Joint Legislative Audit

All right. Good morning everyone. We're going to start off on our Joint Legislative Audit Committee. We obviously do not have enough Members here to start with a quorum, but this is our Committee's first hearing of the session and we are going to hear new audits.

I know everyone's very busy, and I do want to keep this on schedule. Quickly note, I don't think anyone would do this, but in order to facilitate today's hearing, we will not permit or conduct any disruptions, disturbances, otherwise anything that impedes today's hearings. With that said, I want to thank everyone for being here today.

We look forward to a productive meeting. Want to quickly announce that our Committee will be holding an oversight hearing on July 15th regarding the conditional release program for sexually violent predators.

I hope all of us, all of us Committee Members and anyone in the public will attend. Like to take a point of privilege to quickly congratulate our State Auditor, Mr. Grant Parks in his office on being awarded a Certificate of Impact by the National Conference of State Legislatures.

This award was based on an audit of the community college transfer process and was requested by prior Committee Chair, Assemblymember Alvarez. Congratulate—congratulations—Mr. State Auditor. Let's give you a round of applause. Very well deserved. And with that, Mr. State Auditor, we're going to hand it over to you for your status report.

Thank you very much, Chairman Harabedian, Vice Chairman Laird, Members of the Committee. It's a pleasure to be with you this morning to represent the dedicated and hardworking staff of the State Auditor's Office.

Before we discuss the proposed audit requests on today's agenda, I'd like to provide the Committee with an overview of my office's current work in progress, our audit staffing levels, and our audit bandwidth to take on additional performance audit work for the Committee.

My office's capacity to start audits is primarily driven by the number of Audit Supervisors we have available to manage the day to day activities of our audit work. My office has a total of 14 Audit Supervisors available for performance audits.

So, in other words, my office has a capacity to manage up to 14 of these audits at a single time, which necessarily includes both statutorily required audits, as well as audits approved by this Committee. In your materials for today's hearing, you'll see 14 JLAC and statutory performance audits listed as our work in progress.

There are no JLAC performance audits currently awaiting staffing and we are planning to release six audits this summer, starting with our release of the Twin Rivers Highlands Charter Audit on June 24th. And we'll be releasing another four audits this fall.

I'll also note that of the work we have in progress, two of the 14 audits listed in your materials are audits that do not currently impact our audit staffing. The first is the Huntington Beach Air Show Audit, which was requested by former Senator Min, which is currently on hold, pending litigation.

The Office of Legislative Counsel is currently representing us in that matter.

And the second performance audit not involving staff from my office, is actually an audit being conducted at the moment by KPMG, under my state's—my office's State High Risk Program. California has experienced several years of late financial reporting in its ACFR, and last year, the state issued its fiscal year '22-'23 financial statements in December 2024, or 18 months after the end of the fiscal year and nine months later than what is expected under federal single audit requirements.

And so, obviously, putting together the state's financial statements is a is a large undertaking by several state agencies.

So, I've tasked KPMG to independently evaluate not only the Controller's Office but my own office, in terms of how we're managing the act for audit to ensure that every key agency and Department is maximizing opportunities to improve the timeliness of the state's financial reporting, and we expect to publish that high risk report this coming winter.

At today's hearing, the Committee will consider 13 audit requests.

We have the capacity to start all of them on a staggered basis, between this coming July through March of next year, and the forecasted timing of those audit starts would be one audit starting in July, two in August, one in September, one in November, two in December, three in January, one in February, and two in March.

The cause for these staggered starts is a combination of the timing of when our current audit work is scheduled to conclude and the need to start other statutory work already authorized by the Legislature.

For example, of the six audit teams coming free this summer, three of them will need to transition to statutory audit work, including our third annual audit of the Department of Cannabis Control under their Local Jurisdiction Grant Program, another fiscal monitoring review, and will be conducting a performance audit of the UC and CSU system regarding their sexual harassment prevention efforts.

And as we move into the winter, my office also needs to set aside additional resources for our fourth audit of the University of California's compliance with NAGPRA. Increasing my office's staffing, in particularly increasing the number of audit supervisors I have to manage audits, continues to be an area of focus.

We're up to a total of over 170 employees at the moment. We're looking to hire an additional 20 to 30 auditors this year, as well as four to six more team leaders, which should hopefully increase our audit capacity to produce an additional six to nine performance audits a year. And so, with that, Mr. Chairman, I'd be happy to answer any questions the Committee may have.

Thank you. Mr. Auditor, I appreciate the overview and all the updates. And I just want to take a moment to welcome my Vice Chair, Senator Laird. Senator Laird, any introductory comments before we proceed?

Thank you. And congratulations as well. I would just make one overall comment about today's agenda. One of the things that seemed to be true with some of the audits is there's possibly another process going on to examine exactly what is being examined by some of the audits.

And so, I just think that's going to—that's going to come up in some of the individual audits. I just wanted to note it at the outset. Thank you, Mr. Chair.

Thank you, Mr. Vice Chair. And we will now move on. I'll just give a brief overview of the process, of how we actually entertain audit requests and how this meeting will proceed. First of all, thank you to my colleagues who are here to present. They are timely. They got here with the sunrise, I heard.

So, this is, this is unique and just for people in the public and at home, Senators Wahab, Seyarto, Archuleta, and Assemblymember Gonzalez, kudos to you. You get the gold medal for being on time. For the audit requests that we are going to be considering today, we will follow the Audit Committee's established format with the Members presenting their audit requests in sign in order.

Members of the Committee will present their audit requests last. Each Member may have up to two witnesses to make brief comments during their presentation. This will be followed by the State Auditor's presentation of his analysis.

I will then invite affected agencies to come forward to make brief comments and answer questions. This will be followed by questions from Committee Members and then the public will have a chance to weigh in as well. We still do not have a quorum.

We need two Senators, it looks like, but we can proceed as a Subcommittee on our first audit request, and in sign in order, that will be Assemblymember Gonzalez. Audit Request 2025-107, Coachella Valley Unified School District Contract and Fiscal Management. Senator Gonzalez, please approach the bench and begin whenever you'd like.

Do you want my two witnesses to approach as well? Do you want my two witnesses to be here as well?

Yeah, let's, let's—it's hard to hear with the door open. Once that door closes, your two witnesses can come up now, Assemblymember Gonzalez. And you can begin when you're ready.

Chair and Members of the Committee, thank you for your time and the opportunity to address you all today.

I come before you as a voice for the eastern Coachella Valley community, a predominantly Latino, disadvantaged, and underserved region, which has endured years of chronically failed mismanagement and systematic failures at the hands of the Coachella Valley Unified School District Board, a crisis that dates back to at least 2016.

Above all, I come before you as a concerned parent who has watched CVUSD fall into this fiscal crisis. I can no longer watch as talented students, staff, educators, and parents continue to be led down a dangerous financial path with no clear plan to remedy. Pains me to be here today, but our community has demanded action.

That's why we're here today. In a press release dated June 6th of 2025, responding to the announcement of the hearing today, Coachella Valley Unified School District stated, "New politicians usually need to learn their community and the systems within those cities, which includes school districts."

That's why I believe it's important to note that before serving as Assemblyman for District 36, I was actively attending school Board Meetings and witnessing the dis—the dysfunction firsthand. One special meeting in November of 2024 was called specifically to address the district's then projected $44 million budget shortfall.

After spending two hours in closed session, the board returned only to announce there was nothing to report. The meeting ended without explanation or a plan. I shared that experience with frustrated parents and concerned district faculty. It made one thing painfully clear: the system is broken and it's failing our community.

A 2019 FCMAT Report exposed serious structural deficits and governance lapses that have only deepened. Among the issues identified were the misuse of district fuel cards by the former Superintendent, Darrell Adams, absence of required Superintendent evaluations, and a Board that repeatedly failed to provide basic fiscal oversight. These problems were not isolated incidents.

They reflect a pattern of neglect and a culture of complacency that continues to imperil our students' education today. Now, the district faces a staggering $60 million budget shortfall, forcing layoffs of hundreds of staff members, including union educators, threatening educational quality for thousands of children.

Deficit spending is projected to worsen, driven by unrealistic budget assumptions and over reliance on one-time funds.

In March of this year, an additional fiscal health risk analysis conducted by FCMAT rated the district as high risk, citing continued governance failures including late or incomplete internal financial reviews, a lack of transparency in fiscal planning, and failure to implement corrective actions from prior findings.

The district has cited the recent FCMAT fiscal health risk analysis as an audit. However, this analysis is not an audit. It only identifies potential vulnerabilities rather than verifying compliance or the proper use of bond funds. Using it to claim fiscal health is misleading. Community members have repeatedly demanded transparency.

Parents, teachers, taxpayers, and even former district officials have reached out with concerns, yet those voices are too often met with silence or efforts to manipulate the narrative through mass communications targeting staff and families.

I expect the District Board to paint this audit as a political stunt, but I'm here to because the people of the Coachella Valley are exhausted by the status quo. CVUSD faculty and staff have confided their fear of retaliation if they speak openly.

As you have seen in some of the letters submitted to the Committee, several names have been redacted, so I am their voice. The community has yet to receive the transparency they deserve regarding their children's education. This crisis extends beyond fiscal mismanagement.

The Coachella Valley Unified School District Foundation, responsible for major donations, including $1.5 million, has operated out of compliance with state nonprofit laws since 2023.

The Foundation's failure to properly report or account for these funds raises serious questions of legal and ethical violations with current District Board Members sitting on that same board foundatio. District insiders have shared concern over contracting irregularities with projects being awarded without competitive bidding, including 61 contracts awarded to one specific local construction company, which totals over $51 million.

Just days after the Board approved to lay off educators, they approved $150,000 to be spent on ice hockey tickets towards minor league hockey games. This concern is not mine alone.

Just one day before this audit hearing became public, a formal letter was submitted to both county and district officials by current and former leadership cabinet members and directors of the Coachella Valley Unified School District. The letter calls for an independent investigation into the current Superintendent's conduct and outlines a handful of serious concerns, including fiscal mismanagement.

The letter is included in your packet. Their willingness and bravery to come forward underscores the depth of the dysfunction and the urgent need for state level oversight. If district leadership truly has nothing to hide, they should welcome an independent audit and fully cooperate. But their resistance will only deepen suspicion.

The district's ongoing failure to conduct Superintendent evaluations, enforce governance training, timely submit audits, and comply with labor laws shows a systematic governance failure that has been allowed to carry on for years. Members, I want to stress that this audit is about restoring public trust, accountability, and protecting taxpayer dollars.

The state must act now to protect our students and educators to ensure transparency and restore the integrity of public education in the Coachella Valley. Here with me today to offer statements and answer any technical questions is the Teachers Union President, Carissa Carrera, and former Coachella Valley Unified School District Superintendent, Dr. Luis Valentino.

Thank you, Assemblymember Gonzalez. Appreciate the very thorough presentation. Before we go on to the witnesses, I see that we have a quorum. Madam Secretary, can we do a roll call, please?

