Existing law establishes the California State Auditors Office, headed by the California State Auditor and under the direction of the Milton Marks Little Hoover Commission on California State Government Organization and Economy, with specified duties that include, among others, conducting financial and performance audits as directed by statute. Existing law requires that the California State Auditor be chosen without reference to party affiliation and solely on the ground of fitness to perform the duties of the office and that, prior to selection, the California State Auditor possess a combination of education and experience in auditing and management necessary to perform the duties of the office. Under existing law, the California State Auditor is appointed by the Governor from a list of 3 qualified individuals nominated by the Joint Legislative Audit Committee (JLAC) by a vote of at least a majority of the committee membership from each house of the Legislature.

This bill would require JLAC to select the 3 qualified individuals from a pool of candidates after conducting a comprehensive search for qualified individuals. The bill would require JLAC to provide notice in a prescribed manner that it is seeking applicants for nomination as California State Auditor. The bill would authorize members of the Legislature, individuals, and entities to submit names for consideration by JLAC.

Existing law establishes the California State Auditors Office, headed by the California State Auditor and under the direction of the Milton Marks Little Hoover Commission on California State Government Organization and Economy, with specified duties that include, among others, conducting financial and performance audits as directed by statute. Existing law requires that the California State Auditor be chosen without reference to party affiliation and solely on the ground of fitness to perform the duties of the office and that, prior to selection, the California State Auditor possess a combination of education and experience in auditing and management necessary to perform the duties of the office. Under existing law, the California State Auditor is appointed by the Governor from a list of 3 qualified individuals nominated by the Joint Legislative Audit Committee (JLAC) by a vote of at least a majority of the committee membership from each house of the Legislature.

This bill would require JLAC to select the 3 qualified individuals from a pool of candidates after conducting a comprehensive search for qualified individuals. The bill would require JLAC to provide notice in a prescribed manner that it is seeking applicants for nomination as California State Auditor. The bill would authorize members of the Legislature, individuals, and entities to submit names for consideration by JLAC.

Existing law establishes the California State Auditors Office, headed by the California State Auditor and under the direction of the Milton Marks Little Hoover Commission on California State Government Organization and Economy, with specified duties that include, among others, conducting financial and performance audits as directed by statute. Existing law requires that the California State Auditor be chosen without reference to party affiliation and solely on the ground of fitness to perform the duties of the office and that, prior to selection, the California State Auditor possess a combination of education and experience in auditing and management necessary to perform the duties of the office. Under existing law, the California State Auditor is appointed by the Governor from a list of 3 qualified individuals nominated by the Joint Legislative Audit Committee (JLAC) by a vote of at least a majority of the committee membership from each house of the Legislature.

This bill would require JLAC to select the 3 qualified individuals from a pool of candidates after conducting a comprehensive search for qualified individuals. The bill would require JLAC to provide notice in a prescribed manner that it is seeking applicants for nomination as California State Auditor. The bill would authorize members of the Legislature, individuals, and entities to submit names for consideration by JLAC.

 THIRD READING  

Bill No: AB 32

Author:

:

Vote:

SENATE GOVERNMENTAL ORG. COMMITTEE: 11-0, 7/11/17

AYES: Dodd, Berryhill, Bradford, Gaines, Galgiani, Glazer, Hill, Hueso, Mendoza, Portantino, Vidak

NO VOTE RECORDED: Cannella, Lara

ASSEMBLY FLOOR: 67-6, 5/22/17 - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST: This bill sets a recruitment process for California State Auditor (State Auditor) candidates by requiring the Joint Legislative Audit Committee (JLAC) to conduct a comprehensive search, as specified, before it selects three qualified individuals for the position of State Auditor. As is current law, the Governor would then appoint one of those individuals as the State Auditor.

ANALYSIS:

Existing law:

1. Establishes the California State Auditor’s Office headed by the State Auditor, with specified duties that include, among others, conducting financial and performance audits as directed by statute.
2. Provides that in order to be free of organizational impairments to independence, the State Auditor’s Office shall be independent of the executive branch and legislative control.
3. Requires the State Auditor to be appointed by the Governor from a list of three qualified individuals nominated by JLAC by a vote of at least a majority of JLAC’s membership from each house of the Legislature.
4. Provides that the term of any individual appointed as the State Auditor shall be four years.
5. Provides that the State Auditor shall be chosen without reference to party affiliation and solely on the ground of fitness to perform the duties of the Office.
6. Provides that prior to selection, the State Auditor shall possess a combination of education and experience in auditing and management necessary to perform the duties of the Office.

