Santa Cruz County Grand Jury • 2009-2010

PDF of complete 2009-10 Grand Jury Final Report

Published: October 01, 2010 217 pages Consolidated Report
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Findings 27 findings

F1 Page 14
The City of Watsonville appeal process is outlined and governed by three documents: the City Charter, the Municipal Code, and the Rules and Procedures of the Personnel Commission. Response: Watsonville City Council – PARTIALLY AGREE In addition to the three documents, the appeal process is also governed by the Personnel Rules and Regulations of the City of Watsonville as adopted and amended through Resolution No. 44-07 (CM) of the Watsonville City Council and also by California Court decisions regarding due process. Government Code sections 3254(b) and 3254.5 were also taken into consideration as the employee involved is a firefighter.
F2 Page 14
Per the Watsonville Municipal Code and the City Charter, recommendations made by the Personnel Commission are only advisory to the city manager No Response Required
F3 Page 14
Prior to the hearing on August 20, the city did provide dinner for persons involved in the hearing. An agenda was posted announcing the dinner. The commissioners attended, as did the city attorney and the department manager defending the disciplinary action. In fact, the manager greeted and admitted one of the commissioners into the room where the dinner took place. Response: Watsonville City Manager – AGREE There was an agenda posted announcing the dinner for the commissioners. Staff was in attendance at the dinner which was open to any one wishing to attend.
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Those interviewed confirmed that the commissioner knew the department manager and that they did exchange salutations, but that nothing was said regarding the appeal. The hearing was not discussed during dinner. However, some of the commissioners also were concerned about the potential appearance of collusion. Response: Watsonville City Council – PARTIALLY AGREE Those in attendance confirm that nothing was said regarding the appeal\hearing at the dinner. However, it is not known whether or not some commissioners were concerned about the potential appearance of collusion as it was not expressed to staff, the City Attorney, or anyone else except apparently to the Grand Jury. Greeting and holding the door for someone is courteous and customary. For example, the attorney for the Department and the employee greeted each other in the hearing room. Does Appearance Trump Substance? ∫ 3 Response: Watsonville City Manager – PARTIALLY AGREE Those in attendance confirm that nothing was said regarding the appeal\hearing at the dinner. However, it is not known whether or not some commissioners were concerned about the potential appearance of collusion as it was not expressed to staff, the City Attorney, or anyone else except apparently to the Grand Jury. Greeting and holding the door for someone is courteous and customary. For example, the attorney for the Department and the employee greeted each other in the hearing room.
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The employee who requested the Commission hearing could have attended the dinner but would have been required to purchase his meal; however, he was not told he could attend. Response: Watsonville City Manager – PARTIALLY AGREE It is correct that the employee requesting the appeal hearing could have attended the dinner; however, he was not expressly invited. Nevertheless, it was posted on the agenda. This was a unique situation as usually Personnel Commission hearings to consider employee disciplinary appeals are closed to the public. However, in this case, the employee expressly requested that the hearing be open to the public. As a result, the dinner was made open as well to anyone wishing to attend. Staff present that evening were invited to eat after all commissioners had been served. Had the employee been present, he presumably could have eaten as well. Again, normally, this would have been a closed affair and only the Personnel Commission and staff to the commission (Recording Secretary and Counsel) would have been present.
