Report 2016-133 Recommendation 7 Responses
Report 2016-133: SAFE-BIDCO: At Risk of Insolvency, It Needs Increased Oversight if It Is to Receive State Funding and Continue to Help Small Businesses in California Gain Financing (Release Date: April 2017)
Recommendation #7 To: State Assistance Fund for Enterprise, Business, and Industrial Development Corporation (SAFE-BIDCO)
Regardless of whether the Legislature establishes SAFE-BIDCO as a program within a state entity, it should do the following:
-To ensure that it spends its funds furthering its mission of helping California small businesses, SAFE-BIDCO should decrease its travel expenses by adopting a travel budget in consideration of its expenses and mission and limiting out-of-state travel.
6-Month Agency Response
SAFE-BIDCO did not provide a response for the reason noted below in the State Auditor's Assessment of Status.
- Estimated Completion Date:
- Response Date: December 2017
California State Auditor's Assessment of 6-Month Status: Resolved
SAFE-BIDCO was seized by the California Department of Business Oversight (Business Oversight) in September 2017 and is no longer in operation. Business Oversight in July 2017 required SAFE-BIDCO to prepare plans to liquidate the business. On September 15, 2017, citing our April 2017 audit in part, Business Oversight issued an order taking possession of SAFE-BIDCO and appointing an agent to assist in liquidating the entity. Business Oversight noted in its order many of the same concerns we identified in our audit, including SAFE-BIDCO's operating losses, declining capital, and declining loan production. In particular, Business Oversight found that SAFE-BIDCO had no viable plan for improving its sustainability or protecting its creditors. Business Oversight's action to liquidate SAFE-BIDCO has effectively resolved the need for our recommendations.
60-Day Agency Response
FY2017/2018 budget has restricted all conference attendance.
- Completion Date: July 2017
- Response Date: June 2017
California State Auditor's Assessment of 60-Day Status: Partially Implemented
Although SAFE-BIDCO's fiscal year 2017-18 approved budget does reduce its travel budget, there is no formal limitation or restriction on out-of-state travel. The notes on the budget indicate that the travel budget assumes no conference travel and the chief executive officer confirmed that there was no discussion at the board meeting.
Agency responses received are posted verbatim.