Joint Legislative Audit Committee

Alright. We're gonna get started here so that we can keep moving. We have this room until 04:00, and that's a nice tight timeline and wanna make sure we we finish everything before then. Welcome to the joint legislative audit committee. We are having our first hearing of 2026, and we are going to be considering new audit requests.

Obviously, no disruptions. Please be polite and don't try to impede today's proceedings. I know no one would do that, but I have to actually formally say that. And, obviously, thank you guys for all being here. If you are looking for public safety, that's next door now.

This is this is the JLAC committee herein. And it doesn't look like we have a quorum, so we're gonna proceed as a subcommittee. And I'm going to invite our state auditor, mister Parks, to come up and give a brief status report. And then we will probably have a author or after you're done, and then we can get into the first auto request. So mister Parks, take it away and take as much time as you need.

Good Afternoon Chairman Harabedian members of the committee its a pleasure to be with you this afternoon. Before we discuss the proposals for audit request today, I thought I'd provide a brief summary of my office's activities. As far as JLAC work goes, as you note in your materials today, we have, 10 audits previously requested by JLAC that are currently in progress. Eight of these JLAC audits will be released over the spring and the summer, with the remaining two audits to be issued this fall.

The only audit we've yet to start is the pesticide audit that was requested by Assembly Member Connolly, which we anticipate starting this spring when Senator Ashby's victim restitution audit is published.

I'll also note, that my office continues to engage in litigation with the city of Huntington Beach regarding an audit that JLAC approved in 2024, where the city disputes our authority to conduct the audit. Legislative counsel's office, along with the assistance of outside counsel, is handling that litigation on our office's behalf. In addition to our work for JLAC, we also have other audit responsibilities pursuant to various statutes, including our state high risk program. We currently have five such statutory audits in progress.

We have an audit of the UC and CSU systems with respect to their processes for investigating and responding to allegations of sexual harassment.

That audit should be coming out this summer. We also have an audit underway at the California State Bar regarding its administration of the troubled February 2025 rollout of the state bar exam. That'll be issued this summer. And we also have three audits in progress under our state high risk program. We have an audit examining the state's late financial statements.

We've contracted with KPMG to conduct that work. They're not evaluate they're not only evaluating my office, but also the SEO and several other large state departments to get a better handle on the causes behind the state's late financial reporting. We are also conducting a state high risk audit focusing on the safety and maintenance of an oversight of dams and levees throughout the state.

And finally, we have a state high risk audit underway with respect to eligibility determinations under Medi Cal, focusing on the Department of Healthcare Services and various local county departments that play a role in eligibility determinations. And that is expected this fall.

In terms of other potential work that JLAC may wanna consider, when we always plan our year for audit activity, we consider the possibility of conducting additional state high risk audits, and so that's really a function of, workload resources and the number of audits that JLAC approves.

But workload permitting, it's quite possible that my office would be engaged in an audit of the employment development department and its unemployment insurance program, given what we listed in our most recent state high risk report, and also the Department of Social Services and its SNAP CalFresh program, taking a look at the payment error rate associated with that with that program. In terms of staffing, I'm pleased

to announce that our office has now grown to just over 200 employees, 30% increase from when I began as state auditor three years ago, of which roughly a 120 are audit and audit specialist staff. And so after two solid years of staff growth and retention, we've now reached our staffing limits based on our annual appropriation. And with that, I would, estimate that we currently have the staff resources to start five JLAC audits between April and July. And with that, mister chairman, those are my opening comments.

Thank you, mister Parks. Any questions? Thank you for that. Are you still enjoying it?Good. Well, we we love working with you. We appreciate everything you're doing, and thank you. And we'll be hearing from you on a on a number of these. So you can stay there if you'd like or you can retreat. It's up to you. Would you okay.

Great. So today, we have a few notes. Assemblymember Silva has asked us to hold her audit request 2026-124 regarding prop 28. So that will not be heard today. Also, the audit request for 2026-1126 by Senator Allen regarding the PUC, Public Utilities Commission, is being removed from our consent calendar.

So that would be placed on regular calendar, and he will be presenting that. We have five audit requests to consider. One of these audit requests is on proposed consent calendar, so we will have four presentations. The one audit request on proposed consent is, Assemblymember Lackey's, the DMV license revocation will actually vote on that once we get a quorum. For all the requests, for presentation, we'll do the standard format.

