Existing law, on order of the Governor, requires the head of each state agency to make a report to the Governor giving an account of all matters pertaining to the agency during the period specified by the Governor.

This bill would require each state agency or department authorized to undertake any infrastructure project costing $100,000,000 or more to publicly post on its Internet Web site any change in the cost or schedule of the project that would result in the project exceeding its established budget by 10 percent or more or being delayed by 12 months or longer. The bill would require that the posted information describe how much the project is expected to exceed its established budget or delay its construction schedule.

Existing law, on order of the Governor, requires the head of each state agency to make a report to the Governor giving an account of all matters pertaining to the agency during the period specified by the Governor.

This bill would require each state agency or department authorized to undertake any infrastructure project costing $100,000,000 or more to publicly post on its Internet Web site any change in the cost or schedule of the project that would result in the project exceeding its established budget by 10 percent or more or being delayed by 12 months or longer. The bill would require that the posted information describe how much the project is expected to exceed its established budget or delay its construction schedule.

Existing law, on order of the Governor, requires the head of each state agency to make a report to the Governor giving an account of all matters pertaining to the agency during the period specified by the Governor.

This bill would require each state agency or department authorized to undertake large and complex any infrastructure projects project costing $100,000,000 or more to develop and implement a policy for publicly reporting any significant post on its Internet Web site any change in the cost or schedule of a large and complex infrastructure the project that would result in the project exceeding its projected established budget by 10 percent or more or being delayed by 12 months or longer. The bill would require that the report include documentation and an explanation justifying a decision to proceed with the large and complex infrastructure project. The bill would also require the policy to require that the state agency or department provide a copy of this report to each appropriate policy committee of the Legislature. posted information describe how much the project is expected to exceed its established budget or delay its construction schedule.

Existing law, on order of the Governor, requires the head of each state agency to make a report to the Governor giving an account of all matters pertaining to the agency during the period specified by the Governor.

This bill would require each state agency or department authorized to undertake large and complex infrastructure projects to develop and implement a policy for publicly reporting any significant change in the cost or schedule of a large and complex infrastructure project that would result in the project exceeding its projected budget by 10 percent or more or being delayed by 12 months or longer. The bill would require that the report include documentation and an explanation justifying a decision to proceed with the large and complex infrastructure project. The bill would also require the policy to require that the state agency or department provide a copy of this report to each appropriate policy committee of the Legislature.

 THIRD READING  

Bill No: AB 2543

Author:

:

Vote:

SENATE GOVERNMENTAL ORG. COMMITTEE: 10-0, 6/12/18

AYES: Dodd, Wilk, Cannella, Gaines, Galgiani, Glazer, Hill, Hueso, Portantino, Vidak

NO VOTE RECORDED: Bradford, Lara

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 74-0, 4/26/18 - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST:

This bill requires each state agency or department authorized to undertake any infrastructure project costing $100 million or more to post on its Internet Web site any change in the cost or schedule of the project that will result in the project exceeding its established budget by 10 percent or more, or being delayed 12 months or longer.

ANALYSIS:

Existing law:

1. Requires the head of each state agency, on order of the Governor, to make a report to the Governor giving an account of all matters pertaining to the agency covering the period specified by the Governor.
2. Establishes the State Public Works Board (PWB) consisting of the Director of the Department of Finance, the Director of the Department of Transportation, and the Director of the Department of General Services.
3. Authorizes the PWB to augment a major project up to 20 percent of the total of the capital outlay appropriations for the project.
4. Requires that augmentations in excess of 10 percent of the amount appropriated for each capital outlay project be reported to the Chairperson of the Joint Legislative Budget Committee, or his or her designee, 20 days prior to board approval.
5. Defines “state agency” to mean every state office, officer, department, division, bureau, board, and commission. A “state agency” does not include the California State University.

This bill:

1. Requires each state agency or department authorized to undertake any infrastructure project costing $100 million or more to publicly post on its Internet Web site any change in the cost or schedule of the project that would result in the project exceeding its established budget by 10% or more, or in delaying its completion by 12 months or longer.
2. Specifies that the posted information must describe how much the project is expected to exceed its established budget or delay its construction schedule.

Comments

In support of this bill, the author cites an October 2017 audit of the California WaterFix Project (WaterFix) by the California State Auditor. According to its Internet Web site, WaterFix is a “science-driven upgrade to our aging water system. It will provide clean, reliable water while protecting our environment.”

