Report on San Joaquin County Reclamation Districts – May 30, 2014

R1

1 No later than November 1, 2014, the Board of Trustees of each Reclamation District is to review their current legal services contract to assure it contains all services provided by the law firm and that the contract contains all relevant information required under Federal and State laws and regulations to assure reimbursement of permitted costs in the event of an emergency.

R2

No later than December 31, 2014, all Districts that do not have an adopted annual operating budget are to prepare the framework for an annual budget and utilize it for all subsequent fiscal years. 3.0 Are there more efficient organizations? The County’s Reclamation Districts are small organizations. Only seven of the Districts responding to the survey indicated they have full time employees. Many have part-time employees and a few utilize outside contract employees to perform the work associated with the District. As previously discussed, most do not have administrative staff but instead use their legal firms to provide basic administrative, accounting and financial services. The lack of financial resources is the primary reason for the limited staffing. Twenty-four of the Districts have at least one Trustee with over 20 years of service on the Board. Because of the small populations in most of the Districts, the Grand Jury finds no cause for concern with this length in office. All Districts responded that their Trustees have filed the required Fair Political Practices Commission’s “Statement of Economic Interest” (Form 700). Those Trustees who receive no compensation for service on the Boards are not required to take the training required under AB 1234. Because of the small size of the Districts, the Grand Jury investigated whether consolidation, dissolution or some other action could result in more cost savings and efficiencies. Districts are hesitant to undertake consolidation or other actions. Many have very limited resources and there are costs and other considerations associated with dissolution or other actions. These include: (1) The application/processing fees charged by LAFCo, legal fees to prepare, advertise and adopt the required legal actions; (2) Identifying who will provide the services the District provided, a finding LAFCo is required to make before approving any action; and (3) The potential personal liability of Trustees for either dissolving a District or assuming responsibility for another District where the flood control work has not been kept to standards. There is one small District that had the land filled in creating an island thus eliminating the need for reclamation activities. However, the cost of dissolution (LAFCo charges $10,350 for an application to dissolve a district) and potential residual liability does not make that action attractive to the District’s property owners or Trustees. A District, responding to the survey, indicated that it is dormant and has had no activity for many years. Another District remains as a reclamation district but has no budget or activity. As a result, the District would be eligible for funding should the need arise without the time and expense of being re-established. A third District has been administratively taken over by a larger, independent agency when the reclamation land fell within the new agency’s purview. The Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 (California Government Code Section 56000 et seq.) requires each county LAFCo to conduct a review of the services provided by independent special districts within its jurisdiction. This is known as a Municipal Services Review (MSR). These are for the purpose of identifying and analyzing information about the governance structure and efficiency of these service providers and to identify opportunities to improve the quality, efficiency or cost effectiveness of local services. The law requires an MSR be conducted at least every five years. However, the State guidelines for preparing an MSR were not finalized until August 2003. The San Joaquin LAFCo has not conducted its review of Reclamation Districts. The delay has been the result of staff shortages and limited funding. LAFCo indicated that the review is being scheduled for Fiscal Year 2014-2015. The Grand Jury reviewed the draft survey LAFCo proposes to use for its MSR for Districts. It found the breadth and range of information being requested should allow LAFCo to determine the effectiveness of current District services and to identify areas of potential increased effectiveness. If the MSR recommends consolidation, dissolution or other actions, LAFCo currently has the authority to waive or adjust the processing fees which may make it more feasible for the small Districts. Findings

R3

1 No later than November 1, 2014, as the agency responsible for addressing Reclamation Districts’ level of services provided, LAFCo is to hold a meeting for all Reclamation Districts in the County to jointly discuss how the Districts can better provide services within current financial constraints.