2010-2011 Santa Clara County Civil Grand Jury Report Lafco’s Responsibility for Special Districts:

Conclusions 5

• CL1 Page 10
  The recommendations SCC LAFCO makes through its mandatory service review reports are intended to improve agency performance and may recommend special district dissolution when the services those districts were intended to provide are no longer provided or needed; however, SCC LAFCO stops short of enforcing the implementation of its recommendations either because they do not think this is within their purview or because they are afraid of potential litigation.
• CL2 Page 10
  Previous SCC LAFCO service reviews fall short of addressing subjects of transparency, the examination of effective service delivery by special districts, or addressing the continuing need to maintain any given district, which, together with the topics the reports do cover, would constitute a performance audit.
• CL3 Page 11
  SCC LAFCO has failed to initiate action to dissolve special districts that it has already determined are obsolete, such as the Saratoga Cemetery District.
• CL4 Page 11
  SCC LAFCO Commissioners receive limited training about LAFCO and are not fully educated as to their broad responsibilities to oversee LAFCO or LAFCO’s responsibilities regarding special districts.
• CL5 Page 9
  The Grand Jury found that SCC LAFCO, although one of the more active in the state, does not proactively engage in the oversight or evaluation of special districts, but rather seems to do only a part of what is specifically required by law, focusing primarily on annexation of unincorporated islands by municipalities. Little attention is devoted to special district performance audits, even though the statute requires some analysis of the community service needs, operational efficiencies, and potentially the effective or efficient service delivery, which essentially constitutes a performance audit. No efforts to see that SCC LAFCO recommendations are implemented appear to have been undertaken. The Grand Jury thinks that SCC LAFCO could more effectively fulfill its mandate by adopting policies directed to improve delivery of services or to dissolve special districts when they are no longer needed. Its planned service review of special districts, most likely to be completed in 2012, presents an opportunity for SCC LAFCO to treat the service review as a performance audit. This focus on analyzing whether taxpayer monies are effectively spent is a responsibility that Commission policy should direct SCC LAFCO, as a custodian of taxpayer dollars, to actively pursue. Furthermore, SCC LAFCO should aggressively follow up with special districts and agencies to see that recommendations made in service reviews are implemented. At the very least, it should request a written response from the agencies reviewed. If the threat of a lawsuit impedes SCC LAFCO from fulfilling the full range of responsibilities it has to taxpayers, then lobbying for legislative change to strengthen SCC LAFCO authority should be pursued. County LAFCOs cannot serve as effective watchdogs if they have no teeth. SCC LAFCO staff and its Commissioners are very active in the CALAFCO association. This association offers an avenue for affecting legislative change. Such lobbying efforts can also be encouraged and sanctioned by SCC LAFCO Commission policy. SCC LAFCO staff can better train Commissioners on the scope of their LAFCO responsibilities and powers, as by providing information on the full range of available options in packets accompanying meeting agendas. However, the Grand Jury feels that the Commissioners themselves need to take the initiative to learn more about what LAFCO can and cannot do under current law. The Commission also needs to exercise its full authority in representing the public through oversight of special districts subject to LAFCO purview. Further, while the SCC LAFCO Commissioners are fortunate to have a responsible and able staff to supply them with meeting topics and information packets, the Grand Jury concludes that the Commissioners have failed to establish any meaningful SCC LAFCO policy with regard to special districts. Backed by a policy requiring performance audits, SCC LAFCO can demonstrate leadership in demanding improved special district performance, thus helping to improve transparency around whether special districts spend taxpayer monies effectively. 