The member who is requesting the audit will present. We will then have up to two witnesses followed by the state auditor, and then we will have questions from the committee, and then we will have questions from or comment from the public, and they will we will vote. So I do have a Senator here ready to present. Senator Cervantes, if you would like to proceed with your audit twenty twenty six one thirty four California fusion centers state and local oversight.

You can get started whenever you're ready and which will then follow. Do you have any witnesses here today? Okay. You can if you are a witness on this, you can come up now and join us at the table. And, Senator, proceed whenever you're ready. Thank you.

Thank you, mister chair and committee members. Colleagues, this audit request aims to examine the state and local oversight of California's fusion centers, entities that have operated in secrecy for nearly three decades, largely unregulated and without meaningful public or legislative oversight. California has five fusion centers operating under the state threat assessment center embedded in a national network of 80 DHS designated centers. They bring together federal, state, and local law enforcement public agencies, private contractors, first responders to collect, analyze, and distribute intelligence.

No law established this network, defined its mission, or authorized it to operate as a domestic intelligence collection mechanism.

The infrastructure at fusion centers is designed to gather information about individuals' identities, movements, activities, and relationships, and distribute that data across multiple levels of government and private entities for purposes that remain largely unknown to the public. A 2032 senate investigation found that DHS support for fusion centers produced little, if any, benefit to counterterrorism efforts while routinely generating intelligent reports that were poorly constructed, ultim ultimately, also endangering civil liberties of Americans.

During the 2020 racial justice protest, Northern California's Regional Intelligence Center issued bulletins to over 14,000 officers that broadly labeled protesters as Antifa. Without specific threat information, echoing language used to demonize constitutionally protected dissent. Fusion centers have shared surveillance tools with ICE agents circumventing California sanctuary protections under sb 54.

Local law enforcement has used fusion centers to search ICE deportation databases without warrants, enabling officers to target individuals based on personal disputes with zero safe guards against abuse. Environmental groups, Native American tribes, reproductive rights, demonstrators, and labor organizers have all been surveilled under the guise of public safety. Fusion centers mine personal information, who we are, where we go, what we do, who we know without regulation or accountability. A 2020 breach exposed 269 gigabytes of sensitive data from 251 law enforcement agencies.

The public still doesn't know how their data is being collected, stored, shared, or secured.

In California, ICE has informally sought assistance from the Orange County Fusion Center to help locate immigrant vehicles. Additionally, a US Senate review along with findings from the BlueLeaks document highlights four fusion centers that collaborate with US immigration and custom enforcement on deportation matters, providing various surveillance tools to individuals who identify themselves as ICE agents. For example, the Northern California Regional Intelligence Center has routinely requested access to DMV records, social media information, and license plate data.

This audit will examine Fusion Center's legal authority, funding sources, personal vetting, data system access, training, information security, and management oversight. It will assess compliance with California law including sb 54 and determine whether taxpayer resources are being used lawfully and effectively.

It has been thirteen years since the last federal audit. I am not seeking to ban fusion centers. I am seeking transparency. 40,000,000 Californians deserve to know whether these centers are serving their intended counterterrorism purpose or whether they have become unaccountable surveillance infrastructure operating in the shadow of our democracy. Today, I have two witnesses who are here, mister chair, to testify.

Mike German here Gurman here is sixteen years as an FBI agent, including undercover assignments in domestic terrorism, investigating targeted violent neo Nazi groups in Southern California and far right militia groups in the Pacific Northwest, and George Pomerampathu, a legislative attorney with ACLU California Action who covers criminal justice and policing issues.

Thank you, Senator. Please, sir, you'll have two minutes, but I'll give you a little bit more time if you need it.

Thank you, chair Harabedian and committee members. I'm Mike German testifying in favor of auditing California fusion centers. After the nine eleven attacks, the US Departments of Justice and Homeland Security developed a national network of approximately 80 intelligence fusion centers, providing funding, personnel, and access to federal law enforcement, military intelligence data systems. But the federal government does not accept responsibility for ensuring that this network operates legally or effectively.

Fusion centers are extensively state operated agencies that house federal, state, and local law enforcement agents sitting alongside nonlaw enforcement, first responders, and public health officials, national guard, and unnamed private entities and contractors.