[Roll Call]

Thank you, colleagues, for being here. I'm sorry. Let me—I was going to have him finish, but I do know that Senator Seyarto is waiting, so maybe we can, I think it's a good idea to maybe move the consent calendar now, get that done with, so that some of our Senators can go.

So, let's take a brief pause and thank you to our witnesses. And we can handle the consent calendar now. So, Members, what we have—13 total audits. We have six that are on consent. And let me just remind all of us which six those are.

We have the 2025-109 Kindergarten Oral Health Assessment. We have 2025-110 California Institution for Men, Infrastructure Management. 2025-114 Los Angeles Fires Prevention Response, which I particularly like. 2025-119 California Community Colleges, Financial Aid, and Enrollment. 2025-121 Chino Hills State Park Wildfire Management and 2025-128 Los Angeles County Department of Public Health, Chiquita Landfill.

Are we still in agreement that all of these should remain on the consent calendar? Great. Is there a motion and a second for the consent calendar? Okay, I have a motion from Ransom, second from Cervantes. Madam Secretary, let's call the roll.

[Roll Call]

The consent calendar is approved. Thank you, colleagues. We will now revert back to Senator Gonzalez's audit. Dr. Valentino, Ms. Carrera, I'm going to give you just a couple minutes. We'll keep it brief. I do think the Assemblymember was very thorough. So, if you guys can kind of within the two of you get within three minutes.

We still have the Auditor, we have the agencies, and we do have a number of different audits. So, thank you for being here. We really appreciate it if you can make your brief remarks.

Okay. Good morning, Committee Chairs and Members. I am Karissa Carrera, President of Coachella Valley Teachers Association, and I've been a CVUSD employee for 24 years. I am here on behalf of my Board and the more than 900 dedicated educators we represent to express our strong support for a state audit in CVUSD.

We receive more funding per student than other districts in our area, yet our students are provided fewer services. This is unacceptable. Nearly 40 administrators have left CVUSD in the last two years, either resigned or dismissed. Our new interim CBO is already on her way out, just months after arriving.

This kind of instability is costly and harmful. In fact, nearly a million dollars has been spent buying out the contracts of administrators who were pushed out, many for simply questioning certain practices or refusing to carry out the wishes of Board Trustees.

Decisions are not being made in the best interest of students, but rather, to satisfy the agendas of certain leaders. Right now, our district is under the oversight of the RCOE, Riverside County Office of Education.

But in the fall of this past year, RCOE approved our unaudited actuals, reflecting a healthy budget, only to report a $60 million deficit practically one week later. RCOE has deep and concerning ties to CVUSD leadership. FCMAT has ties that compromise their impartiality as well. I can share more details if needed.

But please note, this oversight is not neutrality, it is entanglement. Very little, if any, consultation with stakeholders occurs, particularly with the recent cuts being made, which will harm student learning. The consequences are real. At the same time, new administrator positions are being created.

Let's be clear, CVUSD receives money intended to be used on student learning and their well being. Unfortunately, much of the money is being used to fulfill the interests of a few. Oversight by entities with ties to district leadership will not fix this.

Our students don't deserve just the clarity and corrective measures that could result from a state audit. They desperately need it. Because of this, CVTA is asking, or rather pleading, for an impartial state audit. Thank you.

Thank you, Mr.—Mrs. Carrera—and Dr., time is yours.

Thank you, Chairman Harabedian and Members of the Committee. My name is Dr. Luis Valentino and I'm a retired educator with 35 years in education. More recently, I served as a Superintendent with the Coachella Valley Unified School District.

When I joined the school district in July of 2021, I learned that CVUSD was already under fiscal oversight due to financial challenges documented by FCMAT. With the district classified as high risk for insolvency, it became clear that the financial concerns did not appear overnight but traced back at least a decade.

In recent years, these concerns were mitigated by the additional funding provided through ESSER. Over the past decade, the school district had—has had—four district superintendents and two interim superintendents. This high rate of turnover is not limited to the superintendency. There is high turnover among most district leadership positions.

This lack of stable leadership has exacerbated the current financial instability. The one constant over the past decade has been a stable school board. During my tenure from July of '21 to March of '24, I worked with an existing parameters in navigating the district's complex financial and operational challenges. That said, I support a state audit.

An in depth investigation into the $60 million deficit will bring greater clarity to the complex issue being discussed today. As a lifelong Democrat, I have dedicated my career to education, focusing on racial equity and social justice, devoting myself to addressing the challenges faced by historically marginalized students and their communities.

For me, being here today is not about politics. It's about doing what is right for students, ensuring that every child, regardless of their background, has access to a high quality education which help holds the public trust through transparency and responsible leadership.

Thank you.

Thank you. Now, State Auditor Parks, floor is yours.

Thank you, Mr. Chairman. The audit request seeks to audit and evaluate the school district's financial and contracting practices given its projected multimillion dollar budget shortfall.

Just to briefly go through the audit objectives, Objective Two has us evaluate the financial condition of the school district over the—over the last 10 years—including determining which programs and services have been cut or reduced over that 10 year period, including a review of how the district has responded to prior audit findings and whether or not the district was adequately prepared for the expiration of federal funding.

We're also going to be looking at, as part of that objective, determining the amounts of funds that the district may have used to cover employee lawsuits and settlements. Objective Three has us identify the funding sources and expenditures related to the district's Expanded Learning Opportunities Program and evaluate the program's compliance with applicable rules.

Objective Four has us review the partnership agreements and financial transactions and contracts entered into between the school district and the City of Coachella and other contractors, to ensure that they complied with applicable laws and management best practices.

Objective Five has us review whether or not the Coachella Valley Education Foundation appropriately received and spent donated funds and how those funds were ultimately spent and for what purpose.

And finally, Objective Six has us evaluate the district's contracting practices to better understand the extent to which it follows a competitive bidding process and awards contracts, and whether or not those contracts and those contractors are consistently exceeding their approved budgets and the reasons why.

Our office has a history of conducting numerous audits of school districts, most, most recently at Sacramento Unified School District in 2019. And so, I anticipate this is a medium-sized audit that will require around 3,400 hours of audit work to complete.

Thank you, Mr. Parks. We will now go to the effective—affected agency. So, the Coachella Unified School District. I understand there are representatives here. Please come to the dais. If the—to the extent that there's more than one, could the supporting witnesses actually just proceed back to the galley? That would be great. Sure.

You guys can come up if you can keep your comments to three minutes. I understand that this is very important. Folks have flown here. We have a number of different audits and would like to hear from you.

But if you can keep it to three minutes at the table, the—between the three of you, that would be great. So, please proceed to the table.

And if you could introduce yourself? Thank you very much.

Good morning, chair and members of the Joint Legislative Audit Committee. Thank you for the opportunity to speak today. My name is Dr. Frances Esparza, and I'm the proud superintendent of Coachella Valley Unified School District.

Please know that I've been the superintendent officially for 11 months now, and under my leadership, I've been extremely transparent, especially on our budget shortfalls and how we will improve the fiscal stability of Coachella Valley Unified.

I want to assure the committee that we're taking proactive and strategic steps to improve our district's effectiveness, our operational efficiency, and long-term fiscal health. Recently, FIGMA completed a fiscal health and risk analysis of our district.

Their findings confirmed that we're moving in the right direction, putting in place the systems and practices necessary to stabilize and strengthen our operations. With that, we also have the support of the Riverside County Office of Education and we've been assigned a fiscal advisor who's been with us for the past six months and is actively working with us on making thoughtful, strategic budget reductions aligned to our priorities and focused on sustainable financial recovery for the district.

I'm also proud to share that the most recent federal program monitoring audit by the California Department of Education resulted in no findings for our categorical programs, which is huge. This reflects the hard work that the team is working on there in regards to compliance, accountability, and student success.

There are other things that we've done all the way back from the fall of 2024. We recommended that the board approve a fiscal stabilization plan as a broader strategic plan to eliminate the ongoing expenditures that have contributed to the deficit within the district. We began with restructuring of some departments.

We identified the overage of staffing, overage of staffing based on the $199 million that was given during Covid, and so we needed to make sure that we reduced the force in certificated. We reduced the force in classified. We reduced leadership hours.

We also identified redevelopment dollars that are now able to be used for our routine maintenance efforts in the amount of $13 million and that was in collaboration with the cities around us: La Quinta, Riverside, as well as Indio.

We also repurposed allowable ELOP purchases for preserving core services for students before school, after school, for summer school, and for our special ed extended school year. We also have made reductions in our contracts with mental health. We do have wellness centers at every secondary site to ensure that our students still have that support.

We know that the work isn't done. We're making the necessary reductions, we're strengthening our systems, and most importantly, we're doing it with the future of our students and the Coachella Valley Unified School District in mind. So thank you for, for your continued support as we move forward with the focus and determination on making our district fiscally stable.

Thank you, Dr. Esparza. That's your three minutes, almost on the dot. So I'm, I'm going to now pass it over to the members for questions. Any questions for the, the member? Any of the witnesses? Mr. DeMaio.

Thank you, and I will go ahead and move approval of the audit.

Thank you. We have a motion on the table. Do we have a second? We have a second, but we will continue before we go to a vote with questions. So Mr. Hoover, and then Senator Cervantes had a question and then Assembly Member Ransom.

So the issues I'm having here, you've come before us and you've just rattled off a whole list of problems that you've inherited as the superintendent. You've been on the job nine months. These are significant problems, so there's no dispute that this is a problem-challenged school district. Correct? You have problems.

So in the past 11 months, we wrote a fiscal stabilization plan that the district had never had before. So we have a plan in order to manage some of the issues that former leadership did implement here.

Understood. So--but you acknowledge that your district is plagued with problems. So that's not a question here. So we have a problem school district, and I'm looking at some of the other issues that have been raised in this letter from community leaders, which is quite alarming about retaliation, about financial mismanagement, ethical lapses, contracting questions.

The problems are well-documented here. The question before this committee is, does this rise to the level of the use of state funds for us to prioritize our limited audit resources? And I think the answer is an overwhelming yes. First, because we do have significant problems of--school districts will have bumps in the road, but this one is--let's just call it what it is--it's a hot mess right now.

I'm not blaming you. I know that you're saying that you're committed to fixing it and I'm hoping that you will be successful, but it is a hot mess. More, more problem-plagued than other school districts, and that's saying a lot.

But second, we have a duty in this committee to audit school districts. Part of the auditor's role, you have statutory authority. This Legislature has oversight over public school districts. Now the challenge is we can't audit everyone. So what is a good audit? It's a random sample. In this case, we don't even have to do a random sample.

We get to identify a district that is plagued with problems and say, 'you know what? We can't audit everyone.' But when problems rise to such a level, we will indeed, as a Legislature, respond. We will indeed, as an Office of State Auditor, respond with limited resources. Because what will this audit do?

It will send a message to all of our school districts that if there are problems that you don't resolve within your own locality, that this Legislature has the ability and has a record, a track record, of responding and auditing. This is not just about this one school district.