9 Findings and Recommendations Finding 1 The recommendations SCC LAFCO makes through its mandatory service review reports are intended to improve agency performance and may recommend special district dissolution when the services those districts were intended to provide are no longer provided or needed; however, SCC LAFCO stops short of enforcing the implementation of its recommendations either because they do not think this is within their purview or because they are afraid of potential litigation. Recommendation 1A SCC LAFCO should develop and adopt policy directives that ensure, through its service reviews, that SCC LAFCO proactively examines, oversees, and makes recommendations regarding whether special districts should continue to exist. Recommendation 1B SCC LAFCO should adopt policies that direct LAFCO staff to exercise its enforcement authority where appropriate. Recommendation 1C SCC LAFCO Commission should consider adopting a policy strongly encouraging Commissioners and staff who are active in CALAFCO’s legislative committee to lobby the California legislature to strengthen protections against litigation based on LAFCO actions. Recommendation 1D SCC LAFCO staff should actively oversee that agencies address and implement recommendations made in LAFCO service review reports. Finding 2 Previous SCC LAFCO service reviews fall short of addressing subjects of transparency, the examination of effective service delivery by special districts, or addressing the continuing need to maintain any given district, which, together with the topics the reports do cover, would constitute a performance audit. Recommendation 2A SCC LAFCO should continue with the proposed plan to perform a service review of special districts (other than fire and water) separate from municipalities. 10 Recommendation 2B SCC LAFCO should handle the next service review for special districts as a performance audit, to include an examination of effective service delivery and an assessment of the continued need for the district, if any. Recommendation 2C Particularly as there appears to be no urgency to its decision with respect to El Camino Hospital District (see minutes of the April 2011 meeting), SCC LAFCO should complete a thorough El Camino Hospital District service review prior to any further Commission action on the topic. Finding 3 SCC LAFCO has failed to initiate action to dissolve special districts that it has already determined are obsolete, such as the Saratoga Cemetery District. Recommendation 3 Facilitated by its service review recommendations, SCC LAFCO should proceed with action to dissolve those special districts that have outlived their usefulness or that can continue to provide the same level of service without property tax revenues. Finding 4 SCC LAFCO Commissioners receive limited training about LAFCO and are not fully educated as to their broad responsibilities to oversee LAFCO or LAFCO’s responsibilities regarding special districts. Recommendation 4A SCC LAFCO Commissioners should initiate means to more completely understand the full range of their authority, through independent learning and more thorough staff briefings. Recommendation 4B SCC LAFCO staff should use Commission information packets to provide “just in time” training. Examples: present a full range of options when presenting recommendations for Commission decisions, weigh the alternative options, include information on the full range of LAFCO authority, and include broader contextual information surrounding an issue on the agenda. 11 Appendix A CALAFCO website: http://www.calafco.org/ California Government Code Section 56430, Spheres of Influence. https://www.nolo.com/law/CA-GOV56430.20072447.html California’s Health Care Districts, a paper by Margaret Taylor. Prepared for California HealthCare Foundation. April 2006 http://www.chcf.org/~/media/Files/PDF/C/PDF%20CaliforniasHealthCareDistricts.pdf Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 http://www.santaclara.lafco.ca.gov/pdf-files/2010_CKH_Guide.pdf Demystifying the California Property Tax Apportionment System, A Step-by-Step Guide Through the AB8 Process. Prepared by David G. Elledge, Treasurer- Controller of Santa Clara