28 ---oOo--- 26 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 June 14, 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 26 constitute 14 a complete and accurate transcription of the 15 shorthand writing. 16 17 Dated: July 1, 2016 18 19 20 ____________________________ 21 KATHLEEN SKIDGEL, CSR #9039 22 Hearing Reporter 23 24 25 26 27 28 27