This is about a school--every single school district in the State of California. Let me make it quite clear: this is the most appropriate use of limited audit funds is when a school district has problems like this one and it's not been addressed adequately within the local community. It is our duty to audit because it's not just about the school district in question. It is about all school districts.

And finally, I have never seen a school district plagued with so many problems come before a governing body and say, 'we have problems, but we do not need an audit,' that it somehow would be above--beyond the pale to audit our school district. Why would you fear an audit?

I mean, by doing that, by coming here today and by--in the media, because I've done a complete review of how your district has reacted to this common sense proposal for an audit--you have undermined public trust and confidence in your district because you said, 'no, no, no. Do not audit. This is politicized.'

'This, that, and the other thing. There's a scheme here. Don't do it.' You have done grave damage to public trust and confidence and now we are compelled to audit your district because of your own actions in sowing the seeds of doubt. You should have welcomed this audit, but you didn't. And so we have to act today.

I urge my colleagues, do not see this as a partisan issue. This is now an imperative of this Audit Committee to make sure that we do this and we do it right. In closing, let me just say that this reminds me a lot of the Sweetwater Unified School District in San Diego County.

I think the FBI has bugs in that district that they just simply, permanently have there and they just turn it on whenever they get a court order because it's had so many problems, but the problems in this district typically have been raised by community members time and time again, only to be ignored by elected officials on both sides of the aisle. I'm not making a partisan comment. I'm just simply saying Sweetwater has been failed by elected officials too many times.

I believe that these problems actually exhibit a bigger issue of cultural failure in the district. I believe that this audit will help us fix those problems. I think well-intended people who want to fix problems will be aided by this audit, but if we don't audit, I guarantee you, I fear that we're going to have something happen here. And then if we rejected this audit, we will be part of the problem because we did not act in time.

I will remind the members that this school district operates in the southern--sorry--the central district of the U.S. Attorney's Office. Riverside County is under the jurisdiction of the central district of the U.S. Attorney's Office, and I will tell you, if we don't do our job, I think other authorities will. Thank you.

Thank you, Mr. DeMaio. Before we go to Mr. Hoover, just want to remind folks we have a lot of wood to chop today, so I do appreciate the comments. I do think that our loudest and strongest words are our vote. Do appreciate the questions and the comments, but we do need to keep this moving. So, Mr. Hoover.

Thank you. In the interest of time, I'll just limit myself to one question, if I may, but a question would be for Dr. Valentino, if he's available to come back up to the microphone.

It's my understanding--so first of all, I've heard a lot of things that I'm obviously very concerned about here that I think do warrant an audit, so will be supporting this today, but it's my understanding that you did have a contract as superintendent and you chose to leave that contract early.

You know, if you could give me a little bit of insight into why you made that decision? Obviously that's not something that happens very often. I was a former school board member and traditionally, you know, boards and superintendents try to work well together when they can, but I wish--if you give me a little insight into why you chose to leave early and what your experience was with the, with the board?

Yes. Thank you. I had a four-year contract when I first arrived, so I left before the end of my third year. And the reason I left was because I was extremely frustrated not being able to move the agenda forward.

Soon after my arrival, I was confronted when I approached the board members with three issues that were concerning to me. One was an antiquated contracting bidding system for contracts. It was on paper and only until very recently did they raise the conversation that they needed to do digital because what it did, it discriminated against anyone living in the area.

It wasn't the only thing--there were things around. The second thing was they reduced legal services to one law firm which appears to make sense until you realize the complexities of a school system, right, from special education to facilities to finance.

You needed expertise at the table, and so we spent a lot of time working with the attorneys to help them understand what the work was. My greater concern is that we were being billed for that. We will call you back. And two hours later we would get a response and billing.

So the third one was that we had several measures that had been funded, public bonds, but we didn't have an oversight committee that included citizens. So there was no citizen oversight committee and the only oversight was district staff and selected board members who chose to be on that committee. That happened a month after I started.

I knew that my journey was going to be extremely difficult to get any work done, and so by the time that the third year I made the decision that I was going to end, I was there for a few more months and then just made the decision that I was going to retire, which was my goal all along, to retire after my fourth year. But if I wasn't going to be of value to the school district, why was I going to continue in that position?

I appreciate your response. Certainly do think the concerns raised warrants an audit and will be supporting it, but thank you to the Assembly Member for bringing it forward and that, that'll be my time. Thanks.

Thank you, Mr. Hoover. Before we go to Senator Cervantes, I'm going to briefly hand over the gavel to the vice chair who will proceed. Thank you.

Thank you very much. I have four people on the list, and there's a fifth. Senator Cervantes.

Thank you, Mr. Chair, and this could be a question for any of the witnesses today or if we have an RCOE representative in the room before us. I understand that the Fiscal Crisis and Management Assistant Team--and RCOE, we have an oversight process that is ongoing. Can anyone speak to that?

Thank you, Senator Cervantes. Jeff Vaca, representing the Riverside County Superintendent of Schools. That is an accurate statement that RCOE has been actively engaged with the district for some time now in our role, statutory role, as monitoring the fiscal health of our school districts in the county and ensuring that they do not become insolvent.

I don't know what level of detail you want me to go into, but I could kind of provide a sequence of the communications with the district.

The work that we have been doing and continue to do with the district, which will continue, you know, regardless of the decision made today, we will be continuing to work with the district on the issues related to solvency and their, and their fiscal health.

And throughout this process. Can you share for the Committee, has the district been fully cooperative in submitting all relevant documents?

Yes, absolutely. We have our fiscal team at rcoe. A number of folks are in the district very regular on a regular basis. They attend, I think, just about every board meeting to provide support and be prepared to answer any questions that the community has. You know, we have provided them.

We assisted with the development of the fiscal stabilization plan that Dr. Esparza referenced in her testimony. We, you know, provide answers to any questions that the fiscal team in the district has with the overall goal. As you know, Senator, if a district becomes insolvent, essentially it loses.

The governing board, loses its authority, the Superintendent loses their authority, overall goal to ensure that that doesn't happen, and outlining the steps that the district needs to make. And sometimes these are very difficult decisions in order to bring the budget back into balance, to address the structural deficit that was mentioned earlier. And. Well, I'll stop there.

Thank you. And I just want to acknowledge that. It seems like the district has many things to work through here, but just wanted to understand where RCOE was at in this process. And thank you for providing some clarity.

Thank you, Assemblymember Ransom.

Thank you, Mr. Chair. I want to thank the witnesses on both sides for being here today. I particularly would like to thank you, new Superintendent, and appreciate the work that you're doing. It's no easy undertaking to take over a school district that's been in dire straits.

With all of that said, I really want to agree with the sentiments of my colleague here from San Diego in regards to the need for an audit and the concerns of just really the persistence. When people are so persistent, we don't need something. It's really concerning, especially when so many things have been identified.

But I do want to get some clarity. There are some things that were brought up that were very concerning to me. Can you kind of recap for me how many times or how many decades that this district has kind of fallen into the overview process and the financial straits that it's facing?

So in 2019, I do know that there was a FIGMA audit and it was right before COVID happened. And then Covid happened and it masked the fiscal crisis in that district with the government giving them $199 million. And so they gave them 109 million. $199 million, masked all of that, did massive hirings.

There was a lot going on with all school districts with the purchases of one to ones and making sure that we had enough staffing for online learning and things of that nature.

Then it came down right after that that there was no fiscal stabilization plan prior to me coming in as the assistant Superintendent, because I did walk in as the assistant Superintendent. And so there were several people on staff even after the COVID monies were no longer given to the district.

And so with that in creating a fiscal stabilization plan and when RCOE came to us and said, hey, you know what, you're overstaffed. You have all of this money that is just deficit spending and it's really causing a huge impact. You're going to have to create a fiscal stabilization plan. There's a lack of concern.

And so what we did is we put a fiscal stabilization plan. They told us it was $60 million. And so we put some something together over the amount of three years.

Thank you. I don't want to interrupt, but you answered my question a long time ago, so I don't want you to keep going. But it definitely does sound like your district spent one time money on permanent employees, which is another red flag. Right.

I heard something about late financial reviews, which is concerning, which is kind of another reason that I'm interested. But something came up that I've not heard anyone talk about. 61 contracts to one company, is that one of the rationales?

Has anyone vetted, is there a relation to board Members to this one company or like I'm trying to figure out why this rises to a level of concern. Because it could be something, it could be nothing. So.

So the 61 contracts that were awarded to that bidder.

Could you please identify yourself?

Zero, sorry. I'm Leticia Torres, director of facilities for Coachella Valley Unified School District. So the contractor that was awarded the 61 contracts was the lowest responsive, responsible bidder.

And is there any relationship to anyone on the board or 61 contracts to one? It's really interesting. So can you have you vetted to see if there's any sort of relationship? Are we going to find that there's any relationship by marriage, by any other relationships to the contracts and board Members?

That's not my. My role. I just vet the contractor.

So are there rules in your school district about nepotism and relationships?

I think the Superintendent's here and is probably more qualified. Are there rules?

Zero, yes, there's rules in regards to nepotism and things of that nature. And so.

So. Okay, thank you for answering that question. So with that in mind, who would be whose job? She said it's not her job. Whose job would it be to find out if those 61 contracts were given to someone family.

So our purchasing Department gets all the contracts prior.

They get all the bids. Okay. And is there a process to vet to ensure that that's not happening?

So. Good morning, Committee. My name is Randy Marroquin. I'm the Director of Purchasing. I've been working for CBUSD for about year and seven months now. Yeah. So there's a lot of processes that we're working on. We're implementing new procedures. There is a lot of lack of procedures and things of that nature.

So to give you a clear answer, these are things that we're working on. I don't have a clear answer on the vetting process.

Okay. All right. I'm sure the auditors can figure that out. Thank you. 150,000 on Ayes hockey tickets. I've worked with school boards for 20 years. Is that something that you all typically do, or is there some business we're trying to support locally or.

These are real concerns that I can understand the community bringing at a time that a district is having fiscal crisis and structural budget deficits. Just trying to understand and also trying to not just ask a bunch of questions, but kind of aid the auditors in things that we might want to be. We might be interested in.

So what happens with the elop monies that are provided to the district? And that's 20 million dol year. Many of much of that money is. Is for purchasing different tickets and different ways for us to engage our students. And so $150 million is not what it was because they've also gone to Disneyland.

They've gone to Knott's Berry Farm. And this is part of the ELOP enrichment program after school and on during summer.

Got it. Thank you. And to. There was one other thing that was brought up. So honestly, there's. I don't see. There's no concern. People sit on Boards and on all the time. But there was something about some. Lots of money and board Members looks like $1.5 million. And something like that is the concern.

And I guess this is going to be. For the person who brought the audit. Is a concern that there's mismanagement or was. Was there not a recusal? Because, you know, there are board Members, people who serve in public office, serve on boards and things all the time. But can you share the concern?

Thank you for the question. Yes, board Members, currently, current board Members, also currently serve on a foundation for that same district. $1.5 million was given to that. To that board, to that. Excuse me, that foundation.

From the school board.

From a donor.

Okay.

A corporate donor.