County. March 2006. http://www.sccgov.org/SCC/docs%2FFinance%20Agency%20%28AGY%29%2Fattach ments%2FDemystifying%20the%20CA%20PT%20Appt%20System_41706.pdf LAFCO website: http://www.santaclara.lafco.ca.gov/index.html LAFCO meeting agenda and information packet for April 20, 2011. Available on LAFCO website. http://www.santaclara.lafco.ca.gov/agenda/Full_Packets/2011Packets/2011Apr20/April %202011%20Agenda.pdf Property Tax Apportionment and Allocation System. Audit report. Santa Clara County. July 1, 2003 through June 30, 2007. http://www.sco.ca.gov/Files-AUD/12_2009ptxsantaclara.pdf Special District in Santa Clara County. List provided on LAFCO website. http://www.santaclara.lafco.ca.gov/specialdistricts/list_SpecialDistricts.pdf 12 Appendix B 13 Appendix C 1% Prop.Tax Additional Notes re Funding Independent Special Districts ? (also see footnote regarding AB8) AB8 Apportionment Factor:0.0000024714 1 Aldercroft Heights County Water District YES Est. 2011 Allocation: $7,322 2 Burbank Sanitary District NO Sewer Sani/Storm Assessment 3 Cupertino Sanitary District NO Sewer Sani/Storm Assessment AB8 Apportionment Factor:0.0033705834 4 El Camino Hospital District YES Est. 2011 Allocation: $9,986,235 AB8 Apportionment Factor:0.0000581133 5 Guadalupe Coyote Resource Conservation District YES Est. 2011 Allocation: $172,176 6 Lake Canyon Community Services District NO Estab. 1993. Special Assessment 7 Lion's Gate Community Services District NO Estab. 1998; Sanitation Assessment AB8 Apportionment Factor:0.0000226291 8 Loma Prieta Resource Conservation District YES Est. 2011 Allocation: $67,045 AB8 Apportionment Factor:0.0064285006 9 Midpeninsula Regional Open Space District YES Est. 2011 Allocation: $19,046,114 AB8 Apportionment Factor:0.0000060572 10 Pacheco Pass Water District YES Est. 2011 Allocation: $17,946 AB8 Apportionment Factor:0.0001849873 11 Purissima Hills County Water District YES Est. 2011 Allocation: $548,073 AB8 Apportionment Factor:0.0001051943 12 Rancho Rinconada Recreation and Park District YES Est. 2011 Allocation: $311,666 13 San Martin County Water District NO Assessment separate from 1% 14 Santa Clara County Open Space Authority NO Estab. 1993; http://www.openspaceauthority.org/ 15 Santa Clara Valley Water District YES Multiple Assessment zones within AB8 Apportionment AB8 Apportionment Factor:0.0002141425 16 Saratoga Cemetery District YES Est. 2011 Allocation: $634,453 AB8 Apportionment Factor:0.0016956201 17 Saratoga Fire Protection District YES Est. 2011 Allocation: $5,023,71 AB8 Apportionment Factor:0.0000334612 18 South Santa Clara Valley Memorial District YES Est. 2011 Allocation: $99,138 19 West Bay Sanitary District NO Sewer Sani/Storm Assessment Dependent Special Districts 1 County Sanitation District No. 2-3 NO Sewer Sani/Storm Assessment AB8 Apportionment Factor:0.0072391530 2 County Library Service Area YES + other Est. 2011 Allocation: $21,447,884 http://www.santaclaracountylib.org/about/financial.html 3 County Lighting Service Area NO 13 Special Assessment Zones AB8 Apportionment Factor:0.0023589834 4 Los Altos Hills County Fire Protection District YES Est. 2011 Allocation: $6,989,105 5 Santa Clara County Central Fire Protection District YES Multiple Assessment zones within AB8 Apportionment 6 Santa Clara County Vector Control District NO Vector Control Assessment AB8 Apportionment Factor:0.0012819446 7 South Santa Clara County Fire Protection District YES Est. 2011 Allocation: $3,798,096 sales tax, measure A, fares, other: 8 Santa Clara Valley Transportation Authority NO http://www.vta.org/brochures_publications/pdf/progress_report.pdf 9 West Valley Sanitation District NO Sewer Sani/Storm Assessment The AB8 Apportionment Factor is determined by the County in accordance, and audited by the State Controller. The estimated 2011 allocation is based on valuation as of Jan 1, 2011. Actual dollars allocated will vary with tax roll corrections. Information obtained from SCC Treasurer. 14 This report was PASSED and ADOPTED with a concurrence of at least 12 grand jurors on this 19th day of May, 2011. Helene I. Popenhaager Foreperson Gerard Roney Foreperson pro tem Kathryn Janoff Secretary 15

No Responses Found 2

Government entities assigned to respond to this report. No response documents have been linked in our database.