The audit found that the unexpected complexity of WaterFix, an infrastructure project managed by the Department of Water Resources (DWR) to restore the Sacramento-San Joaquin Delta and improve water reliability, had resulted in significant cost increases and delays. In March 2009, DWR estimated the initial budget for these activities to be $140 million. In 2012, DWR signed agreements with water contractors for supplemental funding of $100 million to pay the “actual” remaining costs of the planning phase. According to the audit, as of June 2017, the planning phase cost had reached approximately $280 million.

Further, the audit recommended that the Legislature require state agencies to publicly report significant changes in the cost or schedule of large and complex infrastructure projects. This bill incorporates that recommendation from the audit, and specifically requires state agencies and departments that undertake any infrastructure project costing $100 million or more to post on their Internet Web sites any change in the cost or schedule of the project that would result in the project exceeding its established budget by 10% or more, or in delaying its completion by 12 months or longer. The posted information would be required to describe by how much the project is expected to exceed its established budget or delay its construction.

Related/Prior Legislation

AB 2198 (Obernolte, 2018) expands the type of expenditure data that is required to be available on the Financial Information System for California’s Internet Web site to include special funds. (Pending on the Senate Floor)

SB 921 (Morrell, 2018) would have required any state agency that maintains or operates its own Internet Web site to post specified information regarding the number of persons it employs and its total authorized budget amount on its homepage. (Failed passage in the Senate Governmental Organization Committee)

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT: (Verified 7/2/18)

None received

OPPOSITION: (Verified 7/2/18)

Alameda County Water District

Antelope Valley-East Kern Water Agency

Coachella Valley Water District

Crestline-Lake Arrowhead Water Agency

Cucamonga Valley Water District

Desert Water Agency

Eastern Municipal Water District

Las Virgenes Municipal Water District

Metropolitan Water District of Southern California

Mojave Water Agency

Orange County Business Council

Rancho California Water District

San Bernardino Valley Municipal Water District

San Gorgonio Pass Water Agency

Santa Clarita Valley Water Agency

Three Valleys Municipal Water District

Western Municipal Water District

Westlands Water District

ARGUMENTS IN SUPPORT: According to the author, “this bill provides necessary scrutiny to ensure major state infrastructure projects are undertaken with full transparency and accountability.”

ARGUMENTS IN OPPOSITION: In opposition to this bill, the above listed water agencies collectively write that “[t]here is overwhelming evidence that California needs to invest in its future by improving its road, education and water systems, to name a few, and faces court oversight relating to prison conditions and population levels. A far greater level of investment is necessary and should not be subject to AB 2543’s unnecessary and new reporting requirements. The measure would not improve state management of important projects and only adds new costs, more paperwork and possibly, more litigation over any perceived non-compliance.”

Further, the water agencies claim that the “backgrounder on Assembly Member Eggman’s bill centers on a single project, the state-federal effort known as California WaterFix. Ironically, no state funds are to be expended for the construction of California WaterFix, while construction is to be managed by agencies other than the state. And in October 2017, the State Auditor found that DWR did not use any General Fund money to fund the planning and design for the project. AB 2543 will not result in any change in how state dollars are managed for California WaterFix since no state funds are involved in the first place.”

ASSEMBLY FLOOR: 74-0, 4/26/18

AYES: Acosta, Aguiar-Curry, Arambula, Baker, Berman, Bigelow, Bloom, Bonta, Brough, Burke, Caballero, Calderon, Carrillo, Cervantes, Chau, Chávez, Chen, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Dahle, Daly, Eggman, Flora, Frazier, Friedman, Gallagher, Eduardo Garcia, Gipson, Gloria, Gonzalez Fletcher, Gray, Grayson, Harper, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Muratsuchi, Nazarian, Obernolte, O'Donnell, Patterson, Quirk, Quirk-Silva, Reyes, Rubio, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Voepel, Waldron, Weber, Wood, Rendon

NO VOTE RECORDED: Travis Allen, Fong, Cristina Garcia, Rodriguez

Prepared by:

7/3/18 15:23:09

**** END ****

SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION

Senator Bill Dodd

Chair

2017 - 2018 Regular

Bill No: AB Hearing Date: 6/12/2018

SUBJECT:

DIGEST: This bill requires each state agency or department authorized to undertake any infrastructure project costing $100 million or more to post on its Internet Web site any change in the cost or schedule of the project that will result in the project exceeding its established budget by 10 percent or more, or being delayed 12 months or longer.