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The hearing was held after dinner. All parties were represented by counsel, including the commissioners, who were represented by the city attorney. When the hearing was completed, the commissioners went into closed session with the city attorney for deliberations. The city attorney provided clarification and advice when requested by the commissioners; the attorney only answered questions asked by the commissioners and did not influence their decision on the appeal. Response: Watsonville City Manager – AGREE
F7 Page 15
The Watsonville city attorney advises and represents the city council and all city boards and commissions. The Santa Cruz city attorney and the Capitola city attorney similarly advise and represent the city councils and all boards and commissions in their cities. However, the Watsonville City Charter, unlike the charters of these other cities within the county, does not explicitly include commissions and committees for city attorney representation. Response: Watsonville City Council – PARTIALLY DISAGREE The Santa Cruz City Charter in Section 812 states that the City Attorney shall have the power and be required to (a) Represent and advise the City Council and all City officers, commissions or boards or departments in all matters pertaining to their office. The City of Capitola is a general law city and has no charter. Section 804 of the Watsonville City Charter states that the City Attorney shall, a. Represent and advise the Council and all City officers in all matters of law pertaining to their offices 4 ∫ Santa Cruz County Grand Jury Final Report 2009-2010 b. Represent and appear for the City in any or all actions and proceedings in which the City is concerned or is a party, and represent and appear for any City officer or employee or former City officer or employee in any or all actions and proceedings in which any such City officer or employee is concerned or is a party, for any action arising out of his employment or by reason of his official capacity; c. Attend all meetings of the Council and give his advice or opinion in writing whenever requested to do so by the Council or by any of the boards or officers of the City. The City was concerned in this matter. Response: Watsonville City Manager – PARTIALLY DISAGREE The Santa Cruz City Charter in Section 812 states that the City Attorney shall have the power and be required to (a) Represent and advise the City Council and all City officers, commissions or boards or departments in all matters pertaining to their office. The City of Capitola is a general law city and has no charter. Section 804 of the Watsonville City Charter states that the City Attorney shall, a. Represent and advise the Council and all City officers in all matters of law pertaining to their offices b. Represent and appear for the City in any or all actions and proceedings in which the City is concerned or is a party, and represent and appear for any City officer or employee or former City officer or employee in any or all actions and proceedings in which any such City officer or employee is concerned or is a party, for any action arising out of his employment or by reason of his official capacity; c. Attend all meetings of the Council and give his advice or opinion in writing whenever requested to do so by the Council or by any of the boards or officers of the City. The City was concerned in this matter. Conclusions C1. The Personnel Commission conducted the appeal in accordance with the requirements of the City Charter, the Municipal Code, and the Rules and Procedures of the Commission, and there were no errors in the manner in which the hearing was accomplished. C2. There is a need to ensure that all participants receive a fair and impartial hearing by an independent judge. Although the dinner was not an illegal action, the mingling of commissioners with management prior to the hearing could result in a perception of bias that may undermine the credibility of the Personnel Commission in the eyes of the participants and the general public. C3. The addition to the City Charter of specific language about the city attorney’s representation of city commissions and committees would help to clarify the role and eliminate speculation about the legitimate powers and duties of that attorney. Does Appearance Trump Substance? ∫ 5
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Approximately $200 million is spent annually in California to arrest, prosecute and incarcerate marijuana offenders. (This figure includes the $75 million from F7 above.) Allocating that cost to Santa Cruz County on a per capita basis would result in annual costs of $1.36 million. The Fiscal Impact of the Legalization of Cannabis ∫ 15 Calculation: CA population of approximately 38 million people Santa Cruz County population of 260 thousand people or 0.68 percent 0.68 percent of $200 million = $1.36 million in annual costs Revenue Findings
F9 Page 27
The Santa Cruz Narcotics Enforcement Team seized approximately $150,000 in cash and property in 2008 and approximately $370,000 in cash and property in 2009. The Santa Cruz County Sheriff’s Department received a $30,000 grant in 2009 from the Federal Drug Enforcement Administration (DEA) under the Federal Domestic Cannabis Eradication and Suppression Program (DCESP) specifically to pay for overtime hours, training, and the purchase of equipment specific to marijuana-related crime enforcement.
F10 Page 27
Santa Cruz County collects an unknown amount of revenue from marijuana-related fines; revenue is unknown because it is not tracked on a per offense basis. The fine for possession of less than one ounce of marijuana (11357b) is up to $270. However, since the County system doesn’t track fines per offense and since the fine amounts vary, the Grand Jury cannot estimate the current revenue for pot offenses.
F11 Page 27
Based upon our assumptions about legalization and taxes, the State of California would collect approximately $400 million in additional sales tax revenue; the Counties would collect about $990 million in excise tax revenue. The State of California would collect additional income tax revenue from people working in the cultivation, production, and sales of marijuana.