Okay. So there you're looking for the relationship between.

So that those board Members, those current board Members who also sit on the foundation as the. As the leadership, signed leadership for that foundation, have the ability to spend or not spend on what's needed. And in that relationship, they have unfortunately spent money in. It was sent back, but it was done without any approval.

So there's mismanagement going on, fiscal mismanagement, and there's an ethical question that has to be answered.

Thank you. Okay, so with that, I'm gonna say I do appreciate that. Of course, I mean, there. We don't wanna demonize board Members and there could be something. There could be nothing.

But I do wanna say that based on just the fiscal mismanagement over time, the fact that you all are new and you're trying to figure it out and you're trying to put things in process that clearly should have already been in process, I do think this definitely does warrant review. And so you definitely have my support.

And thank you all for answering my questions and being here.

Thank you, Senator Valledares.

Thank you, Mr. Chair. So one thing I haven't heard any information about is actual student outcomes. So to the current Superintendent, what do outcomes in the district look like now? Test scores in math, English and college readiness. What percentage of students are at?

So we're really happy that this year we received our preliminary scores, and we have gone up in almost every single grade. The only grade that we didn't go up in was 8th grade math. Our graduation rate went up to 90%, which was at 78% when I walked into the district just a little over a year ago.

And we have also met our A through G state requirement, and our flagship high school is at 95% graduation rate. And so test scores have improved.

We've implemented a process in the district where we are ensuring that we have an infrastructure to ensure that teachers are supported, that our administrators are supported, and we created an instructional framework, a pathway for us to be able to support staff at the school sites.

So can you just clarify, though? Because some of the data that I have says that in 2024, only 27.88% of your students were meeting or exceeding English and 16.5 or 16.655% were meeting your math. Is that accurate?

That's accurate. And that was actually going up? That was actually going up because it was way lower when I entered the district.

So what percentage has. It went up?

So it's gone up. For math, I believe we went up to 21%. And for Ela, I am looking at in my mind all the preliminaries. We did go up about five points.

So about 32%. About 32%. Right now, that's still failing. And I. At the end of the day, when it comes to public education, government has a responsibility to ensure that every child has access to education. Curious to know what percentage of your students are English language learners or Latino?

We have 37% of our students who are English language learners. We have 90%, 92% of our students who are Latino. That concerns me.

I say it all the time. The California dream starts with a good education and a good job. It is very clear that the mismanagement of the finances of the district are impacting students. Our constitution, California's constitution, says that children have a right, a constitutional right to an education. And I'm glad that. I understand that you're new.

I understand you're committed to the district. I'm glad that you're seeing an improvement in your outcomes. But at the end of the day, it is our responsibility to ensure that your district is meeting the needs of students. And they're not doing that.

And so I'm going to support this audit because those kids, every single kid, deserve an education.

And if you could also support the audit of the teachers contract, because that would help us a lot to ensure.

Point of order. Point recognized. Let's not have that exchange right here. There was a question and it was answered. Are there any further questions? Okay, then we will go to Senator Becker.

I think one of my questions was answered, but just because. So there is an audit. Is there an audit going on right now with county? No, there's not.

There's not a county. Who were you directing that question? You were looking at one person. Another person answered, well, anyone directing that question? Answer. I'm just understanding that there's. Who are you directing that question to? Sure. Well, you can start there.

County has oversight right now of our school, and so they are on our. In our district office, in our fiscal office. And they've been working with us. We. We did have, again, the FIGMA audit, where the health and risk analysis.

And so we are working with the county on a daily basis to make sure that we stick to our plan. Because our plan, out of the 60 million that Demale mentioned, 52 million will be cut this year based on the plan, so that we will only have small increments. I know they're large.

Larger, but small increments within the next two years of cuts that we want to make sure. Stay away from the classroom. So 52 million will be cut this year.

And just to add, Daniela Tavares, Interim CBO, we get an annual audit every. Year as a district, and currently we're. Undergoing our audit, our annual audit for fiscal year 2425. It has already started.

Request to rebut, Mr. Chair.

I'll allow it, but we're trying not to have. I'll make a quick exchange in a hearing that is already endless, so please make a quick comment.

I'd ask the opposition to continue to call it a fiscal health risk assessment. This is not an audit.

Noted. Any other questions, Mr. Becker?

Yeah, just looking through. I'm looking through. You provide a lot of information about previous audits. They kind of make some small. Some suggestions around salaries and benefits. I mean, what are you hoping to achieve with this? I mean, they already have a plan to cut 52 million. But what are you hoping to achieve here?

What we're hoping to achieve is transparency, number one. Number two is the reality is over 300 staff and teachers will be losing their jobs. This is going to impact the community significantly. Significantly. And this is not a. A 2025 issue. This has been going on for decades. To say that fiscal health risk assessment answered the problem.

It didn't. 2019, they were at high risk. 2025, high risk. It's not working. We need the state to step in and provide direct audit and guidance because what they were doing before is just not working. So that's what we need.

We need to get this ship back in the right place because it matters to the 300 staff Members that will be losing their jobs, and it matters to the families of our community.

Yeah, well, I appreciate your passion. There are hard decisions to be made. It feels like they are being made. I'll continue to listen here. I'm not quite sure it's the state's role to come in if the county is working on this. But I appreciate we'll continue to listen to dialogue and I appreciate your efforts here.

Thank you. I had, before the chair left, stepped in line to make a comment, and I'm going to make a brief comment wearing another hat. I chair the Senate Budget Subcommitee on Education, and we oversee the Fiscal Crisis and Management Assistance Team, known as fcmac.

And there is an existing process that assesses every school district in the state, makes a decision if they're at risk to advance them, if they're really underwater, advances them to receivership. We have, and I don't know what the precise number is because Vallejo just came out, we have something like five school districts that are under receivership.

And it was said if there was ever a need to spend state money, this is it, as if no other state money was being spent. We are expending extensive state money on school health through that process.

And if out of 1,000 districts we cherry pick, that is in many ways additional audit money that could be used for something else when we have it. I know when I was a Cabinet secretary, we had one particular incident where we had five individual audits or investigations done on that incident.

We could have done much better to have one or two, and we would have resulted in exactly the same outcome and there would have been a lot of less resources expended. And I didn't appreciate the shot that was taken by one of the witnesses to figmac.

And if there is a documented conflict of interest between anybody from that agency and the work they do, then submit that documentation and appropriate action will be taken. But making an offhand comment in a hearing without the facts behind it is not helpful. And so to me, some of the things here are political disagreements.

And the real question is, is if over time, because this has been called out, I think this is premature, but I think it's very relevant for the Riverside Office of Education and for fcmac. And if it turns out that they uncover malfeasance as well as the fiscal issues, then it is appropriate to advance to an audit.

And so I will be staying off today. I appreciate the work of the author and I appreciate his passion, which was evidenced by this. But I wanted to just. We also observe that we're having problems across the state because enrollment is going down in K through 12 and districts are having to adjust.

It's hard to adjust when you're losing one or two kids across every class. And we also had Covid money that is just running out that really bridged for many districts. And so this is not an isolated incident on how districts are trying to adjust to these fiscal realities that are there.

So I appreciate the discussion and just wanted to make sure those points were made. We are going to go to public comment before we move to a vote. And this would be the opportunity for anybody that has not commented already as a witness to speak for up to one minute on this audit.

And if it turns out there's about 90 of you at some point I will choose to limit. But for now up to one minute for whoever's in line to offer comments in this audit. Welcome to the Committee.

Good morning honorable Members of the Committee. My name is Mary Meyer. I have been a teacher at CBUSD for 33 years. As one of the hundreds of faculty and staff who've been directly affected by the district's fiscal mismanagement, I urge you to vote in favor of a full scale audit.

One of the comments that was made today was about the transparency of the district. Dr. Esparza and the board announced almost a year ago exactly about the Proposition 28 funds that were going to be used to expand and enhance the visual and performing arts program in the district.

And then a few months later, 21 VAPA teachers positions who work directly daily with 4th through 6th grade students and additional students as well. Those positions were eliminated. If there are any questions I could be answered, I'd be happy to do so.

So your position is. You close to tell us what your position is?

I. I urge you to vote in favor of a full scale audit.

Thank you very much. We appreciate your comments. Next, Speaker.

Michelle Warshaw on behalf of the California Teachers Association and support.

Thank you. Anyone else?

Mr. Chair, Members? I'd simply say in addition to my previous comments and could you. Jeff Baka representing the Riverside County Superintendent of Schools, Riverside County Office of Education, should the audit be approved is prepared to cooperate with the auditors and provide background about the role that we play. Have continued to play in the district.

As I mentioned before, the work is ongoing and I'll close there. Thank you.

Thank you very much. Any other comments?

Good morning. My name is Monica Makovich. I'm the Assistant Superintendent of Human Resources and have been in that position 10 months. I oppose the audit because we are. Really committed putting those systems and procedures in place. And we have reduced the number of total layoffs. Hard layoffs for classified staff is 170. And certificated layoffs is 48.

So not over 300. So thank you.

Thank you very much. Any Additional comments.

Good morning. Yes, again, my name is. My name is Leticia Torres and I serve as a Director of facility for Coachella Valley Unified School District. And I oppose the audit.

I just want to take a moment to reaffirm that CV USD follows all state mandated public contracting laws and bidding procedures as outlined in the California public contract codes. Every contract we award goes through a formal transparent bidding process with legal oversight and final approval by our board of Trustees.

Since 20142015 we have awarded over 160 contracts through this process, ensuring fairness, competition and fiscal responsibility. Contractors are required to disclose any subcontractors at the time of bid and all subcontractors must properly be licensed. We maintain clear documentation of each project and we take budget accountability seriously, addressing any projects challenges through proper channels and corrective actions.

You have reached your minute. Could you tell us what your position is and close the position? What position are you taking? And please close your comments.

I oppose and I'm a Director of facilities for Coachella Valley.

Thank you. Thank you very much. Are there any additional public comments? You were a witness as opposed to a public commenter. So are there any additional public comments from somebody that has not been a witness seeing? None. Then the matter is back before the Committee. We have a motion. Traditionally we vote, but is there a last comment?

I see people leaning to mics. Okay, then would you please call the roll? Do I have closing comments? So we don't have a motion. We have a motion. Okay, I need a motion. I had a second. Ms. Ransom seconded my motion to approve the audit. See, that's what I thought. I'm sorry.

Chairman, do I have a closing comment? Yes. Would you please close now that we have a motion?

Thank you, sir. I'm saddened to hear that some, some of you believe that this is political. The reality is this has been going on for decades. For decades, teachers have tried to reach out to their legislators and have been met with no assistance, no help.

And because of that, when I came into office, they asked me for their help and I listened. And that's why I'm here. This is not political. This is my job. This is what I do. I listen to my community and I take the appropriate action necessary.

With 80% of the contracts going to one company, 80% of the contracts going to 1 company, I can't see a reason why we shouldn't be auditing. This is not about me. This is about folks in the Coachella Valley that are absolutely in need of us to step in to find a solution. Look, they have a path.