This bill:

1. Requires JLAC to conduct a comprehensive search before it selects three qualified individuals for the position of State Auditor.
2. Requires JLAC to provide at least 120 days’ notice that it is seeking applicants for nomination by providing notice in the Journals of the Senate and the Assembly and by advertising in appropriate newspapers and with nationally acknowledged professional journals and associations.
3. Provides that names for consideration by JLAC may be submitted by members of the Legislature, professional organizations, individuals, and other entities.
4. Specifies that the term of any individual appointed as the State Auditor shall be four years and any vacancy shall be filled in the same manner provided by the provisions of this bill.

Background

California State Auditor’s Office. The State Auditor’s Office is the state’s independent external auditor. Its goal is to provide independent, nonpartisan, accurate, and timely assessments of California’s financial and operational activities in compliance with generally accepted government auditing standards.

The State Auditor’s Office is the only state entity that is given full access by law to all records of state and local agencies, special districts, and school districts. It has the authority to perform financial, compliance, performance and contract audits. Any member of the Legislature can request the State Auditor to conduct an audit either through a request to JLAC or through legislation.

In addition, the State Auditor’s Office is also responsible for administering the California Whistleblower Protection Act (WPA). Under the WPA, the State Auditor has broad authority to perform independent investigations into complaints about state agencies or employees engaging in improper governmental activity.

Current selection process. Currently, the State Auditor is chosen every four years from a list of three qualified individuals nominated by JLAC. Current law does not specify the process by which those three individuals shall be nominated. However, the author’s office states that in the past it has been common practice for the sitting State Auditor to send three names, including the name of the sitting State Auditor, to JLAC which are then sent to the Governor for consideration. It should be noted that there is nothing in current law that prohibits JLAC from rejecting any of the names submitted by the State Auditor’s Office or anything that requires the State Auditor’s Office from being involved in the selection process.

Different states have different processes for selecting state auditors or the equivalent positions. Some state auditors are elected by popular vote while others are appointed, often by an audit committee of the legislature or the full legislature. Terms for the position generally vary between four and 10 years. However, many states have auditors with no set terms. Instead, they serve at the pleasure of the audit committee or the Legislature and can often be removed by a majority vote.

Comments

Purpose of the bill. According to the author’s office, “current law is unclear as to how JLAC should identify candidates for the nomination of the State Auditor. Further, there is no requirement for public notification that the committee is seeking applicants for the position. In the past, common practice has been for the sitting State Auditor to select three names to be submitted for the Governor’s consideration. This process lacks transparency and adequate opportunity for public participation.”

The author’s office argues that this bill “provides a transparent and ethical instruction to JLAC on how to seek qualified candidates for the position, bringing clarity and integrity to the process.”

Need for the bill. It is unclear what problem the bill is seeking to solve as there is nothing in current law that would prohibit JLAC from performing the type of process that is described in this bill. Even if the bill becomes law it is unclear if it would produce a different outcome.

As an example, during the most recent expiration of the State Auditor’s term, JLAC pursued a more comprehensive search for the position of State Auditor by advertising the position for possible candidates. After the search, JLAC submitted the name of the State Auditor as well as the names of two deputies to the Governor as it had done in the past. The Governor than reappointed the incumbent State Auditor.

Related/Prior Legislation

AB 31 (Rodriguez, 2017) requires the State Auditor to create a means for its employees to submit confidential allegations of improper governmental activities by employees of the State Auditor’s Office to an independent investigator. (Pending in the Senate Judiciary Committee)

SB 1395 (Rubio, Chapter 281, Statutes of 2012) renamed the Bureau of State Audits as the State Auditor’s Office.