ANALYSIS:

Existing law:

1. Requires the head of each state agency, on order of the Governor, to make a report to the Governor giving an account of all matters pertaining to the agency covering the period specified by the Governor.
2. Establishes the State Public Works Board (PWB) consisting of the Director of Finance, the Director of Transportation, and the Director of General Services.
3. Authorizes the PWB to augment a major project up to 20 percent of the total of the capital outlay appropriations for the project.
4. Requires that augmentations in excess of 10 percent of the amount appropriated for each capital outlay project be reported to the Chairperson of the joint Legislative Budget Committee, or his or her designee, 20 days prior to board approval.
5. Defines “state agency” to mean every state office, officer, department, division, bureau, board, and commission. A “state agency” does not include the California State University.

This bill:

1. Requires each state agency or department authorized to undertake any infrastructure project costing $100 million or more to publicly post on its Internet Web site any change in the cost or schedule of the project that would result in the project exceeding its established budget by 10% or more, or in delaying its completion by 12 months or longer.
2. Specifies that the posted information must describe how much the project is expected to exceed its established budget or delay its construction schedule.

Background

Purpose of the bill. According to the author, “this bill provides necessary scrutiny to ensure major state infrastructure projects are undertaken with full transparency and accountability.”

In support of this bill, the author cites an October 2017 audit of the California WaterFix Project (WaterFix) by the California State Auditor. According to its Internet Web site, WaterFix is a “science-driven upgrade to our aging water system. It will provide clean, reliable water while protecting our environment.”

The audit found that the unexpected complexity of WaterFix, an infrastructure project managed by the Department of Water Resources (DWR) to restore the Sacramento-San Joaquin Delta and improve water reliability, had resulted in significant cost increases and delays. In March 2009, DWR estimated the initial budget for these activities to be $140 million. In 2012, DWR signed agreements with water contractors for supplemental funding of $100 million to pay the “actual” remaining costs of the planning phase. According to the audit, as of June 2017, the planning phase cost had reached approximately $280 million.

Further, the audit recommended that the Legislature require state agencies to publicly report significant changes in the cost or schedule of large and complex infrastructure projects. This bill incorporates that recommendation from the audit, and specifically requires state agencies and departments that undertake any infrastructure project costing $100 million or more to post on their Internet Web sites any change in the cost or schedule of the project that would result in the project exceeding its established budget by 10% or more, or in delaying its completion by 12 months or longer. The posted information would be required to describe by how much the project is expected to exceed its established budget or delay its construction.

Prior/Related Legislation

AB 2198 (Obernolte, 2018) expands the type of expenditure data that is required to be available on the Financial Information System for California’s Internet Web site to include special funds. (Pending in the Senate Governmental Organization Committee)

SB 921 (Morrell, 2018) requires any state agency that maintains or operates its own Internet Web site to post specified information regarding the number of persons it employs and its total authorized budget amount on its homepage. (Failed passage in the Senate Governmental Organization Committee)

SB 1251 (Moorlach, 2016) would have established the California Transparency Act of 2016 and would have required the Legislative Analyst’s Office to create and maintain separate and dedicated Internet Web sites that list specific state financial obligations. (Failed passage in the Senate Public Employment and Retirement Committee)

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT:

None received

OPPOSITION:

Alameda County Water District

Antelope Valley-East Kern Water Agency

Coachella Valley Water District

Crestline-Lake Arrowhead Water Agency

Cucamonga Valley Water District

Desert Water Agency

Eastern Municipal Water District

Las Virgenes Municipal Water District

Metropolitan Water District of Southern California

Mojave Water Agency

Orange County Business Council

Rancho California Water District

San Bernardino Valley Municipal Water District

San Gorgonio Pass Water Agency

Santa Clarita Valley Water Agency

Three Valleys Municipal Water District

Western Municipal Water District

Westlands Water District

ARGUMENTS IN OPPOSITION: In opposition to this bill, the above listed water agencies collectively write that “[t]here is overwhelming evidence that California needs to invest in its future by improving its road, education and water systems, to name a few, and faces court oversight relating to prison conditions and population levels. A far greater level of investment is necessary and should not be subject to AB 2543’s unnecessary and new reporting requirements. The measure would not improve state management of important projects and only adds new costs, more paperwork and possibly, more litigation over any perceived non-compliance.”