But the reality is there is a history, decades of history with where there has been problems. So this is the point where we get a chance to step in. I also understand that you all have been lobbied heavily by the opposition to this audit.

But I know every single one of you within you knows that this is the right thing to do to protect our most vulnerable. And I hope that your vote will reflect that. A leader that is overseas.

900 teachers has come up here, A teachers union has come up here and they are all in support because they know what the right thing to do is. So with that, I respectfully ask an aye vote and request to keep the rules open for add ons. Thank you.

Thank you very much. Will you please call the roll?

[Roll call]

We have six votes, three in the Assembly, three in the Senate. It needs four of each to pass. We will put that bill on call. Thank you very much. Thank you, Mr. Chair. I have to go vote in the Committee where Senate where Assembly Member Harabedian just presented the last bill.

So poor Assembly Member Hart has agreed to take over sharing.

Thank you Senator Laird. And Senator Wahab is next. Our next item is Senator Wahab's audit regarding the East Bay transit agencies. Audit number 2025. 120. Senator Wahab positions on audit request. Apparently quote. Your Laird just said you would go to this it? Yep. Senator Archuleta would be next. This is in sign in order. So thank you.

Not sure. Thank you. Senator Wahab, please, if you would begin. Actually, I guess we're going to start with the State Auditor. The time is now to present your analysis. zero, excuse me. Senator Wahab first.

All right.

Yeah.

Ready. Thanks. Senator Wahab, whenever you're ready to begin.

Thank you. You know, I. I just want to highlight. I represent Alameda County and Santa Clara County for roughly two years now. I have 20 talked about how the Bay Area transit systems need far more effort and consolidation. And I want to flag that. Alameda County has the highest sales tax of any county in California. The highest.

And so I respectfully request the Joint Legislative Audit Committee approve an audit of the East Bay Transit Agency's. The Bay Area has one of the most fragmented transit landscapes in the country with 27 agencies across the nine Bay Area counties.

Having 27 agencies each with its own board of directors and administrative staff makes consensus difficult and waste taxpayer resources that could be put to better use funding transit operations. The 2021 Metropolitan Transit Commission Transit Transformation Action Plan showed near universal support from riders for integr graded seamless transit.

89% of respondents said they would vote yes on a proposal to operate as a single transit system. Now, I have not actually stated that consolidation should only be one specific transit system. It could even equate to county per county. However, these efforts have been opposed significantly and at the same time, multiple transit agencies have duplicative services.

Duplicative services in a number of ways. And I want to highlight that having 27 transit agencies in addition to all of the public private agencies like Uber and Lyft and all of the other organizations that are coming out, our transit dollars are extremely limited.

And the reality is that many of these agencies are being created with no uniformity. One in particular can be created by a City Council. Another can be created by a county board. Another can be created by a joint powers authority. There is no uniformity.

And there has been more and more agencies being created with duplicative service provided to the public. So with that, the goal is really to focus on what can we do in both the East Bay counties, which is Santa Clara County, I'm sorry, Alameda County, as well as Contra Costa County.

And what I'm asking for is support to prove an audit of transit agencies in Alameda and Contra Costa counties, specifically AC Transit, County Connection, lafta, Tri Delta, Union City Transit and West cat. The Bay Area again has significant concerns. They're in a fiscal deficit as well and a fiscal cliff.

The budget just recently highlighted nearly $1.0 billion loan for four agencies in the Bay Area. And again, another initiative that will hit the ballot in 2026, potentially raising sales tax on roughly three or four counties, depending on how that final outlook looks.

And so I say this because as You've heard many times this is the right thing to do, to have a neutral body be able to fulfill an audit and provide answers and recommendations to the larger public with no fingers on the scale, and making sure that we have the answers that we need to make the best decisions for our community members.

So I respectfully ask her an aye.

Thank you, Senator Wahab. And do you have any witnesses here?

No.

Okay, appreciate that. Auditor Parks, floor is yours.

Thank you, Mr. Thank you, Mr. Chairman. The audit has nine primary objectives. I'll summarize them briefly in the interest of time. Objectives 2 and 3 for the six transit agencies that the Senator mentioned located in Alameda and Contra Costa counties.

We'll be seeking to determine the level of autonomy each has to plan its own routes and invest in transit projects. This will likely include reviewing, you know, what barriers exist to greater coordination among the different transit agencies and for a selection of routes that cross service area boundaries.

You know, how are they doing in terms of determining the availability of connecting transfers, ease of payment, and whether or not there might be some duplicative services in those transit agencies that could be eliminated through consolidation.

Objective 4 has us review ridership levels pre and post COVID 19 and identify what initiatives those agencies have employed to increase ridership. Objectives 5 and 8 has us evaluate the financial condition of the six transit agencies by reviewing their reserves and the extent to which they rely on non operating revenues.

Objectives 6 and 7 primarily focus on the Metropolitan Transportation Commission's efforts to collaborate and coordinate with the six transit agencies and also to determine the amount of funding that MTC provides.

And finally, objectives 9 and 10 asks us, to the extent possible, determine the likely financial condition of a single transit agency in Contra Costa County and a single agency in Alameda County with respect to bus service and the consolidation of that bus service by looking at combined assets, liabilities, revenue and expenses.

It's a fairly large audit with seven, at least, oddities. And so I anticipate the audit would require at least 4,000 hours to complete.

Thank you, Mr. Parks. Now, going to invite the agency representatives. It does look like we have seven different agencies here. And if that is the case, I'm going to give each of you a minute. I mean, this is.

I understand that each of you want to speak, but if we can hold each of you to less than a minute, that would be great.

Thank you. Mr. Chair and Members of the Joint Legislative Audit Committee, I'm Christy Wegener, Executive Director of the Livermore Amador Valley Transit Authority. We operate bus service in Dublin, Livermore, Pleasanton, and unincorporated Alameda County. Collectively, the six agencies that will be providing testimony today provide essential bus service across Alameda and Contra Costa counties covering 700 square miles.

Serving four large census designated urban areas. The six agencies here today serve over two and a half million constituents. We transport over 150,000 daily riders who are essential workers, commuters, visitors, students and seniors. We also provide essential service to persons with disabilities.

Consolidating our agencies might be worth exploring if we overlapped or duplicated duplicated one another or if there were obvious inefficiencies or redundancies. But that is not the case for the six of us. We do not duplicate. We provide essential local service and connect with one another and all of us provide critical connections to the regional BART network.

Absent new funding due to the differences in our labor costs, consolidating the five smaller operators into one large operator would result in a reduction of almost 50% of service and it would also seriously degrade our paratransit service. I'll now turn it over to my colleague Salvador from AC Transfer and thank you.

Good morning Chair, Committee Members and staff. My name is Salvador Llamas. I am the general manager and CEO of the Alameda Contra Costa Transit District, AC Transit, which serves and connects communities across western Alameda and Contra Costa counties.

We probably provide vital transit service in 13 cities and across three bar area bridges into San Francisco, San Mateo and Palo Alto.

As the region moves towards recovery, our transit agencies remain a critical lifeline, particularly for our most vulnerable residents, students, seniors, people with disabilities and working families who depend on transit access jobs to access jobs, education and essential services. Ridership is steadily returning and transit remains indispensable. That said, we are approaching an urgent and extreme fiscal cliff.

One time federal and state fund relief funds are winding down. Without a stable long term funding solution, the ability to maintain and grow service is under threat.

In response, we've taken decisive steps to maximize our limited resources by redesigning routes to improve frequency, strengthening local collaboration with the Metropolitan Transportation Commission, the Alameda County Transportation Commission and the Contra Costa Transportation Authority, and collaborating with other transit agencies to launch innovative solutions like integrated fare payment schedule coordination and one seat paratransit rides.

We're also proud to have Senator Wahab represent AC Transit in the East Bay and we look forward to working with her. However, given the limited fiscal resources and staffing AC Transit, we should focus on implementing existing programs to deliver reliable, coordinated and equitable transit service. And I'll pass it over to my colleague. Thank you.

And if any of the future comments from the agencies are just duplicative or Reiterating. You can say in support or you can make different points, but points well taken. Thank you.

Good morning, chair and Members of the Committee. I'm Rob Thompson, the General manager of the Western Contra Costa Transit Authority, also known as Westcott. Westcott provides bus service to a 20 square mile area that includes the cities of Panola, Hercules and unincorporated areas of Western Contra Costa County.

In addition to providing local service, our buses connect residents to the broader Bay Area via BART and through the Transbase service into San Francisco. Ridership has grown by over 10% on our express routes over the last year and by over 15 to 20% on our transbay service. Many of the efforts predated the COVID 19 pandemic.

But the catastrophic loss of ridership in 2020 for transit agencies across the nation created new agencies to increase efficiency and improve coordination for the benefit of riders. In response to the pandemic, the Metropolitan Transportation Commission created the Blue Ribbon Task Force on Transit Recovery. The task force was charged with developing the Bay Area Transit Transformational Action Plan.

Operators large and small participated in the development of the plan and are now laser focused on the implementation of the 27 implemented actions. These include standardised mapping and wayfinding of transit hubs. Collaboration on transit priority projects that improve transit travel times along congested corridors and highways. Improving paratransit service to eliminate the need for interagency transfers.

Four of the agencies here today have successfully implemented such a program. We've also been active participations participants in the Clippa 2 efforts by our regional agency which will further enhance the Bay Area's universal fare payment system, including free reduced system transfers and the Bay Area's first all agency transit pass. Many of the topics included in the audit.

30 seconds.

Many of the topics included in the audit request are awareness already occurring. We did hand out this chart to all the members. The detail the accountability mechanisms we already follow and how they match up with this audit request. Thank you for your time.

Thank you. Are there any other agencies here to testify? And I'm giving a little bit of leeway here, but if you could keep it under a minute, that would be great.

Good morning, Chair and the Members of the Committee. I am Rashidi Barnes, CEO of Eastern Contra Costa Transit Authority which operates bus service as Tri Delta Transit.

Tri Delta Transit provides approximately 1.5 million trips a year to a population of roughly 315,000 residents in the cities of Pittsburgh, Oakley, Antioch and Brentwood, none of which are in the Senator's district Here are a few ridership stats that are important for you all to understand. 70% of our ridership are minorities and transit dependent.

22% of them do not have have only access to one car. 46% of of them take trips to work and 22% to school. 98% of our routes interact. 10 seconds touch a barf station. And then lastly I also sit on SB 125 which is mandated by the State Transportation Agency's Transformation Task Force. It was established in 2023.

Thank you. I'm gonna have to cut you off there. Appreciate the comments.

Next witness. Hi, my name is Steve Adams. I'm the Transit Manager for with the City of Union City operating Union City Transit. We serve the residents and businesses in Union City and along with the southern Hayward border.

Our services have been designed to go ahead and primarily connect with the Bay Area Rapid Transit District while also connecting with AC Transit and at several shared stops to provide our customers regional connections for work and education.

I also want to say thank you to the Center WAHA for the certificate of recognition given to us on June 13th for Union City Transit taking a step toward improving the rider experience and ensuring safer, more comfortable transit access for her community.

