Report 2014-108 Recommendation 3 Responses

Report 2014-108: State Board of Equalization Building: Despite Ongoing Health and Safety Concerns, the State Has Not Thoroughly Analyzed the Costs and Benefits of Relocating Employees (Release Date: September 2014)

Recommendation #3 To: Equalization, Board of

To more clearly demonstrate its case for a new facility, BOE should incorporate staffing growth into its analysis of costs and benefits, using projections based on long-term historical data.

Agency Response*

Staffing Growth:

The BOE continues to project a three-percent annual staffing growth rate over a ten-year average, and will provide an update each fiscal year. As stated in the BOE's initial response on November 24, 2014, the BOE must allow for adjustments to this staffing growth rate based on existing mandates, e.g.: Fire Prevention Fee, Pre-Paid Mobile Telephony Service Surcharge, Hazardous Materials Fee (Rail Transportation) and potential new legislative mandates that will likely impact staffing, including administration of a new program to regulate medical cannabis related businesses.

Rental Escalation Factor:

The projections the BOE previously provided to the CSA are consistent and have been verified with DGS rent escalation values, which are realistic for long-term planning. As stated in the BOE's six-month response, the DGS will provide all future rent estimates to the CSA.

  • Response Type†: Annual Follow Up
  • Completion Date: November 2014
  • Response Date: October 2016

California State Auditor's Assessment of Status: Fully Implemented

The BOE's contracted for Efficiency and Process Improvement Study (referenced in recommendations 1 and 2) includes an analysis of staffing growth during the periods from 1995 through 2006 and from 2005 through 2016, which concludes that a ten-year look-back of the BOE's headcount history is appropriate based on several disruptive forces described in the study. This study helps substantiate the BOE's use of a 3 percent annual staffing growth rate, which was not clearly supported by the BOE at the time of our audit.


Agency Response*

Staffing Growth:

The BOE continues to project a three-percent annual staffing growth rate over a ten-year average, and will update each fiscal year. As stated in the BOE's six-month response, the BOE must allow for adjustments to this staffing growth rate based on existing mandates, e.g.: Fire Prevention Fee and Pre-Paid Mobile Telephony Service Surcharge, Hazardous Materials Fee (Rail Transportation) and potential new legislative mandates that will likely impact staffing, including administration of a new program to regulate medical cannabis related businesses.

Rental Escalation Factor:

The projections the BOE previously provided to the CSA are consistent and have been verified with DGS rent escalation values, which are realistic for long-term planning. As stated in the BOE's six-month response, the DGS will provide all future rent estimates to the CSA.

  • Response Type†: 1-Year
  • Estimated Completion Date: TBD
  • Response Date: September 2015

California State Auditor's Assessment of Status: Pending


Agency Response*

The BOE has chosen to develop and implement a 10-year average growth factor for use in any and all staffing growth analysis projections.

  • Response Type†: 60-Day
  • Completion Date: November 2014
  • Response Date: December 2014

California State Auditor's Assessment of Status: Pending

We do not believe BOE's choice to use ten years of data, instead of the many more years of data that is imminently available, is correct. Specifically, as we state on page 22 of our report, BOE's filled positions declined by more than 4 percent from fiscal years 2002-03 through 2003-04, because of the condition of the state budget at the time. As a result of not using a longer time period for its analysis, BOE's starting point of its analysis is at the trough of the position reductions it experienced roughly ten years ago. Consequently, we believe its 10-year average growth factor is a particularly aggressive view of future staffing growth.

  • Auditee did not address all aspects of the recommendation

All Recommendations in 2014-108

†Response Type refers to the interval in which the auditee is providing the State Auditor with their status in implementing recommendations made in an audit report. Auditees must submit a response regarding their progress in implementing recommendations from our reports at three intervals from the release of the report: 60 days, six months, and one year or subsequent to one year.

*Agency responses received after June 2013 are posted verbatim.


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