F12 Page 27
The County of Santa Cruz hypothetically would receive $129,200 in marijuana sales tax revenue from the state. This number was calculated with an assumption of 19 million ounces of annualized statewide consumption allocated on a per capita basis to Santa Cruz County with a minimum sale price of $100 per ounce. Calculation: CA population of approximately 38 million people Santa Cruz County population of 260 thousand people or 0.68% 0.68% of 19 million ounces = 129,200 ounces * $100/ounce 1% of sales tax revenue is returned to the County Sales tax to Santa Cruz County of $129,200
F13 Page 27
The County of Santa Cruz hypothetically would receive $6.46 million in marijuana excise tax revenue if the County collected $50 per ounce. This number was calculated with an assumption of 19 million ounces of annualized statewide consumption allocated on a per capita basis to Santa Cruz County. Calculation: CA population of approximately 38 million people Santa Cruz County population of 260 thousand people or 0.68% 0.68% of 19 million ounces = 129,200 ounces $50 per ounce * 129,200 ounces = $6.46 million excise tax 16 ∫ Santa Cruz County Grand Jury Final Report 2009-2010 Conclusions C1. Although the federal government recently announced that it would no longer prosecute medical marijuana patients and providers whose actions are consistent with State laws, it has continued to enforce its laws on non-medical marijuana activities. To the extent that the federal government continued to enforce existing federal laws, it would inhibit the legal cultivation, sales, and use of marijuana in California even if the State legalized it for recreational purposes. C2. Santa Cruz County spends considerable resources, roughly $1.36 million based upon statewide estimates, enforcing existing marijuana laws through law enforcement, the courts, and jails. If marijuana were legal, it could result in savings to our local government by reducing the number of marijuana offenders incarcerated, reducing the associated time and costs for enforcement of marijuana-related offenses, and also the handling of related criminal cases in the court system. Costs associated with new marijuana regulations and the County’s collection of excise taxes are unknown. C3. Legalizing marijuana may result in the reduction of County revenues from fines for marijuana infractions, and it could reduce the cash and property seized by the Santa Cruz Narcotics Enforcement Team. It is unlikely that the county would receive another DCESP grant from the DEA. The County could impose additional fines and fees associated with a new law, but the net monetary effect is unknown. C4. The State of California would realize additional revenues from sales taxes generated by retail sales of legal marijuana. Some of those sales taxes, $129,200 based on the assumptions in this report, would come back to the County. The State also could realize additional income tax revenue from people involved in the business of marijuana cultivation, production, and sales. Santa Cruz County would derive some indirect benefit if the State were in better financial health as a result of marijuana legalization and taxation. Finally, Santa Cruz County would gain direct monetary benefit, $6.46 million based upon the assumptions in this report, from a $50 per ounce excise tax. The chart on the next page provides a summary of the Grand Jury’s calculations to provide a net estimated increase in revenue to Santa Cruz County of over $7.5 million if marijuana were legalized for recreational use. C5. It seems clear that, legal or not, millions of ounces of marijuana are going to be smoked each year in California. The Fiscal Impact of the Legalization of Cannabis ∫ 17 Changes in Revenues and Costs Associated With the Legalization of Marijuana Inc/(Dec) In Revenues (Inc)/Dec In Costs Revenues: Sales Tax: Price per ounce $ 100 Estimate # of ounces to be sold 19,000,000 Total Sales $1,900,000,000 Santa Cruz County population as a % of total CA population 0.68% Sales attributed to Santa Cruz County $ 12,920,000 Santa Cruz County portion of sales tax 1.00% Sales tax to Santa Cruz County $ 129,200 $ 129,200 Excise Tax: Estimated # of ounces to be sold 19,000,000 Santa Cruz County population as a % of total CA population 0.68% # of ounces attributable to Santa Cruz County 129,200 Estimated excise tax per ounce $ 50 Excise tax to Santa Cruz County $ 6,460,000 $ 6,460,000 Revenue lost: Loss of fines related to marijuana $ Unknown Loss of DCESP Grant $ (30,000) Estimated Cash and property seized based on 2008 actual – no longer available $ (370,000) Costs: Amount spent annually in CA to arrest, prosecute, and incarcerate marijuana offenders $ 200,000,000 Allocate to Santa Cruz County based on CA population 0.68% Estimated cost savings to Santa Cruz County $ 1,360,000 $ 1,360,000 Additional possible costs related to legalized marijuana: Licensing and collection of taxes, etc $ Unknown Others $ Unknown Net Estimated Increase in Revenue to Santa Cruz County $ 7,549,200 18 ∫ Santa Cruz County Grand Jury Final Report 2009-2010
F14 Page 163
The Friends recently expanded the list of current volunteer needs posted on its web site. It does not include checking out books, however, which limits the possibility of using volunteers to keep the libraries open more hours. Response: Santa Cruz City/County Public Libraries – PARTIALLY DISAGREE Thinking that using volunteers to check out is the only way they can help libraries stay open more hours is way too narrow. There are many functions that volunteers can help 152 ∫ Santa Cruz County Grand Jury Final Report 2009-2010 with that might eventually result in being able to be open more hours. We need staff devoted to volunteer coordination as stated in Finding 13 to explore this. Until that happens, even if we were to use volunteers to check out books, we would not be able to do so without staff to manage the volunteer function. Library Services and the Strategic Plan In December 2008, the past library director retired after 25 years of service. There was an interim director for a brief time while the JPB and the City of Santa Cruz recruited and hired a new director, who joined the SCPL system in July 2009. Under new leadership, the SCPL undertook an ambitious series of town hall meetings and focus group sessions with the goal of developing a community-based plan for the next five years. The town hall meetings were centered on the library branches. The focus groups were of assorted demographics (seniors, Latinos, business leaders, teens, educators, the homeless, a lady’s club, et cetera). The data collected through these activities was supplemented with information from about 2,500 surveys gathered over the internet and in person at grocery stores and farmers markets in the county. The result is the 3-5 Year Strategic Plan, 2010-2015, presented to the JPB and the public on Monday, April 19, 2010. The strategic plan that was developed is not intended to solve current budget problems but rather to provide the system with a focused future.