We look forward to the District 10 Senator at future Union City transit community achievements in 2026 and 27. The idea of consolidation consolidating transit agencies in the Bay Area is not new and is almost cyclical. Dating back to the 1980s there have been several attempts to consolidate agencies.

The outcomes of consolidation reports have never moved forward because they have consistently recognized that our services areas have unique needs, are geographically constrained and that as a report regional consolidation is impractical.

And in areas with well established transit in the past a good measure of how much service would be delivered through consolidation is the highest cost per vehicle revenue hour service.

Just ask you to wrap up. Thank you.

All right. In consol in a consolidation study it is considered that if if a audit were to proceed it should include all 27 barrier transit agencies and not just the six before you today.

Good morning. My name is Ruby Horta and I serve as the Assistant General Manager for County Connection. We serve the residents in central Contra Costa County. I believe it is imperative that the Committee understand that we are not afraid of being audited. Audited audits are a part of our day to day lives. It's a regular occurrence.

It is important to recognize our agencies are already subject to numerous audits and oversight mechanisms. As recipients of federal, state, regional and local funding, transit agencies are regularly subject to a number of financial and performance based audits.

These include triennial Transportation Development act performance audits conducted by the Metropolitan Transportation Commission, triennial compliance audits conducted by the Federal Transit Administration, annual single audits due to the Federal Audit Clearinghouse, the DMV and the CHP and ongoing annual audits of comprehensive financial statements.

We know that this comes with the territory in our work and we take it very seriously. What we don't like is that this audit lacks clear justification. Nobody has accused us of any malfeasance.

We are well run, hardworking operators who would rather spend our time and our limited resources serving the hundreds of thousands of riders in our community. Thank you for the opportunity to address you and me and my colleagues are here to answer any questions.

Thank you all. I believe we have one more agency. Thank you.

Thank you. Chair Harbedian and Members Rebecca Long with the Metropolitan Transportation Commission. We don't have a position on the audit. We welcome the opportunity to highlight the coordination efforts of MTC and how we Fund transit agencies, including these in the proposed audit. Thank you.

Thank you very much. Members, any questions?

Yes, Senator Ransom, thank you so. Thank you, Senator Wahab, for bringing this. I want to thank all of the transportation agencies for fiercely protecting your districts and your autonomy. I think we can all understand that that is your job.

And so what I did hear is a couple of very overlapping themes of like who we serve, you know, paratransit, going to BART, going to some of the same places and transportation justice is a huge issue.

I would love for the Senator who brought this if you can address really what you are hoping to achieve, what your scope of work. Well, get your scope of work. But what you're hoping to achieve through this audit.

Definitely first and foremost I want to say that I've brought up consolidation a number of times. We are one of the few metro regions in the United States that has this many public agencies serving a relatively small region.

I want to highlight the fact that there have been leaders in the different agencies that have been quoted publicly in the newspapers that have said that consolidation needs to be taken a look at, including the President that represents the San Francisco area for BART, who said in the San Francisco Chronicle that consolidation needs to be focused on.

I want to highlight the fact that again, Alameda County has been the pilot for not only a number of different transit efforts both on 880 Freeway and in the fast track lane, and the fact that we are taxed more than any other county in the State of California baseline, including we are taxed more than La County, Right.

That is our sales tax. That is our working class individuals that are paying into the system. The fiscal cliff has been around for a number of these transit agencies before COVID and after Covid.

They are asking for a citizens measure in 2026 that is looking to increase the taxes not to all of the nine Bay Area counties, but again, Alameda County, Contra Costa County, San Francisco county and whoever decides to opt in.

They have also requested $750 million in this budget deficit in, in this budget that we have just voted on. And again, you know, looking to see what are they improving, what are they truly working on.

There were a couple of comments to your point that was mentioned about, you know, we heard Transit Transformation Action Plan, SB 125, reporting the task force. I've actually read a lot of these and I want to say that these efforts lack independent analysis of structural barriers to integration or consolidation. Doesn't even really touch it.

They do not evaluate the inefficiencies in the funding allocation. The governance are operating across agencies. There are significant duplicative services have not produced concrete recommendations or accountability mechanisms that deliver the kind of change that riders actually need and want. AC Transit in particular, when we're talking about vulnerable populations.

Prior to the pandemic, they were looking to cut eight bus lines in my City of Hayward alone, total of 16 in the county. And Hayward is one of the lowest income cities in the Alameda County area.

When I first started on City Council then the median family income was $65,000 compared to some of our competitors in the Peninsula in San Francisco that make six figures or more.

So when we're talking about vulnerable communities, we need to make sure that the dollars stay in people's pockets and not funding a system that has been effectually broken. And so that is the primary purpose.

I will say I would love to do an audit of nine Bay Area counties and all of the agencies and how we are competing in the future against an Uber, against a Lyft, against all these new tech companies that are coming out. But we're not there yet.

And clearly there's a lot of interested parties in keeping the status quo.

Thank you for that, Senator. Very detailed response. And one of the things that stands out is we're seeing the fiscal cliff is real and we're seeing this continuous request for budget increase as we saw in the budget recently, that only serves one part of our state.

At the same time, it's to close clear that they don't have the ridership independently.

So what I am gathering that we may be able to learn from this audit if it is approved, is the ability for things for people to do a better job of working together where there is overlap and sharing ridership as opposed to standing in their corners. But totally understand why people want to protect their autonomy.

I do think that you brought up very valid points and I will be supporting your request. Thank you. Thank you, Senator.

Member Quick-Silva. Thank you, Senator, for bringing this forward. I will be supporting it today. I do want to concur with my colleagues.

Cam comments I mean, when we talk about consolidation, it doesn't matter what part of the state you are in or what topic, whether it's water districts, whether it's school districts, transit, the first response is no, we don't want to do that.

And not only no, but don't move forward on any conversations we have to get in the State of California, we are now in our second year of deficit. It's projected that we will be having in the next few years out deficit.

We have to reimagine California and we have to reimagine California in these big systems where whether it's school districts and when I say that I happen to have many small, small school districts under 5,000.

And so when we start to look at 27 transit agencies, each with an Executive Director, each with board Members, each with staff that support that this is a huge infrastructure amount related to dollars. And the same could be said of water districts across California.

The same could be said, like I said, of other major systems in our state. And unless we start to, like you say, audit and analyze and maybe, as some of the speakers said, there won't be duplication. There won't be. So I appreciated the person who came up and said we're not afraid of it.

I don't think most people like an audit or want an audit, but it's a tool we have and I have used it several times as a Member here. But we have to look at the why behind the dollars, which is, as you mentioned, $750 million.

And we put in many millions last budget cycle in addition to these 750 million. And so California has to be the steward of these dollars to understand is this an investment and is there equitable investment? Because each one of us can say, I have Orange County Transit Authority, I have parts of Los Angeles.

So I think this is a sound audit. But I concur that nobody wants to consolidate if you ask, and this for my friends across the aisle, if you ask Republican board Members of a tiny school district, they're never going to say yes if you ask. Even in the pandemic when we were shrinking things.

I have Fullerton as a school district. We have Fullerton Elementary School District and Fullerton Unified School District of a fairly 150,000. Two school districts, one high school, one elementary. We're talking about closing down. Pandemic. There was zero conversation about let's consolidate. That would be a likely consolidation. Having a K12. We have this all over.

We couldn't even get one conversation. So I think this is kind of a conversation that nobody likes to have, but it is going to be essential as we start to look at shrinking dollars in our budget. With that, I'm not sure if it was moved, but I moved the audit.

Second, we have a motion and a second Senator Becker question.

Yeah, well, I'll just have maybe more of a comment just to keep it brief. Appreciate the Assembly Members comments represent many school districts and I think she makes a good broader point.

I'll just say, number one, I appreciate all the comments from the operators here today and I appreciate what they're working towards, the efficiencies that they're operationalizing right now, the work that they're doing. And I appreciate that there has been coordination, increased coordination. I am a big supporter of the funding for transportation, including the transportation measure.

And I did the seamless Bay Area bill for a couple years, which we came very close on. And you know, so as such, as both a supporter of transit and as someone who wants to see more coordination, I will support this audit here today.

I appreciate, again, I don't think that this is a judgment at all on any of the individual agencies. I think the Senators really looking through, looking for what are these efficiencies we can achieve as a region.

And I think for all the reasons that were just mentioned and then very, you know, specifically the reasons she mentioned here, I think that we need to support this measure so we can look at this again more broadly and keep figuring out what are the efficiencies we can generate across our system.

Thank you. Thank you. Seeing no further questions. We'll open this up for public comment. Please, if there is any public comment. Keep your comments under a minute if you can.

Mr. Chair and Members, Michael Pimentel here with the California Transit Association. I just want to know that we were before the Legislature in 2023 to request funding for transit operations.

And as part of that discussion we delivered to the Legislature and worked with you ultimately to enact an accountability framework for improving transit service that yes, includes a focus on fare and Service Coordination and Integration. That framework includes detailed annual reporting to regions like mtc, as well as the establishment of a new Transit Transformation Task Force.

Those processes are underway on timelines that you all established, and they've not yet been completed. The task force report has not been finished. In fact, it's due to you all in October of 2025.

And I think for us, the question that we have is why should this audit move forward before those processes, which again you establish in statute in 2023 have yet to be concluded? They look at many of the issues that are before you in the audit.

There is a paper that outlines the symmetry between this audit request and those information requests, those accountability requirements. We would ask that this audit not be approved. Thank you, Mr. Chair. Members. Matt brought here on behalf of the Teamsters and Amalgamated Transit Union, we would just echo the comments of the cta. Thank you.

Steve Wallach, on behalf of the California Association for Coordinated Transportation Calact, we also echoed the comments made by the cta. These consolidations don't always result in savings and sometimes they aren't done because they cost more money.

Mr. Chair, Members, Louie Costa with Smart Transportation Division. I'll echo the comments of the CTA and just add we also have some serious concerns, the effects of consolidation on the workforce. And we respectfully ask that you reject this budget request or this audit request.

Thank you to the Members of the public. Senator Wahab, would you like to briefly close?

Thank you, Juan. I appreciate everybody's comments, including those that do not want this audit. This audit is not about penalizing anybody. And I do support the line staff that does the hard work every day to make sure that people get to work on time and so forth.

It's about ensuring that public dollars are used wisely and that riders get the system they've been asking for. Roughly 89% of people have been wanting in surveys and actual consolidation. This effort is actually not about consolidation. It is something that I have been pushing for, and I want to be very clear about that.

But as our tax dollars keep increasing, tolls also keep increasing. Nearly our tolls may potentially even hit $11 by 2030. It is not fair to the average public. And so with that, I respectfully ask for an eye on this audit because it is needed. It is good governance, it is good accountability.

And we will get the answers we need and make the appropriate decision after the audit based on their recommendations. Thank you.

Thank you. Senator, we have a motion from Quirk-Silva. Second by Ransom. Madam Secretary, can you please call the roll?