Each of these entities have access to sensitive information but are governed by different federal, state, local laws, and regulations that limit their authority to collect, retain, or share personally identifiable information about California residents. Co locating them in a fusion center breaks down the arm's length relationships between these entities, subverts the laws designed to protect Californian's privacies, and undermines protections inherent to our federal system of government.

The fusion center network operates mostly in secret with opaque authorities and governance structures and virtually no public accountability or independent oversight from elected state and local officials. As a result, fusion centers have regularly produced inaccurate, inappropriate, and biased intelligence reports, often mischaracterizing First Amendment protected activity as threat to be monitored.

The Northern California Regional Intelligence Center's memorandum of understanding states that information it disseminates, quote, may not be accurate, end quote, and requires member agencies to formally acknowledge that, quote, neither the suppliers of shared data nor NCRIG are warranting the accuracy of such information, end quote.

Spreading unreliable information doesn't improve security. As federal law enforcement and immigration agencies are increasingly acting lawlessly, it's essential to subject these state and local intelligence operations to democratic controls. An audit is an essential first step toward this goal. Thank you.

Good afternoon, chair and members. George Parampathu speaking on behalf of ACLU California Action in strong support of this audit request. Fusion centers are black box information gathering and sharing sites between local governments, state governments, and the Federal Government. To get an idea of what I mean by black box, consider this. If you look up the phrase fusion center in the California code, it does not come up.

If you look at the phrase state threat assessment center, the state level fusion center, it comes up just once in a provision relating to a cybersecurity team. To highlight just how ridiculous that is, if you were to look up my name, George, in the California code, it shows up 12 times. I must also note that their funding is Berkey at best. The line item fusion centers fall under is a $4,000,000,000 grant program administered by OES. We do not know if they get $10,000,000 or a $100,000,000.

So fusion centers do not exist in the California code. They barely exist in the budget, but they certainly exist in each of California's major cities. There's one in San Diego. There's one in Orange County. There's one in LA.

There's one in San Francisco, and there are two here in Sacramento. And they are spying on all of us. Given this black box nature, we have no way of knowing which of our laws they are following and which of our laws they are constantly violating. For example, s p 34 rightfully prohibited the sharing of ALPR data with out of state entities, yet we know that fusion centers are storing ALPR data from local departments.

And the entire point of fusion centers is to create a free flow of information between our state, other states, and the federal government.

Without real oversight, we have no way of knowing who has their hands on our data. We don't know how many of Trump's assaults on our freedom have been aided by these fusion centers. We must find out who fusion centers are spying on and what they are doing with that information. For these reasons, we strongly support this auto request and look forward to future bills placing meaningful limits on fusion centers. Thank you.

Thank you to you both. Mister Parks.

Thank you, mister chair. California's fusion centers are led by the state threat assessment center, which is operated by the California Highway Patrol, the Emergency Services, and the California Department of Justice. Senator Cervantes' audit request directs us to focus on the State Threat Assessment Center, and also two local fusion centers to be selected by my office to address seven primary objectives shown in your materials as objectives two through eight.

Objective two has us focus on the oversight, the staffing, and basically asks who has access to information in these fusion centers. The request has us focus on identifying what kinds of oversight exists to ensure that these fusion centers comply with applicable law, seeks clarity on the organizational structure of these fusion centers, and also the reporting relationships with respect to who has access to information.

Objective three has us focus on the legal authority for fusion centers to determine how information is shared, specifically calling out whether or not fusion centers and local law enforcement are sharing intelligence with the federal government for the purpose of immigration enforcement. Objective four deals with data quality standards and enforcement, as the presenters talked about. Objective five has us focus on whether or not fusion centers have controls in place to prevent the unauthorized disclosure of data.

Objective six focuses on whether or not fusion centers rely or make significant use of private companies, nongovernmental entities such as proprietary data systems, analytical tools, or datasets that are owned by nongovernmental entities. Objective seven deals with where does the funding come from for these for these fusion centers, such as by federal, state, or local resources, and what kinds of in kind contributions are being made.

And finally, objective eight has this focus on how do fusion centers themselves evaluate their own performance? What metrics what performance metrics do they have, and what have the results been of their own internal reviews? One note that I will mention in addition to commenting that it's a fairly comprehensive request with several objectives and subparts, there are some potential access issues that I would wanna make the committee aware of.