F15 Page 164
What was discovered through the planning process was not a surprise: library patrons use their local libraries, but they also enjoy visiting other libraries in the system. This is supported by the data in the chart that follows on illustrating where people from each community check out their library materials. These percentages are based on numbers from the 2007/08 fiscal year, before the serious reduction in open hours. The first, second, and third most frequently used libraries (in terms of circulation) for each residential area are color-coded. You can see that patrons from all communities in the county check out books from the Central library, with the Aptos and Scotts Valley branches being second and third most popular. Response: Santa Cruz City/County Public Libraries –AGREE
F16 Page 164
There was considerable consistency in library service priorities, with reading, viewing, and listening for pleasure; lifelong learning; creating young readers; and connecting with the online world being generally the highest ranked. One notable contrast was the attitude of some among the more mature population who favor local branches and believe libraries must be about books and personal service, while others among the younger population suggest that there will be fewer branches in the future and libraries will be less about books and more about technology. Everyone, regardless of age, wants the libraries open many more hours and on regular schedules. Response: Santa Cruz City/County Public Libraries –AGREE Saving the Branches May Kill the Tree ∫ 153 8002-7002 hcnarB hcaE ta noitacoL emoH reworroB yb stuO kcehC fo egatnecreP 51F hcnarB yrarbiL avleS aL dleifraG redluoB aO eviL notleF lartneC alotipaC etroficnarB sotpA hcaeB kraP keerC %4 %2 %0 %0 %21 %5 %2 %1 %37 sotpA %3 %2 %0 %0 %73 %8 %1 %2 %74 samorA %3 %0 %0 %12 %02 %1 %2 %9 %2 dnomoL neB %1 %0 %0 %3 %41 %0 %1 %86 %1 keerC redluoB %2 %0 %1 %8 %52 %1 %1 %73 %01 eladkoorB %31 %1 %1 %0 %61 %15 %2 %0 %41 alotipaC %3 %1 %0 %0 %21 %6 %2 %0 %57 sotilarroC %1 %0 %7 %1 %38 %1 %3 %0 %2 tropnevaD %2 %0 %0 %63 %42 %1 %2 %2 %1 notleF %1 %1 %51 %1 %04 %2 %2 %0 %73 modeerF %1 %74 %0 %0 %11 %2 %4 %0 %33 hcaeB avleS aL %35 %0 %0 %0 %32 %11 %7 %0 %3 kaO eviL %1 %0 %0 %71 %21 %1 %4 %1 %2 nomreH .tM %2 %3 %0 %0 %8 %3 %1 %0 %28 raM leD oiR %4 %0 %01 %1 %36 %2 %61 %0 %2 ytiC zurC atnaS %7 %0 %3 %1 %04 %11 %81 %0 %4 tuO zurC atnaS %1 %0 %0 %1 %21 %1 %1 %0 %1 yellaV sttocS %1 %0 %0 %0 %5 %3 %1 %0 %88 ffilcaeS %9 %1 %1 %0 %02 %93 %3 %0 %62 leuqoS %3 %0 %1 %2 %63 %6 %6 %0 %4 procninU ytnuoC CS %4 %9 %1 %0 %72 %7 %4 %0 %54 ytiC ellivnostaW %7 %9 %0 %1 %54 %8 %31 %0 %41 tuO ellivnostaW %4 %1 %4 %6 %25 %5 %3 %1 %11 aerA fo tuO noitacoL emoH sttocS k yellaV %1 %0 %14 %21 %61 %2 %2 %2 %13 %0 %1 %1 %16 %1 %2 %61 %28 %1 %1 %24 %2 %4 %41 %31 %01 %1 %4 %3 %43 %8 %8 %4 %51 slatoT noitacol emoh rep stuokcehc fo rebmun tsetaerG noitacol emoh rep stuokcehc fo rebmun ni dnoceS noitacol emoh rep stuokcehc fo rebmun ni drihT morf elpoep erehw setartsulli trahc sihT .metsys eht ni seirarbil rehto gnitisiv yojne osla yeht tub ,seirarbil lacol rieht esu snortap yrarbiL smeti rehto dna skoob rieht fo tnecrep 37 tuo kcehc sotpA ni gnivil elpoep ,ecnatsni roF .slairetam rieht tuo kcehc ytinummoc hcae no desab era segatnecrep esehT .yrarbil alotipaC eht morf tnecrep 5 dna yrarbil lartneC eht morf tnecrep 21 ,yrarbil sotpA eht morf .sruoh yrarbil ni snoitcuder suoires eht erofeb ,raey lacsif 8002/7002 eht morf srebmun 154 ∫ Santa Cruz County Grand Jury Final Report 2009-2010
F17 Page 166