AB 187 (Lara, Chapter 451, Statutes of 2011) authorized the State Auditor to establish a high-risk local government agency audit program to identify, audit, and issue reports on any local government agency.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT: (Verified 7/11/17)

None received

OPPOSITION: (Verified 7/11/17)

None received

ASSEMBLY FLOOR: 67-6, 5/22/17

AYES: Acosta, Aguiar-Curry, Arambula, Baker, Berman, Bloom, Bocanegra, Burke, Caballero, Calderon, Cervantes, Chau, Chávez, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Dababneh, Dahle, Daly, Flora, Fong, Frazier, Friedman, Cristina Garcia, Eduardo Garcia, Gipson, Gloria, Gomez, Gonzalez Fletcher, Grayson, Holden, Jones-Sawyer, Kalra, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Obernolte, O'Donnell, Quirk, Quirk-Silva, Reyes, Ridley-Thomas, Rodriguez, Rubio, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Voepel, Waldron, Weber, Wood, Rendon

NOES: Travis Allen, Brough, Eggman, Gray, Harper, Irwin

NO VOTE RECORDED: Bigelow, Bonta, Chen, Gallagher, Muratsuchi, Nazarian, Patterson

Prepared by:

7/12/17 8:47:38

**** END ****

SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION

Senator Bill Dodd

Chair

2017 - 2018 Regular

Bill No: 32 Hearing Date: 7/11/2017

SUBJECT: California State Auditor

DIGEST: This bill sets a recruitment process for California State Auditor (State Auditor) candidates by requiring the Joint Legislative Audit Committee (JLAC) to conduct a comprehensive search, as specified, before it selects three qualified individuals for the position of State Auditor. As is current law, the Governor would then appoint one of those individuals as the State Auditor.

ANALYSIS:

Existing law:

1. Establishes the California State Auditor’s Office headed by the State Auditor, with specified duties that include, among others, conducting financial and performance audits as directed by statute.
2. Provides that in order to be free of organizational impairments to independence, the State Auditor’s Office shall be independent of the executive branch and legislative control.
3. Requires the State Auditor to be appointed by the Governor from a list of three qualified individuals nominated by JLAC by a vote of at least a majority of JLAC’s membership from each house of the Legislature.
4. Provides that the term of any individual appointed as the State Auditor shall be four years.
5. Provides that the State Auditor shall be chosen without reference to party affiliation and solely on the ground of fitness to perform the duties of the Office.
6. Provides that prior to selection, the State Auditor shall possess a combination of education and experience in auditing and management necessary to perform the duties of the Office.

This bill:

1. Requires JLAC to conduct a comprehensive search before it selects three qualified individuals for the position of State Auditor.
2. Requires JLAC to provide at least 120 days’ notice that it is seeking applicants for nomination by providing notice in the Journals of the Senate and the Assembly and by advertising in appropriate newspapers and with nationally acknowledged professional journals and associations.
3. Provides that names for consideration by JLAC may be submitted by members of the Legislature, professional organizations, individuals, and other entities.
4. Specifies that the term of any individual appointed as the State Auditor shall be four years and any vacancy shall be filled in the same manner provided by the provisions of this bill.

Background

Purpose of the bill. According to the author’s office, “current law is unclear as to how JLAC should identify candidates for the nomination of the State Auditor. Further, there is no requirement for public notification that the committee is seeking applicants for the position. In the past, common practice has been for the sitting State Auditor to select three names to be submitted for the Governor’s consideration. This process lacks transparency and adequate opportunity for public participation.”

The author’s office argues that this bill “provides a transparent and ethical instruction to JLAC on how to seek qualified candidates for the position, bringing clarity and integrity to the process.”

California State Auditor’s Office. The State Auditor’s Office is the State’s independent external auditor. Its goal is to provide independent, nonpartisan, accurate, and timely assessments of California’s financial and operational activities in compliance with generally accepted government auditing standards.

The State Auditor’s Office is the only state entity that is given full access by law to all records of state and local agencies, special districts, and school districts. It has the authority to perform financial, compliance, performance and contract audits. Any member of the Legislature can request the State Auditor to conduct an audit either through a request to JLAC or through legislation.

In addition, the State Auditor’s Office is also responsible for administering the California Whistleblower Protection Act (WPA). Under the WPA, the State Auditor has broad authority to perform independent investigations into complaints about state agencies or employees engaging in improper governmental activity.

Current selection process. Currently, the State Auditor is chosen every four years from a list of three qualified individuals nominated by JLAC. Current law does not specify the process by which those three individuals shall be nominated. However, the author’s office states that in the past it has been common practice for the sitting State Auditor to send three names, including the name of the sitting State Auditor, to JLAC which are then sent to the Governor for consideration. It should be noted that there is nothing in current law that prohibits JLAC from rejecting any of the names submitted by the State Auditor’s Office or anything that requires the State Auditor’s Office from being involved in the selection process.

