Responses to 2011-2012 Grand Jury Report Every year, when the annual Santa Cruz County Grand Jury Report is published,

When a special district fails due to neglect or poor practice, the financial burden falls upon the county taxpayers. ○ Response from LAFCO Commissioners: [None; see note above] ○ Response from LAFCO Executive Officer: AGREE [No further comment] ○ Response from County Supervisors: DISAGREE When a special district fails, the financial burden falls upon those people who live in or own property in the district. The burden does not fall on county taxpayers who do not live in or own property within the failed district. ●

When problems in special districts occur, there is no clear cooperative path of response for addressing those problems. ○ Response from LAFCO Commissioners: [None; see note above] ○ Response from LAFCO Executive Officer: PARTIALLY DISAGREE In California, independent districts operate with a primary responsibility to the voters of the district. The district board is responsible to the voters. The voters have a variety of means to correct deficiencies through communications to the board, elections of board members, initiatives and referenda, and petitions to LAFCO. We agree with the Grand Jury's evaluation that the Lompico County Water District, like all other independent districts in California, has limited oversight by state and county offices in limited fields, such as the quality of public drinking water, and the filing of annual financial reports. ○ Response from County Supervisors: PARTIALLY AGREE Special districts are under oversight by state or county officials in limited fields, such as filing of annual financial reports and Statements of Economic Interests. Some districts, such as fire protection districts, work very closely with other governmental agencies. State and county agencies also provide specific oversight to ensure that water and sanitation districts comply with specific health or safety requirements. Special districts deliver highly diverse services, can be single or multi- functional, can be enterprise or non-enterprise, and can be independent or dependent. A “cooperative path” for addressing problems varies according to the services provided and whether the districts are independent or dependent. Depending on the services provided, other governmental agencies are available to assist special districts in resolving problems. However, the elected board of directors of each special district is ultimately responsible for the operation of the special district and to the voters of that district. It is also the responsibility of the residents and property owners of special districts to pay attention to the activities of their special districts and to bring their concerns to the board of directors when problems occur. If the board does not resolve the issues in a satisfactory manner, residents can utilize initiatives, referenda, or recall elections, or can elect new board members at the next regular election. ●

LAFCO underutilizes reviews that would allow for early problem detection and evaluation of independent special districts. ○ Response from LAFCO Commissioners: [None; see note above] ○ Response from LAFCO Executive Officer: PARTIALLY AGREE Like all public agencies, LAFCO prioritizes its work program in a manner that best implements its mission. During the recession of the last five years, LAFCO has focused primarily on its core duties of reviewing applications, has secondarily prepared municipal service reviews and sphere of influence updates as necessary, and has chosen not to expand its work program and budget to preprare municipal service reviews with emphasis on early problem detection in independent special districts. ○ Response from County Supervisors: NEITHER AGREE NOR DISAGREE LAFCO is a separate entity, and these issues are best addressed by that Board. ●

LAFCO has the ability and the responsibility (per Government Code Section 56430) to do service reviews at least every five (5) years; however, they are not being completed in a timely or effective manner. ○ Response from LAFCO Commissioners: [None; see note above] ○ Response from LAFCO Executive Officer: PARTIALLY DISAGREE LAFCO is preparing service reviews in a timely and effective manner, as required by law. LAFCO is not preparing service reviews as major stand- alone studies. Rather, LAFCO is preparing service reviews as needed as part of the sphere of influence review program and in response to major sphere of influence amendment applications. ●

LAFCO asserts that a general lack of funding prevents the performance of proactive and comprehensive service reviews, yet they selectively pursue funding for other purposes. ○ Response from LAFCO Commissioners: [None; see note above] ○ Response from LAFCO Executive Officer: PARTIALLY AGREE LAFCO has purposely limited its budget during the recession so as to limit the amount of contributions that the County, Cities, and 24 Independnent Districts make annually to pay to support LAFCO. Those agencies are struggling to provide the range of public services that make our communties good places to live. LAFCO has chosen to prioritize funding to process applications and to perform needed sphere of influence studies and services reviews in house. ○ Response from County Supervisors: NEITHER AGREE NOR DISAGREE LAFCO is a separate entity, and these issues are best addressed by that Board. ○ Response from County Auditor-Controller: PARTIALLY AGREE LAFCO’s expenditures have remained relatively flat since the first signs of the economic recession in 2006. Their expenditures ranged from a low of $294,864 in fiscal year 2009-10 to a high of $345,996 in fiscal year 2010- 11, with an average of $320,428 during those seven years. The primary expenditures in the LAFCO budget are salary and benefits for its two employees and legal fees for outside counsel. About 95% of LAFCO’s funding is from other local governments, which all experienced serious financial stress during that time. From a purely fiscal perspective, LAFCO is to be commended for its frugality. The Auditor-Controller’s Office is not aware of instances when LAFCO selectively pursued funding for other purposes. ●

LAFCO, external agencies, and citizens have conflicting interpretations of the scope and frequency of service reviews for special districts. ○ Response from LAFCO Commissioners: [None; see note above] ○ Response from LAFCO Executive Officer: AGREE [No further comment] ○ Response from County Supervisors: AGREE [No further comment] ●