One important part of the Strategic Plan is the section entitled “Change for the Future,” a description of five current trends in public library services that the SCPL has identified and committed to in the coming years as it pursues its vision of Transforming lives and supporting communities. Succinctly, the five trends are: 1. Patrons get service at the level they want – more self-service in checking out materials, placing and picking up holds, editing own accounts, paying fines; and single point of service, 2. Rebranding and marketing – establishing the library as a relevant resource through evolving services and better marketing of those services, 3. Local focus – providing local content that is unavailable elsewhere and taking library services outside into the community, 4. Remote delivery of services – associated with self-service; downloadable materials, e- books, podcasts; online payment of fees, and 5. User involvement – use of social media like Twitter, Facebook, and Wikis. Response: Joint Powers Authority Board – AGREE Response: Santa Cruz City/County Public Libraries –AGREE
F18 Page 166
Despite the budget problems, the SCPL offers an amazing range of outreach programs and in-house events. Through the efforts of library employees and Friends volunteers, there are programs for special populations like toddlers and young readers, students of all levels, teens, film and gaming enthusiasts, the elderly, the sight impaired, and the developmentally disabled. There are special holiday events, including pumpkin carving and gingerbread workshops. Programs and Partnerships was begun in September 2009, involving local businesses in library activities. It includes the “Book Wish List” being supported by local bookstores. Other businesses have held fundraisers, and still others have partnered with the library in offering parents and children in-store workshops and story-times. Response: Santa Cruz City/County Public Libraries –AGREE However, the Programs and Partnerships Division was established for more than just involving local businesses. It was established to bring under one roof all library programming and various partnerships with all sectors of the community. The Budget Funding for the libraries comes from five sources: • county property taxes and Santa Cruz and Watsonville city general funds • the ¼ cent sales tax approved by voters first in 1996 and then again in 2008 • library fees and fines • a State of California Public Library Fund grant • income from bequests and trusts The sales tax and monies from the city general funds are allocated to the SCPL and the Watsonville Library each year by a Library Financing Authority; the funds are divided using a population-based formula. The city of Santa Cruz provides administrative, financial, human resources, and legal services to the SCPL; they charge the library system a flat 5.5% of its total revenues for these services. Saving the Branches May Kill the Tree ∫ 155
F19 Page 167
In March 2009, after two years of generous sales tax revenues, the SCPL had no cash reserves. In April 2009, the JPB set guidelines for the FY 2009/10 budget that included establishing and maintaining ongoing cash reserves of at least 5% of its annual budget and dedicating at least 8% of its operating budget to books and media. These goals were not met in the FY 2009/10 budget, and they are not being met in the budget proposed for FY 2010/11. Response: City of Santa Cruz Director of Finance – AGREE Response: Joint Powers Authority Board – AGREE Sales taxes were projected to increase FY08/09 from FY07/08 by $27,000. In reality, they declined by $344,000. The 8% for materials was established in the Facilities Master Plan adopted in 2008 not in FY 2009/10 as stated above. Response: Santa Cruz City/County Public Libraries –AGREE Sales taxes were projected to[sic] in FY08/09 from FY07/08 by $27,000. In reality, they declined by $344,000. The 8% for materials was established in the Facilities Master Plan adopted in 2008.