[Roll call]

That audit is approved. Thank you. We will now move on to the next audit. Senator Archuleta, thank you for your patience. I know you have been here for quite a long time. This will be audit 2025108 California community colleges Reserve Fund oversight. Senator, please start when you're ready. Good.

Good morning, Mr. Chair and Committee Members. I'm Senator Bob Archuleta, and I would like to first begin by thanking the chair for his work with my office. I am here today to request an audit of excessive unrestricted reserves in California community colleges.

Specifically, I am requesting audits of five California community colleges districts as well as the Culbright College, selected to represent a diverse cross section of the state's community colleges. The selection of colleges will include a mix of rural and urban schools of varying sizes, geographically distributed throughout California.

This approach will ensure that the audit findings and recommendations are representative of the diverse needs and challenges faced by community college districts across the state, providing a comprehensive understanding of the Reserve balance issue and its impact on the student's success.

The California Community college system plays a vital role in providing accessible and affordable higher education to millions of students across the state, and they have a great history of doing that.

The California Community College Chancellor's Office has recommended that districts maintain sufficient unrestricted reserves with a suggested minimum of two months or a total of General Fund operating expenditures approximately 16.67%. However, many districts hold reserves far exceeding this recommendation, potentially diverting resources from supporting student success and improving teaching and learning conditions.

Over the past decade, a sufficient number of community college districts have accumulated excessively high Reserve balances. As of the end of 2024 fiscal year, the average Reserve balance across all 73 districts was about 37.05%, which with some districts holding reserves exceeding 70% of their total General Fund operating expenditures.

Whereas an unrestricted Reserve total 1.8 billion in 2018 and 19 let me say that again, 1.8 billion and 281918 and 19 they have now grown to 3.5 billion in 2324.

When California community colleges hold excessive financial reserves without reinvesting in students and programs or infrastructure or caused a and it does cause a real lasting harm to the students. This is especially important when considering these institutions critical role in in advancing equality, workforce development and social mobility.

Despite the resources, some colleges continue to scale back on vital services like counseling, mental health support, tutoring and career development and services essential to student success and retention. California depends on its community college system to train workers and in high demand sectors like health care, green energy, technology and skilled trades.

Unused reserves means missed opportunities to expand these programs and to meet the evolving needs of labor market. When available funds aren't used to expand course offerings or student support programs, students may face limited access to classes or experience delays in completing their degree or certifications. The state funds community colleges to educate students, not to accumulate excessive reserves.

This audit will help ensure that public funds are used effectively and efficiently to support student success, as I keep mentioning, and it provides transparency and accountability regarding financial practices of community college districts.

It will help identify the reasons behind the accumulation of Reserve and the excessive Reserve amounts accessing the impact of student outcomes, and provide recommendations to ensure that public funds are being used effectively to support the primary mission of the community colleges by considering or by conducting a state audit of California community colleges reserves, we can identify areas for improvement and establish for best practice for financial management.

With me today in support, I have Sarah Thompson, Vice President of the Faculty Association of California Community Colleges, and Kay Purnell Trishner, President of the California Community College Independent. Respectfully, after your aye vote. Thank you.

Thank you very much. Welcome. If you could each respectfully keep it to three minutes, if you could.

Absolutely. Good morning, everyone. I'm Sarah Thompson, Vice President of the Faculty Association of California Community Colleges. Our college districts are required to monitor their budgets when their reserves get too low and threaten their solvency. But there is no system in place to check when those reserves get to be too high.

15 years ago, community colleges had $632 million in reserves. Now they have almost 3.5 billion. Experts say districts should keep about two months of expenses saved up roughly 17% of their yearly budget. But right now, the statewide average is more than double that.

With 37%, 21% of districts have more than 50% in reserves, and the highest topping out at 88%. These trends are concerning. We're asking for an audit because, as of now, there's no oversight for excessive reserves.

We have a fiduciary responsibility to our students and to our taxpayers to ensure that funding is spent as it is intended for student access and support, not savings accounts. I know Calbright is here today to challenge our request, or at least ask exemption from this audit. But public accountability and transparency are fundamental.

This audit is intended to evaluate the effective and equitable use of public funds across the entire system. Exempting Calbright College would undermine the very purpose of this audit. Calbright is publicly funded, receives an annual apportionment, but unlike traditional community college districts, does not rely on student tuition or enrollments as such.

Its spending patterns actually warrant greater scrutiny, not less. Given these factors, we ask you to please support this audit.

Good morning, Senators and Assembly Members of the Committee. My name is Kay Frindell-Tuscher, and I am the President of the California Community College Independence, a coalition of faculty unions representing educators in 13 districts across California.

I'm here today to strongly urge this body to Fund our proposed audit of the Reserve balances held by California's community college districts. While prudent reserves are essential, we are now seeing districts hoarding reserves at staggering levels, with some approaching or even exceeding 80%.

The biggest jump in reserves started after the new funding system for community colleges was introduced in 2018. This created a divide. Some districts got more funding and others got less Funding formula. Winners now have an average of 40% reserves and losers have an 18% average.

These are public funds meant to serve students, support instruction and invest in the mission of access and equity. Instead, they are being stockpiled with little transparency or justification while administrators repeatedly claim they can't afford to offer fair salaries to the faculty who power our institutions.

At least 50% of the classes at my institution are taught by part time instructors who earn 79 cents on the dollar to teach the exact same classes as full time instructors. At some districts they earn much less. District administrators also claim they cannot fully support classroom instruction and student programs resulting in understaffing and cutting.

For example, in my district we lack enough positions for instructional support in some STEM programs and we have discontinued a very successful certificate awarding theater program in the name of ongoing budget reductions across the state.

Our part time and full time professors, many of whom are struggling to make ends meet, are being told to tighten their belts while college bank accounts quietly grow unchecked. This is not responsible budgeting. It is a systemic failure to prioritize instruction and the workforce that delivers it. We are asking for basic accountability.

An audit will shine light on how these funds are being accumulated and why they are not being used to support the educational mission of our colleges. California's students and educators deserve better. Thank you for your time and I urge you to take action to ensure fiscal transparency and fairness in our community college system.

Thank you both, Mr. Parks. Thank you. Thank you. The audit request directs my office to select five community college districts based on geographic diversity and size, in addition to Calbright College, to address four primary audit objectives shown in your materials as Audit Objectives two through five.

Objective two has us determine the growth of unrestricted General Fund account balances over several years between fiscal years 1819 through 2526. Objective 3 has us determine the reasons why each community college has significantly more reserves than what the Chancellor's Office guidance suggests.

Objective four has us evaluate what oversight role the Chancellor's Office has in exercising oversight of Reserve balances.

And Objective 5 has us evaluate the effects, if any, there are on college students or staff when community colleges accumulate high Reserve balances, such as by evaluating whether college districts opted to increase reserves at the expense of investments to instruction, infrastructure, or student support and determining whether high reserves are in response to anticipated cuts to federal funding or other rationales for higher Reserve balances.

Overall, it's a fairly clearly defined audit request and I anticipate It'll take roughly 2600 hours to complete.

Thank you, Mr. Parks. I would now like to welcome up the agency's affected California Community colleges Office of the Chancellor and Council. Calbright College is also here. And gentlemen, if you could each keep your respective comments in three minutes. Thank you.

Good morning. There is still morning, Mr. Chair and Committee Members. I'm David O' Brien, Vice Chancellor for External Relations at the California Community College's Chancellor's office. My colleague Chris Ferguson, our Executive Vice Chancellor, is joining me as well.

On behalf of Chancellor Sonia Christian, I want to thank the Committee for providing an opportunity for us to respond to this issue and especially to thank Senator Archuleta for his longtime support of the role of California's community colleges in providing accessible and affordable higher education opportunities for California students.

Let me start off by noting that we do not object to or formally oppose this audit in any way. We think it is a perfectly valid subject for the State Auditor and for this Committee and the Legislature to consider.

However, our concern stems from the fact that the audit as proposed does not, in our view, fully account for the purpose of district reserves in maintaining fiscal stability. So as the Senator noted, districts are recommended to maintain a minimum of about two months worth of operating expenses in reserves.

This is based on a best practice provided by the Government Finance Officers Association, or gfoa.

Senator Laird, I spelled it out before I said the acronym, but GFOA does find that government or public agencies that are vulnerable to natural disasters, more dependent on volatile revenue sources or potentially subject to cuts in state aid and or federal grants, quote, may need to maintain a higher level of reserves.

And I think the message we like to convey today is that all three of these are situations that either apply or seem likely to apply to the California community colleges in the near future. I don't need to tell you, Mr.

Chair, or other Members of this Committee that natural disasters are certainly a factor impacting our communities and our community colleges, including the tragic wildfires in Los Angeles this year. The May revised budget that the Legislature and the Administration are finalizing now does include deferrals for community colleges in the coming budget year. Right.

Due to potentially declining state revenues, we continue to see signs of a potential economic downturn. And we have in recent weeks seen public consideration by the New Federal Administration of withholding large scale federal grants and other revenue sources to California's institutions of higher education.

All of these are situations why, in our view, Reserve funds play a crucial role in addressing unpredictable and mounting expenses and hopefully preventing districts from having to resort to layoffs, cutting classes or denying students the access to a higher education. We saw this in the years immediately after the Great Recession.

At its peak, we had over half a million students statewide who were unable to get into the courses they needed because of cuts that were forced by the revenue downturn after the Great Recession.

And that is why, if you look at the trend in district growth and reserves, you will see them start to build up those reserves after the Great Recession because they don't want to have to go through that again in the coming years. They don't want to have to consider layoffs of faculty or classified staff.

They don't want to have to consider rationing access to community colleges because we are, at our core, an open access system of higher education.

So we would simply recommend that the Committee and the Auditor consider not so much the question of whether high levels of reserves are harming students, as the author's request frames it, but how districts can stay fiscally solvent to keep serving students and avoid layoffs or cuts to course offerings in the future in the event of a decline in revenue.

So we think that that is the question that needs to be addressed here, and we're very happy to be able to discuss this with the Committee. Thank you very much, Mr. Lee.

Chris Ferguson, Executive vice chancellor. Mr. Ferguson, I'm sorry. Chris Ferguson, Executive Vice Chancellor of Finance and Strategic Initiatives at the Chancellor's Office. I just ask for consideration for a couple other items as this audit moves forward.

One is to also look at accreditation requirements because there are fiscal solvency components within accreditation, and we would certainly not want to be in a position where we have recommendations that may threaten a district's accreditation requirement.

And also just on a more technical basis, as we look at district reserves, to also separate out accounts receivables that may be in those district reserves. Accounts receivables can be in a district Reserve, but they're not real cash. They're money owed to a district. So would just ask that that also be considered.

Appreciate that.

Thank you very much. Colleagues, questions, Mr. Laird.

Let me just ask the author, given the couple of observations that were just made about considering receivables, and the first one he made, is that something that you would consider, even though I know it's we're not supposed to change audits here, said something that resonated with you in some way?

