County of Santa Clara Budget Inventory Items: a matter of accountability

Note: Missing finding numbers detected: F3, F4, F5, F6, F7, F8, F9, F10, F11, F12, F13, F14, F15, F16, F17, F18, F19, F20, F21, F22, F23, F24, F25, F26, F27

Findings and Recommendations 3 findings

F1

The County acknowledges that the Program lacks transparency, an audit trail, and a consistent set of rules. The Civil Grand Jury agrees based on its investigation. However, the Board has not prioritized the changes needed to improve it and has yet to act on any of the recommendations in the Audit report.

Related Recommendations (3)

R1

4: Clerk of the Board Partially Agreed The Board should adopt a policy stating that organizations that significantly fail to comply with the terms of the grant agreement, such as failure to retain documentation showing how funds were used, will be deemed ineligible for the next three inventory item grants application cycles and may be prohibited from entering into any future partnerships with the County.

R1a

The Board should immediately meet and discuss how to implement the recommendations from the February 9, 2026, Audit. The Board should then implement those recommendations for FY2027- 28. This should be implemented

R1b

The Clerk of the Board should continue to re-evaluate the Program annually to identify potential process improvements and take appropriate action. This should be implemented

F2

The findings and recommendations of the 2023-24 Civil Grand Jury report remain factually sound. The Audit confirmed its findings, identified additional weaknesses, recommended stronger oversight, and extended the analysis beyond the original report. Of the 11 Audit recommendations, the Clerk of the Board agreed with eight, partially agreed with one, tentatively agreed with one, and tentatively disagreed with one.

Related Recommendations (1)

R2

Recommendation 1.2: Rejected by County Clerk of the Board Tentatively Agreed The County should use a common online Note that grant recipients awarded above a application process for all applicants, certain dollar threshold would be Tier 1 and regardless of Supervisorial District. The would sign agreements designated with post- application should include, at a minimum, the award reporting obligations, while those following information: below the threshold would be designated Tier 2 and would be exempt from this requirement. applicant organization’s mission, size of the applicant organization, specific amount being The Board should require Tier 1 requested, applicant organization’s annual organizations to submit a detailed spending budget, proposed summary program budget, plan for the requested funds, as part of their including any direct and/or administrative grant application. Applications should not be fees, description of how funds will be used and accepted without this information. what County priorities they support, the amount of matching or other grant or contract funds available or already received by the organization, and anticipated measurable outcomes for the proposed program. Civil Grand Jury Recommendations Management Audit Division Recommendations

F28

This should be implemented by October 30, 2026.

Related Recommendations (1)

R28

This should be implemented by October 30, 2026. Recommendation 1b The Clerk of the Board should continue to re-evaluate the Program annually to identify potential process improvements and take appropriate action. This should be implemented

Additional Recommendations 3

These recommendations are not explicitly linked to specific findings.

R3

Recommendation 1.1: Rejected by County Clerk of the Board Agreed The County should create a consistent set of The Board should discontinue the use of grant rules and guidelines for review and approval of versus sponsorship distinctions within the inventory item awards that meets their goal of inventory item program and adopt a two-tier supporting smaller organizations, considering agreement structure based on an award but not limited to the following: limit amount to be defined. Recipients awarded inventory item grants to organizations that do above the threshold (Tier 1) should sign not have an existing contract with the County, agreements with post-award reporting and set an annual $250,000 cap on total obligations, while those below (Tier 2) should inventory item grants that each Supervisorial be exempt. District can award. Civil Grand Jury Recommendations Management Audit Division Recommendations
R4

Recommendation 1.3: Rejected by County Clerk of the Board Tentatively Disagreed The County should require recipients to The Board should revise the Tier 1 grant provide annual progress reports and financial agreement language to define “proof of reports, and, if needed, the County should audit compliance,” requiring grantees to submit the organization’s expenditure records. itemized receipts and documentation of expenditures after the funds have been used. Civil Grand Jury Recommendations Management Audit Division Recommendations
R5

No Equivalent Rejected by County If the County does not agree with the previous four recommendations, then it should eliminate the current inventory item program entirely. No Equivalent Recommendation 2.2: Clerk of the Board Agreed The Clerk of the Board should hold an annual Inventory Items training for Board office staff before the Board offices’ application cycles. The training should explain how the disbursement process works, familiarize Board office staff with the grant management software, and clarify why certain documentation is required during the initial application stage. Sources: 2023-2024 Santa Clara County Civil Grand Jury report, “No Strings Attached: County of Santa Clara Board Inventory Items,” June 11, 2024; County of Santa Clara, Board of Supervisors Management Audit Division, “Management Audit of Inventory Item Grants,” February 9, 2026. As part of the agenda for the February 10, 2026, Board meeting, the County Executive recommended that the Board approve the temporary suspension of the Program for FY2026-27. The Board disregarded the guidance and funded the Program at $5 million, to be allocated proportionally using an equity metric based on Medi-Cal enrollment. The equity metric description is documented in an “off-agenda” memorandum (County, 2026) (see Table 2). (Off-agenda reports provide background information that the Board requests on topics such as County programs, services, community conditions, and departmental updates. These documents are published for transparency and public access.) Table 2: Breakdown of Medi-Cal Enrollment by Supervisorial District and Allocation Amount for Inventory Items, FY2026-27. Share of Funds Based on District Medi-Cal Enrollees Equity Measure District 1 20.19% $1,009,542 District 2 36.76% $1,837,994 District 3 16.60% $829,946 District 4 17.56% $878,049 District 5 8.89% $444,469 Total 100% $5,000,000 Source: Data extracted from memo to the Honorable Board of Supervisors and James R. Williams, County Executive from Ezequiel Vega, County Budget Director, and Curtis Boone, Clerk of the Board, February 27, 2026. Other California Counties Have Similar Programs The Civil Grand Jury found that the County’s Program is not unique in California. At least six other counties have similar programs, but with more structured rules and rigorous controls. While other county programs operate under similar funding parameters, none directly mirrors the County’s Program. At the April 17, 2026, meeting of the Board’s Finance and Government Operations Committee, the Auditor presented the findings and recommendations of the Audit. The committee directed the Auditor to further analyze the Program’s equity metrics and sponsorships versus grants, and to present this analysis at the committee’s September 2026 meeting. The committee then voted to receive the report. The committee is targeting a Board discussion of its recommendations by mid- 2027. As of the date of this report, the full Board has yet to act on the Audit, electing instead to move forward with the Program for FY2026-27 (including the $5 million for the grants) without first considering the Audit’s findings and recommendations.