F20 Page 167
Over the last decade, prior and present library administrators have proposed or recommended closing from one to six branches to benefit the balance of the library system. However, in May 2009, the JPB directed library management to develop a balanced budget for FY 2009/10 that did not close any branches. They provided the same direction this April while facing even greater challenges to the system, essentially “kicking the can down the street a bit farther,” in the words of one board member. Response: Joint Powers Authority Board – PARTIALLY AGREE In April 2010 the JPB was presented with several options that all achieved the same goal- a balanced budget for 10/11. They selected the one that reduced hours at all the branches. Response: Santa Cruz City/County Public Libraries –PARTIALLY AGREE In April 2010 the JPB was presented with several options that all achieved the same goal- a balanced budget for 10/11. They selected the one that did not call for closing any facilities.
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The SCPL may be able to balance the budget through deep cuts in personnel and services, but there is a cash-flow problem. The City of Santa Cruz loans the library the cash for payroll and other payables; it covers the actual cash deficit between the time expenses are paid and revenues are received. Currently this loan balance averages between $1 million and $1.4 million. The City charges interest at portfolio rates (in April 2010, about 1.4%), but beginning with the 2011/12 fiscal year the interest will rise to portfolio rates plus 2% (about 3.4% if the portfolio rate was still 1.4%); in the meantime the City will cap the loan at $1 million. The additional interest will add to the cost of operating the library system, and staff stated that, with a cap, some bills will not be paid in a timely manner and additional staff time and effort will be required to prioritize payments. 156 ∫ Santa Cruz County Grand Jury Final Report 2009-2010 Response: City of Santa Cruz Director of Finance – PARTIALLY AGREE The average loan balance has not averaged between $1 million and $1.4 million. The loan balance averaged approximately $500,000 in fiscal year 2009 and approximately $400,000 in fiscal year 2010. The loan balance has decreased over the last two fiscal years and there has been no need for a loan during the last 3 months of fiscal year 2010. Response: Joint Powers Authority Board – PARTIALLY DISAGREE The loan balance does not average between $1-1.4 million. These are maximum amounts reached on several days last year not on a regular basis. The Library has also factored into its 5 year projections re-establishing the reserve to handle the cash flow issue. Given the current situation (ending FY0910 in the black) we do not anticipate exceeding the limit. Response: Santa Cruz City/County Public Libraries –PARTIALLY DISAGREE The loan balance does not average between $1-1.4 million. These are maximum amounts reached on several days last year not on a regular basis. The Library has also factored into its 5 year projections re-establishing the reserve to handle the cash flow issue. The line about with a cap, some bills MAY not be paid in a timely manner rather than will. Given the current situation (ending FY0910 in the black) we do not anticipate this issue occurring.
F22 Page 168
The SCPL has three loans that it must repay, with interest, and substantive rent for headquarters: • First, there is the working capital loan mentioned above, the advance from the City of Santa Cruz to cover the cash requirements on a day-by-day basis. This loan will be outstanding until the SCPL develops the reserves to manage its cash flow. Response: Joint Powers Authority Board – PARTIALLY DISAGREE This is a cash flow loan that is repaid as soon as the monthly payment is received from the County. Response: Santa Cruz City/County Public Libraries –PARTIALLY DISAGREE This is a cash flow loan that is repaid as soon as the monthly payment is received from the County. • Second, there is a loan associated with a Santa Cruz County overpayment, a distribution error discovered in 2005. From August 2005 through August 2013, the SCPL must pay annual principal of $40,293 plus variable rate interest. Response: Joint Powers Authority Board – AGREE Response: Santa Cruz City/County Public Libraries – AGREE • Third, there is a loan from the city of Santa Cruz for improvements to the new headquarters building. Interest is 5%. In September 2008, the principal was $467,303; the current loan balance is about $430,150. The annual payment is $60,518, and this loan will be paid off in 2018. Saving the Branches May Kill the Tree ∫ 157 Response: Joint Powers Authority Board – AGREE Response: Santa Cruz City/County Public Libraries – AGREE • The City of Santa Cruz purchased the building at 117 Union Street in Santa Cruz for use as library headquarters, to house administrative and technical services and outreach. The facility is shared with the Water Department, and building expenses are allocated to each according to the square footage occupied. The library’s portion of the annual rent is $287,189, until 2037 when the City’s loan for the building purchase will be paid in full. Response: Joint Powers Authority Board – AGREE However, it is important to note that the Library was paying $21.89 per square foot for rent and utilities for its Headquarters building on Pacific Avenue and now pays $20.93 per square foot for a building that is being purchased not rented. Response: Santa Cruz City/County Public Libraries – AGREE However, it is important to note that the Library was paying $21.89 per square foot for rent and utilities for its Headquarters building on Pacific Avenue and now pays $20.93 per square foot for a building that is being purchased not rented. Complete Finding Response: City of Santa Cruz Director of Finance – PARTIALLY AGREE The amount of the annual payment to the City of Santa Cruz for use of the building at 117 Union Street is not $287,189; rather the amount varies each year between fiscal year 2010 and fiscal year 2037, from a low of $283,147 in fiscal year 2028 to a high of $312,516 in fiscal year 2035. After 2037, no payments are due under the existing lease.