Further, the water agencies claim that the “backgrounder on Assembly Member Eggman’s bill centers on a single project, the state-federal effort known as California WaterFix. Ironically, no state funds are to be expended for the construction of California WaterFix, while construction is to be managed by agencies other than the state. And in October 2017, the State Auditor found that DWR did not use any General Fund money to fund the planning and design for the project. AB 2543 will not result in any change in how state dollars are managed for California WaterFix since no state funds are involved in the first place.”

ASSEMBLY THIRD READING

ATR Bill Id:AB 2543

Author:(Eggman)

As Amended Ver:March 13, 2018

Majority vote

SUMMARY: Directs state agencies and departments to post specified information about changes in the cost or schedule of large infrastructure projects on their websites. Specifically, this bill:

1. Requires each state agency or department authorized to undertake any infrastructure project costing $100 million or more to publicly post on its Internet Web site any change in the cost or schedule of the project that would result in the project exceeding its established budget by 10% or more or in delaying its completion by 12 months or longer.
2. Specifies that the posted information must describe how much the project is expected to exceed its established budget or delay its construction schedule.

EXISTING LAW establishes reporting requirements relating to cost augmentations and scope changes for capital outlay projects undertaken by state agencies. Specifically, the state Public Works Board (PWB) is authorized to augment the budget of a major capital outlay project by up to 20%, provided that the augmentation is reported to the Chair of the Joint Legislative Budget Committee (JLBC) 20 days prior to the PWB's approval of the augmentation. The PWB must also report scope changes to the JLBC and respective fiscal committee of the Legislature 20 days prior to the PWB's recognition of the scope change. However, there are no specific statutory reporting requirements for scheduling changes. [Government Code Section 13332.11]

FISCAL EFFECT: According to the Assembly Appropriations Committee, minor to negligible costs to affected state agencies and departments. Specific departments indicated the following:

1. Minor costs of approximately $30,000 (General Fund) to the Department of Water Resources (DWR) for staff time to track and report the required information and maintain website updates.
2. Minor and absorbable costs to the Department of General Services (DGS) to create and maintain a page on its website.
3. Negligible costs to California Department of Corrections and Rehabilitation (CDCR). They indicate the requirements in this bill are duplicative of existing Penal Code requirements for CDCR.

COMMENTS: This bill requires state entities to publicly post information when changes in the cost or schedule of large infrastructure projects would result in cost overruns of 10% or more or schedule delays of one year or longer.

The author cites an October 2017 audit of the California WaterFix Project (WaterFix) by the California State Auditor as evidence of the need for this bill. The audit found that the unexpected complexity of WaterFix, an infrastructure project managed by the Department of Water Resources, had resulted in significant cost increases and delays. The audit noted that the costs and timeline of the planning phase alone increased significantly due to the scale of the project, and, as of June 2017, had reached approximately $280 million.

This bill incorporates a recommendation from the audit. Specifically, it requires state entities that undertake any infrastructure project costing $100 million or more to post on their websites any change in the cost or schedule of the project that would result in the project exceeding its established budget by 10% or more or in delaying its completion by 12 months or longer. The posted information would be required to describe how much the project is expected to exceed its established budget or delay its construction.

According to the author, this bill provides necessary scrutiny to ensure major state infrastructure projects are undertaken with full transparency and accountability.

Local water agencies, although not directly affected by this bill, object to it because they believe the state has adequate oversight authority through the annual budget process and the public has adequate access to information through agency websites and public records requests.

Analysis Prepared by: Cassie Royce / A. & A.R. / (916) 319-3600 FN: 0002740

Date of Hearing: April 18, 2018

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

ABPCA Bill Id:AB 2543

Author:(Eggman) – As Amended Ver:March 13, 2018

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill requires state agencies and departments to post on their websites specified information about changes in the cost or schedule of large infrastructure projects. Specifically, this bill:

1. Requires each state agency or department authorized to undertake any infrastructure project costing $100 million or more to publicly post on its internet website any change in the cost or schedule of the project that would result in the project exceeding its established budget by 10% or more or in delaying its completion by 12 months or longer.
2. Requires the posted information to describe how much the project is expected to exceed its established budget or delay its construction schedule.

FISCAL EFFECT:

Minor to negligible costs to affected state agencies and departments. Specific departments indicated the following:

1. Minor costs of approximately $30,000 (GF) to the Department of Water Resources (DWR) for staff time to track and report the required information and maintain website updates.
2. Minor and absorbable costs to the Department of General Services (DGS) to create and maintain a page on its website.
3. Negligible costs to California Department of Corrections and Rehabilitation (CDCR). They indicate the requirements in this bill are duplicative of existing Penal Code requirements for CDCR.