Different states have different processes for selecting state auditors or the equivalent positions. Some state auditors are elected by popular vote while others are appointed, often by an audit committee of the legislature or the full legislature. Terms for the position generally vary between four and 10 years. However, many states have auditors with no set terms. Instead, they serve at the pleasure of the audit committee or the Legislature and can often be removed by a majority vote.

Policy considerations. It is unclear what problem the bill is seeking to solve as there is nothing in current law that would prohibit JLAC from performing the type of process that is described in this bill. Even if the bill becomes law it is unclear if it would produce a different outcome.

As an example, during the most recent expiration of the State Auditor’s term, JLAC pursued a more comprehensive search for the position of State Auditor by advertising the position for possible candidates. After the search, JLAC submitted the name of the State Auditor as well as the names of two deputies to the Governor as it had done in the past. The Governor than reappointed the incumbent State Auditor.

Prior/Related Legislation

AB 31 (Rodriguez, 2017) would require the State auditor to create a means for its employees to submit confidential allegations of improper governmental activities by employees of the State Auditor’s Office to an independent investigator. (Pending in Senate Judiciary Committee)

SB 1395 (Rubio, Chapter 281, Statutes of 2012) renamed the Bureau of State Audits as the State Auditor’s Office.

AB 187 (Lara, Chapter 451, Statutes of 2011) authorized the State Auditor to establish a high-risk local government agency audit program to identify, audit, and issue reports on any local government agency.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT:

None received

OPPOSITION:

None received

ASSEMBLY THIRD READING

ATR Bill Id:AB 32

Author:(Rodriguez)

As Introduced Ver:December 5, 2016

Majority vote

SUMMARY: Sets a recruitment process for California State Auditor (State Auditor) candidates. Specifically, this bill:

1. Requires the Joint Legislative Audit Committee (JLAC) to conduct a comprehensive search for qualified candidates.
2. Sets notice and advertising requirements for the State Auditor position.
3. Allows entities and individuals to submit candidates' names to JLAC.

EXISTING LAW:

1. Specifies that the Governor shall appoint the State Auditor from a list of three qualified individuals nominated by JLAC.
2. Specifies that the nomination of the three individuals requires a vote of at least a majority of JLAC members from each house of the Legislature.
3. Sets a four-year term for the State Auditor position.
4. Specifies that the State Auditor should be chosen without reference to party affiliation and solely on the ground of fitness to perform the duties of the office.

FISCAL EFFECT: Unknown. This bill is keyed non-fiscal by the Legislative Counsel.

COMMENTS: This bill requires JLAC, when nominating candidates for State Auditor, to conduct a comprehensive search. It specifies that JLAC must provide at least 120 days' notice when seeking applicants by announcing the opportunity in the journals of the Assembly and Senate, and advertising in appropriate newspapers and with nationally acknowledged professional journals and associations. Additionally, it allows members of the Legislature, professional organizations, other entities, and individuals to submit names for consideration to JLAC.

While existing law references JLAC nominating "three qualified individuals" for the Governor's consideration, it does not specify how the individuals should be chosen. According to the author, that direction is needed in light of how the nomination process has occurred in past years.

Previously, the State Auditor's Office has submitted the names of three individuals to JLAC and committee members have voted to nominate those candidates. Since this or other practices are not explicitly required by existing law, the process can be changed at the discretion of JLAC. In fact, while the author was Chair of JLAC last year, the committee advertised for the State Auditor position and interviewed potential candidates.

The author explains that future nominations should be conducted openly. "Current law does not specify a nomination procedure for the California State Auditor. This measure provides clear instruction to the Joint Legislative Audit Committee on how to seek qualified candidates for the position, bringing clarity and integrity to the process," he states.

Different states have different processes for selecting state auditors or the equivalent positions. Some state auditors are elected by popular vote while others are appointed, often by an audit committee of the legislature or the full legislature. Terms for the position generally vary between four and 10 years. However, many states have auditors with no set terms. Instead, they serve at the pleasure of the audit committee or the Legislature and can often be removed by a majority vote.