F23 Page 169
While the library staff tabulates a wealth of data about the Santa Cruz community’s library use, (visits per capita, books and materials checked out per capita and per active member; busyness and circulation and visits per open hour, et cetera), there are no established cost accounting measures to gauge the cost of operating the individual branches or the cost of specific library services. The library director prepared a one-time memo detailing the monthly and annual costs for the bookmobile in March 2010 upon request from a member of the JPB. Response: City of Santa Cruz Director of Finance – AGREE Response: Joint Powers Authority Board – AGREE Response: Santa Cruz City/County Public Libraries – AGREE This statement is, however, very misleading. Establishing costs per individual branch is very complicated. Fixed costs are easy to calculate and have been. There are variable costs that are much harder to calculate. We would need to come up with a chargeback system for all administrative functions- payroll, computer support, courier service, branch supervision, programming support, acquisitions/cataloging and processing etc. This is further complicated since the smaller branches have been sharing staff with the larger branches so allocating staff time can get very fuzzy. There has really been no value in allocating costs this way since revenues are not branch specific. I am not sure what 158 ∫ Santa Cruz County Grand Jury Final Report 2009-2010 specific library services are being referred to in terms of cost. Once again, there has not been any value perceived in determining the cost of a service such as materials acquisition. It isn’t like we will stop doing it based on cost. We are always looking at ways to be more efficient but quantifying that in terms of service provided is not an appropriate model for this type of organization. The Library is not a business and cannot be run like one.
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Currently there are no reserves for technology repairs or improvements or for replacing the several SCPL vehicles, including the bookmobile. There are no reserves to finance facility development. There are no emergency reserves. Response: City of Santa Cruz Director of Finance – AGREE Response: Joint Powers Authority Board – AGREE Response: Santa Cruz City/County Public Libraries – AGREE
F25 Page 170
In FY 2008/09, personnel costs accounted for 73.6% of the budget, while books and materials accounted for 6.3% and technology accounted for 0.8%. Personnel costs are projected to consume 80% of the budget within a few years. While employees have been furloughed about 10% of the time this year and the furloughs will continue into the next fiscal year, retirement programs through the California Public Employees’ Retirement System (CalPERS) have not been fully funded and health insurance rates are expected to rise significantly. Response: City of Santa Cruz Director of Finance – AGREE Response: Joint Powers Authority Board – PARTIALLY AGREE It isn’t really correct to say that CalPERS has not been fully funded. During the period of the furlough, city and employees have been paying in based on their reduced pay. When current employees retire, the calculation will be made on their non-furlough pay which is higher. There is a slight discrepancy which is why we have decided not to continue the furlough beyond 2 years. Response: Santa Cruz City/County Public Libraries – PARTIALLY AGREE It isn’t really correct to say that CalPERS has not been fully funded. During the period of the furlough, city and employees have been paying in based on their reduced pay. When current employees retire, the calculation will be made on their non-furlough pay which is higher. There is a slight discrepancy which is why we have decided not to continue the furlough beyond 2 years but this amount has been declared not significant enough to be concerned about at this time.