COMMENTS:

1. Purpose. According to the author, this bill provides necessary scrutiny to ensure major state infrastructure projects are undertaken with full transparency and accountability.
2. Background. The State Public Works Board (PWB) was created by the Legislature to oversee the fiscal matters associated with construction of projects for state agencies and to select and acquire real property for state facilities and programs. The PWB is authorized to augment the budget of a major capital outlay project by up to 20%, provided that the augmentation is reported to the Chair of the Joint Legislative Budget Committee (JLBC) 20 days prior to the PWB’s approval of the augmentation.  The PWB must also report scope changes to the JLBC and respective fiscal committee of the Legislature 20 days prior to the PWB’s recognition of the scope change. There are no specific statutory reporting requirements for scheduling changes.

In October 2017, the California State Auditor released an audit of the California WaterFix Project (WaterFix). The audit found that the unexpected complexity of WaterFix, an infrastructure project managed by the Department of Water Resources (DWR), had resulted in significant cost increases and delays. The audit noted that the costs and timeline of the planning phase alone increased significantly due to the scale of the project. The auditor recommended generally that the Legislature require state agencies to publicly report significant changes in the cost or schedule of such projects if they are expected to exceed their established budgets by 10% or schedules by 12 months. This bill implements that recommendation.

1. Opposition. Local water agencies, although not directly affected by the bill, are opposed to the bill because they believe the state has adequate oversight authority through the annual budget process and the public has adequate access to information through agency websites and public records requests.

Analysis Prepared by: Jennifer Swenson / APPR. / (916) 319-2081

Date of Hearing: March 21, 2018

ASSEMBLY COMMITTEE ON ACCOUNTABILITY AND ADMINISTRATIVE REVIEW

Susan Talamantes Eggman, Chair

ABPCA Bill Id:AB 2543 (

Author:Eggman) – As Amended Ver:March 13, 2018

SUBJECT: State agencies: infrastructure project budget and schedule: Internet Web site information

SUMMARY: Directs state agencies and departments to post specified information about changes in the cost or schedule of large infrastructure projects on their websites. Specifically, this bill:

1. Requires each state agency or department authorized to undertake any infrastructure project costing $100 million or more to publicly post on its Internet Web site any change in the cost or schedule of the project that would result in the project exceeding its established budget by 10% or more or in delaying its completion by 12 months or longer.
2. Specifies that the posted information must describe how much the project is expected to exceed its established budget or delay its construction schedule.

EXISTING LAW establishes reporting requirements relating to cost augmentations and scope changes for capital outlay projects undertaken by state agencies. Specifically, the state Public Works Board is authorized to augment the budget of a major capital outlay project by up to 20%, provided that the augmentation is reported to the Chair of the Joint Legislative Budget Committee (JLBC) 20 days prior to the PWB’s approval of the augmentation.  The PWB must also report scope changes to the JLBC and respective fiscal committee of the Legislature 20 days prior to the PWB’s recognition of the scope change. However, there are no specific statutory reporting requirements for scheduling changes. [Government Code Section 13332.11]

FISCAL EFFECT: Unknown

COMMENTS: This bill requires state entities to publicly post information when changes in the cost or schedule of large infrastructure projects would result in cost overruns of 10% or more or schedule delays of one year or longer.

The author cites an October 2017 audit of the California WaterFix Project (WaterFix) by the California State Auditor as evidence of the need for this bill. The audit found that the unexpected complexity of WaterFix, an infrastructure project managed by the Department of Water Resources, had resulted in significant cost increases and delays. The audit noted that the costs and timeline of the planning phase alone increased significantly due to the scale of the project, and, as of June 2017, had reached approximately $280 million.

This bill incorporates a recommendation from the audit. Specifically, it requires state entities that undertake any infrastructure project costing $100 million or more to post on their websites any change in the cost or schedule of the project that would result in the project exceeding its established budget by 10% or more or in delaying its completion by 12 months or longer. The posted information would be required to describe how much the project is expected to exceed its established budget or delay its construction.

According to the author, this bill provides necessary scrutiny to ensure major state infrastructure projects are undertaken with full transparency and accountability.

REGISTERED SUPPORT / OPPOSITION:

Support

None on file.

Opposition

None on file.

Analysis Prepared by: Cassie Royce / A. & A.R. / (916) 319-3600