While the eligibility requirements like education, experience, or professional certifications are often set in state statutes, the selection of potential nominees is generally left to the discretion of the audit committee. A review of states with the greatest populations found that statutes did not usually specify how legislative bodies should conduct state auditor recruitments. The one exception, Illinois, includes some statutory requirements with limited guidance by stating that its joint legislative audit commission "shall diligently search out qualified candidates."

Should this bill move forward, the author may want to consider if the recruitment process as specified in this bill should be used when a current State Auditor is in office or only when the position becomes vacant. Additionally, the author may want to review other areas surrounding the appointment, including the appropriateness of the term length and method that requires JLAC to submit three names to the Governor.

Analysis Prepared by: Scott Herbstman / A. & A.R. / (916) 319-3600 FN: 0000180

Date of Hearing: April 26, 2017

ASSEMBLY COMMITTEE ON ACCOUNTABILITY AND ADMINISTRATIVE REVIEW

Susan Talamantes Eggman, Chair

ABPCA Bill Id:AB 32 (

Author:Rodriguez) – As Introduced Ver:December 5, 2016

SUBJECT: California State Auditor

SUMMARY: Sets a recruitment process for California State Auditor (State Auditor) candidates. Specifically, this bill:

1. Requires the Joint Legislative Audit Committee (JLAC) to conduct a comprehensive search for qualified candidates.
2. Sets notice and advertising requirements for the State Auditor position.
3. Allows entities and individuals to submit candidates' names to JLAC.

EXISTING LAW:

1. Specifies that the Governor shall appoint the State Auditor from a list of three qualified individuals nominated by JLAC.
2. Specifies that the nomination of the three individuals requires a vote of at least a majority of JLAC members from each house of the Legislature.
3. Sets a four-year term for the State Auditor position.
4. Specifies that the State Auditor should be chosen without reference to party affiliation and solely on the ground of fitness to perform the duties of the office.

FISCAL EFFECT: Unknown, this bill is keyed non-fiscal by the Legislative Counsel.

COMMENTS: This bill requires JLAC, when nominating candidates for State Auditor, to conduct a comprehensive search. It specifies that JLAC must provide at least 120 days' notice when seeking applicants by announcing the opportunity in the journals of the Assembly and Senate, and advertising in appropriate newspapers and with nationally acknowledged professional journals and associations. Additionally, it allows members of the Legislature, professional organizations, other entities, and individuals to submit names for consideration to JLAC.

While existing law references JLAC nominating "three qualified individuals" for the Governor's consideration, it does not specify how the individuals should be chosen. According to the author, that direction is needed in light of how the nomination process has occurred in past years.

Previously, the State Auditor's Office has submitted the names of three individuals to JLAC and committee members have voted to nominate those candidates. Since this or other practices are not explicitly required by existing law, the process can be changed at the discretion of JLAC. In fact, while the author was Chair of JLAC last year, the committee advertised for the State Auditor position and interviewed potential candidates.

The author explains that future nominations should be conducted openly. "Current law does not specify a nomination procedure for the California State Auditor. This measure provides clear instruction to the Joint Legislative Audit Committee on how to seek qualified candidates for the position, bringing clarity and integrity to the process," he states.

Different states have different processes for selecting state auditors or the equivalent positions. Some state auditors are elected by popular vote while others are appointed, often by an audit committee of the legislature or the full legislature. Terms for the position generally vary between four and 10 years. However, many states have auditors with no set terms. Instead, they serve at the pleasure of the audit committee or the Legislature and can often be removed by a majority vote.

While the eligibility requirements like education, experience, or professional certifications are often set in state statutes, the selection of potential nominees is generally left to the discretion of the audit committee. A review of states with the greatest populations found that statutes did not usually specify how legislative bodies should conduct state auditor recruitments. The one exception, Illinois, includes some statutory requirements with limited guidance by stating that its joint legislative audit commission "shall diligently search out qualified candidates."

Should this bill move forward, the author may want to consider if the recruitment process as specified in this bill should be used when a current State Auditor is in office or only when the position becomes vacant. Additionally, the author may want to review other areas surrounding the appointment, including the appropriateness of the term length and method that requires JLAC to submit three names to the Governor.

REGISTERED SUPPORT / OPPOSITION:

Support

None on file.

Opposition

None on file.

Analysis Prepared by: Scott Herbstman / A. & A.R. /