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Also in FY 2008/09, the population served per FTE was lower than the State mean (1,735 versus 3,094) and lower than comparable counties’ figures. Expenses per capita were significantly higher than the State mean ($61.90 versus $34.69) and comparable counties’ numbers. Library administration suggested this was “probably because of the relatively large number of branches we have for the population.” The abundance of branches and the reported library policy that at least two employees are required to staff any open library contribute to these outsized numbers. Saving the Branches May Kill the Tree ∫ 159 Population Served Per FTE Staff Total Operating Expenditure Per Capita 3500 $70.00 3000 $60.00 2500 $50.00 2000 $40.00 1500 $30.00 1000 $20.00 500 $10.00 0 $- California Santa Cruz San Luis Santa Barbara Monterey California Santa Cruz San Luis Santa Barbara Monterey Average County Obispo County Average County Obispo County County County Response: Joint Powers Authority Board – PARTIALLY DISAGREE There is insufficient information to verify whether the relatively low population to FTE and the expenses per capita is caused by the relatively large number of branches nor does it preclude that there may be other contributing factors. Without studying all the factors simply closing branches will not achieve the expected goals. The JPB task force will be studying this issue. Response: Santa Cruz City/County Public Libraries – PARTIALLY DISAGREE It was suggested that the number of branches is probably high given the small size of the county. Expenses per capita are also higher because Santa Cruz is an expensive place to live. Staff in Santa Cruz do not earn as much as their colleagues over the hill. Our problem is more that the total square footage in our branches is inadequate for the size of the population. A staffing level of two is considered minimum for personal security reasons. We have never stated that one of those two cannot be a volunteer as long as the workload and assigned tasks are appropriate to the staffing configuration. In general, there is a certain economy of scale that can be reached by having fewer but larger branches. The down side is that neighborhoods lose branches that help identify that neighborhood and serve as cohesion for it as well.
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Santa Cruz County has more branches, or outlets, per square mile than the comparable counties of Monterey, San Luis Obispo, and Santa Barbara. With a total area of 436 square miles in the county, the service area per outlet averages about 40 square miles. Service Area per County Population Area in Square Miles Outlet in Square Miles Santa Cruz 209,332 436 40 San Luis Obispo 240,480 3,305 207 Santa Barbara 227,349 1,164 129 Monterey 230,478 3,125 156 160 ∫ Santa Cruz County Grand Jury Final Report 2009-2010 Response: Joint Powers Authority Board – PARTIALLY AGREE This comparison is questionable because it does not factor in the geographical differences among these counties. Also, it doesn’t reflect the library square footage per capita or the library square footage per square mile. Counties with large rural areas will have more square miles per branch. Response: Santa Cruz City/County Public Libraries – AGREE See comment in F26. Conclusions C1. The mission of the Santa Cruz Public Libraries is to provide materials and services which help community residents meet their personal, educational, cultural, and professional information needs. This is the current mission statement for the SCPL. Although library enthusiasts from around the county participated in the strategic planning process and considered what the library might look like in 2020, it’s very hard to know just where technology will take us – and our libraries – in the next ten years. In fact, it is difficult looking just a couple of years down the road. The library system will need a solid financial foundation to enable it to evolve as necessary to meet the needs of the community in this era of swiftly-changing technology. C2. There is not enough money in our current economic climate for everything the JPB and the SCPL needs to do today: • there are three loans to pay off and significant rent for the headquarters building • there are plans to build new libraries in Scotts Valley, Capitola, and Felton; in addition to building and equipment costs, there will be moving expenses and additional ongoing staff and utility expenditures because of the increased square footage • there is routine maintenance and emergency repairs for the ten branches and headquarters • there are major technology improvements that must be funded • there is equipment, including vehicles, that need to be maintained in the short term and that will need to be replaced in the near future • there must be funding to build the collection • there must be savings to build reserves • there are personnel costs that are increasing from year to year while revenues are decreasing C3. A dramatic shift in library priorities and operations is necessary to create a balanced budget while allocating the funds necessary to buy the technology that will allow the library staff to improve productivity and to create a library that will continue to meet the needs of the community as our future is increasingly shaped by technology. Unfortunately, the JPB has been unwilling year after year to make the decisions that are necessary to provide an adequate and stable financial foundation for the Santa Cruz library system. The board, with Saving the Branches May Kill the Tree ∫ 161 elected representatives of the cities and county constituting a majority, seems to lack the political will to make the tough decisions that might be unpopular with constituents. C4. Library administration and staff have failed to expand the use of volunteers to provide more regular open hours for patrons.

Recommendations 11

Conclusions 30

Commendations 7

Comments 7