Yeah, I, I want to, as we've been hearing all morning, that not, not every thing is exactly the same in every school district or here, but I think the audit is so necessary to see. Why are you at 75% Reserve, Senator Arch LETIN Excuse me, excuse me.

I'm not arguing with the audit. I support the audit.

My question was, is he just offered some tweaks and some concerns, and I was just looking to see if you were open to them, because I know on the accreditation process, having watched San Francisco City College and some of the others, that due to fiscal reasons, it goes into a certain kind of receivership.

And since they're doing a lot of what might be asked for in this audit, whether that is a process that could be synchronized with the audit. So I was just asking your reaction to his two suggestions.

Thank you, Senator, for the clarity. Yes, that would be. And if I may, Mr. Parks, is accreditation included already within the audit scope?

Not specifically. However, I think what is included in the audit scope is to review the reasons why community colleges are amassed the balances that they have.

And so clearly, I think as part of our work, we would be having discussions with those colleges about why are you increasing your balances, whether it's for accreditation or whether it's for something else. So I already view that it's included in the scope as written.

I appreciate that. Appreciate the question from the Vice Chair. Any other questions, Senator Ransom?

I just explicitly was going to address the question by Senator Laird and ask that we just keep the audit as is. I had conversations with some of the folks, including the witnesses here, and I'd be really curious as to looking at the full picture.

And I know that we have to address each college differently based on, you know, those results, but I think fully treating every. Putting everyone under the same microscope and then adjusting later for whatever the causes is reasonable. Thank you.

Appreciate that. If Senator Becker, please.

Yeah. I'll just say I'm glad to support my good colleague and trust in his work here. I just want to make sure we acknowledge that reserves are not a bad thing. Right.

And I think we heard some good rationale here from our witnesses here about why reserves are necessary and why even substantial reserves could be necessary given what we're facing here the next few years. So just want to acknowledge that.

And in the context of, while we're doing this, to looking at the variation, I do support that, but just want to acknowledge that point.

Thank you, Senator Becker. Senator Fong. Thank you, Mr. Chair. Thank you so much to the Senate for bringing us forward. Just a quick question. In terms of the selection of the five districts, how does that process work? So the who's going to make the final determination?

My office will. So the audit objective specifies that we're supposed to select districts based on their geographic diversity and size. And so my team will be making that decision, although Calbright College is specifically called out.

Thank you. And just one additional question for the 73 districts across California, the. Every year they do fiscal reports, is there going to be, like, an overall scope of the 73 districts, just to have a data tabulation of every district or just going to focus on the five?

My understanding of the scope as written is we're focusing on the five.

Okay, but could part of the report just have an overall scope of the. I think that's just gathering the data point without. Just want to put that out there, if that's something I might be open to.

Folks, just for clarification on audit scope, and I do think that Mr. Parks did clarify to the extent that we are trying to broaden scopes of audits at this hearing, that would be against the rules of this Committee. You can actually take pieces of an audit technically away, but you can't broaden the scope substantially.

So that is just something for clarification. Okay, understood. Thank you so much. Senator Ashby, did you have a motion?

Yes, I want to. I just want to thank Senator Archuleta for being a constant champion of higher education and particularly the most affordable higher education. And, you know, thank the folks in charge for their. For their fiscal conservancy.

But also, you know, we're in a time where we really have to get this balance exactly right, and we have to make sure we're offsetting costs as best we can for these families. Senator Archuleta, like to move your audit.

We have a motion from Senator Ashby. Do we have a second? We have a second from Senator Becker and a third from Senator Fong. Let's open this up for a brief public comment before we go to a vote. And if any Member of the public has a comment, please try to keep your comments under a minute.

Thank you.

I'm sorry. Did we sit down? We're with Calbright College. We were asked to list our names or do we speak to simply during public comment?

zero, I'm sorry. Were you. Yeah, I thought. I thought that Calbright was. Was actually represented here. If you want to make your comment, I will give you two minutes because.

No, that's okay. I just wanted to clarify. Thank you so much. I hope it's morning. Good morning, Chair, Vice Chair, and Committee Members. My name is Jennifer Johnson, and I serve as the Vice President for Government Relations for Calbright College, the online community college district.

And we'd like to begin by expressing our sincere appreciation for Senator Archuleta's prioritization of transparency and Accountability in the finances of community college districts, proud alumni, as well as a focus on investing in student support and success. At Calbright, our core mission is to create opportunity for adult learners and support them in achieving their goals.

Whether that be making a career change, upskilling to earn a new promotion or learn a new skill, or simply expanding their abilities so they are able to more effectively do their current job. At Calbright, we have two sources of funding, not 19.

We receive an annual distribution of $15 million and we were created by this Legislature and then Governor Brown. We received a one time allotment to do all of our startup and that was 800 million. It went to 80 million. So those are our two funding sources. We have not received an increase in COLA Covid dollars.

Those are our two funding streams. At this time, Calbright projects roughly 4 to 5 million of unrestricted General Fund reserves at the end of the current year. Our steward enrollment is a little over 7700 students and more than 1500 certificates have been issued.

Nor that more than 90% of our students are older than 25 and the median age is late 30s. 70% of our students identify as BIPOC and a third are parents or caregivers.

I'm really excited to share that we're in 57 of the state's 58 counties, 39 of 40 rural counties, having just completed, respectfully a Calvary audit in 2023. Less than 24 months ago, the State Auditor found progress, statutory progress and non duplication to the system.

I'd be remiss if we did not advocate for our staff's time and energy from being required to participate yet again in another audit so soon, when already limited resources are across the community college system at this time could be better used servicing our adult learners.

This previous audit included an extensive and satisfactory review of our finances and operations by the California State Auditor who I know is here today. And as discussed publicly in our Board Meetings and through testimony in the Senate and Assembly budget hub submitted Committee, we've shared all of our numbers.

It's all public and we'd be happy to provide you a copy.

30 seconds.

For these reasons, we respectfully asked to be recused from this audit. And I also have my colleague Ed Lee, who's our chief Financial officer. Thank you so much.

Thank you very much. Any other comment from Members of the public? If you could keep it to one minute.

Good morning. Andrew Martinez, Community College League of California. We don't oppose the audit, but we do have some concerns we wanted to raise with you. We are definitely appreciative of the Legislature's proposal. Deferrals are always better than cuts. And we certainly are mindful of the governor's initial deferrals of two months of cash for us.

Mindful appreciative of the Legislature's proposal to buy down those deferrals for us significantly. We're also mindful that the PSSSA account was depleted under the governor's proposal and you are restoring $650 million at the end of the year. Those are all critically important for us as we move forward.

We'd also encourage that the audit look at Trans as well taxation, tax revenue anticipation notes because if a district does not have the revenues available for them, they have to go to market. So there'll be issuances, cost and interest costs for those college districts that have those issues going forward.

And then also we really, really want to be mindful of the fact the Federal Government seems to be going after California. That will have some impacts on us. We're already seeing that with Pell. We had to do a significant effort on Pell grants, reduction of Pell grants for our part time students. The trio is a significant problem.

If that goes away, if trio goes away, that's a significant problem. Accreditation also is a significant challenge that we're looking to be addressed as well. And we are very, very mindful of the accreditation standards, our local governing board entities to manage the districts as they were elected to do.

And so for those points, we'd like to have those added to the audit if it's possible. Thank you.

Good morning Chair and Members. Danny Mae Santiago on behalf of Calbright College. I'm the Government Relations and Policy Analyst. But today I'm speaking on behalf of our lab labor unions. So our California School Employees Association, Chapter 53, California Teachers Association chapter and the Calbright Academic Senate are all in opposition to this audit request. Thank you.

Thank you. Senator Archuletta. Brief. Brief Close.

Yes, thank you. Again, this is just to open a few doors, see where we can improve. I think all of us can look back at our education, friends, family that have gone through the systems in our community colleges. And I think we need to go ahead and make sure that we take care of our future.

And I think our community colleges is there. So the audit is something I think that we can hear that it would be a good thing. And I respectfully ask your.

I vote. Thank you very much. Senator. We do have a motion from Senator Ashby. A second from Senator Becker. Madam Secretary, please call the roll.

[Roll call]

That audit is approved and out. Thank you, Senator. Before we move on to the next audit, I'd like to lift the call on any audits that are currently on call.

[Roll call]

The Coachella Senator Cervantes.

[Roll call]

That audit fails. The next audit is going to be Senator Ashby. Thank you Senator, for stepping up. 2025117 victims restitution, state and local oversight. And then after that we will be going to Senator Cervantes for her audit. Senator Ashby, when you're ready.

Senator Harbin, can I ask you. I mean Assembly Member Harbing can ask you a question. Did you open the roll on the consent calendar as well?

Well, let's take a quick pause. That's. Can we open the consent before Senator Quirk-Silva goes?

Proposed Consent Calendar 2025109 Kindergarten Oral Health Assessment by Assembly Member Bontek. 2025110 California Institution for Men Infrastructure Management by Assembly Member Rodriguez. 2025114 Los Angeles fires Prevention and response by Summit Member Harbidian. 2025119 California community colleges Financial aid and enrollment by Summit Member Rubio.

2025121 Chino Hills State park wildfire management by Senator Seyarto. 2025128 Los Angeles County Department of Public Health, Chiquita Canyon Landfill by Assembly Member Schiavo.

[Roll call]

Thank you. And thank you for that. Senator, please.

Thank you so much. I will be as quick as I can. I am bringing forward a victim restitution audit.

The basis of this is to make sure that when we ask folks to pay restitution, that it goes to the victims and that additional cost can be accounted for so that we as the Legislature can make good decisions about how we address the policies moving forward around those issues.

So the State Auditor, our ask of him here is to assess the restitution procedures for the Department of Corrections and Rehabilitation as well as the Franchise Tax Board and the Victim Compensation Board and county collection programs. California allows crime victims to seek restitution from a person convicted of an offense against them.

The average restitution order before fines and FEES is about $10,000. However, most individuals who are ordered to pay that can't afford it and as a result the offenders live with debt and the crime survivors recently receive little to no compensation.

If someone fails to fulfill their restitution order, their account is escalated to a statewide collection program, usually CDCR or the Franchise Tax Board, but not without first assessing whether non payment was voluntary or due to hardship, which we would like to see happen.

In some cases, interest is imposed or wages are Garnished, which only exasperates an already dire situation, leaving survivors with even less compensation. And if individuals are forced to pay a fee over the portion that is being paid to victims in priority order.

Additionally, the process of paying restitution varies depending on where a person falls within the justice system. CDCR oversees payments for individuals who are incarcerated, but the collection for people who are on parole is done through the counties, which creates a wide variance in disparities.

California lacks a standardized system for tracking payments, which makes it very difficult for one of us when we want to take up legislation to make sure we can help people to understand which legislative body to attempt to modify.

It's unclear how much restitution has been ordered, how much has been collected, what's still unpaid, what's fees and fines and what's going to victims and what's not. It remains unclear because the amount kept by CDCR, ftb, Cal, vb, vcb, or counties as fees, penalties, and interest is varying.