The first one has to do with, just acknowledging for the committee that my office does not have jurisdiction over the federal government or its intelligence data. Fusion centers are partnerships between federal, state, and local entities.

And while our work would primarily focus on how state and local entities support fusion centers, we may be limited in what we can say about data or policies that originate from the federal government. Fusion centers may also assert we lack the necessary security clearance to review the intelligence data they collect. I'm not saying we can't do this work. I'm just cautioning that this is going to require count legal counsel to legal counsel discussions between my office and those that represent fusion centers.

The other comment that I would make for the committee's awareness that we may in addition to an access issue, we may have limitations in terms of what we can public the state in an audit report.

My office cannot release information that is prohibited from public disclosure. And so when we're dealing with intelligence information, naturally, there may be some laws and limitations in what we can disclose. So again, I'm just highlighting for the committee that that would likely entail significant conversations between my legal counsel and the legal counsel of the oddities involved. And with that, I'd be happy to answer any questions.

Thank you very much. Before we get to that, are any of the affected agencies or subject agencies here today to testify? And seeing none, I'll bring it back to my colleagues. Colleagues, any questions? Mister Demaio?

Miss Cervantes, since the three weeks ago when military action was taken against Iran and a variety of terrorist groups started attacking noncombatant states and making threats about, attacking, civilians here in The United States. Did you at any moment pause and reconsider whether now may not be a great time to go into these, centers that are designed to detect terrorist activity and monitor terrorist activity on our homeland? Do you think that do you have any concern about going on this fishing expedition? Does it give you any pause?

Through the chair?

Please.

It is imperative that our state provide a thorough audit of fusion centered activities, which include full disclosures of any cooperation as stated in the analysis that you have with ICE surveillance of protected First Amendment activities and the misuse of public funds, as well as the audit on its intended use of counterterrorism efforts. So looking at performance metrics as well as the results of that internal review that they hopefully will be doing should this be let out of committee.

A brilliant nonanswer, but it it basically confirms that no. You did not, for a moment, hesitate, take pause, reconsider, which I find shockingly bad judgment. This this is a politicization

of our audit function. The fact that the auditor is sitting here having to waste time on this. If you wanna play politics, play politics on CNN, MSNBC, Fox News. There's a variety of forums for that. But I think taxpayers expect legislators to set aside political agendas and witch hunts and to say, when we do audits, it's about the public use of money.

It's about looking at the effectiveness of programs, not making unfounded accusations based on hysteria. And and and, again, it's clear why you're doing this. Let's be quite clear. You're not worried about people's personal information because you would have raised it under Biden's administration. You would have erased it in the past.

You didn't raise it then. No. It's very clear based on a very specific audit query that you have that you're trying to disrupt any sort of enforcement against illegal immigrants. Now if you wanna deny that, then go on record denying that. And and maybe we can expunge that portion of your request from the audit.

But it it it's not at all an interest in the privacy of California citizens that drives your audit. So let's not mistake that. Own what you're trying to do here. You're trying to put the interest of illegal immigrants over the safety of citizens without, you know, can care for privacy because it seems like privacy is a window dressing here because you did not raise this until president Trump started enforcing the laws of this country against illegal immigration. And so I cannot support this audit.

It is a a political witch hunt. I think that it it it comes at a time when we need our threat assessment centers to be focused on what actually is happening. I will actually do something that I don't do very often, and that is quote governor Gavin Newsom. He and I are not Christmas card exchangers. But he says, quote, the threats facing California are constantly evolving, and law enforcement agencies need the flexibility to shift priorities to meet this ever changing threat landscape.

He's speaking specifically about the state threat threat assessment program that he has oversight of. And I would assume that you would not be accusing the governor of going arm and arm with president Trump on on sharing any inappropriate information. So I would urge my colleagues.

This is not the time to politicize when homeland security is being stretched, when we know that there are risks and threats that are ever changing, I urge you to reject this audit and to ask the audit to look at other important priorities of of California taxpayers.

There's no question pending, but I will ...

If I can respond ... Well, I I know my witnesses who have, experts, who are the experts. I'd love them to also jump in, but I do wanna say that we can protect national security and public safety while preserving our essential civil liberties. This audit is about transparency and ensuring that taxpayer taxpayer funds are being spent in compliance with our law.

Please. Please.

a time of heightened national security risk is exactly when you want to know that intelligence agencies are operating efficiently and effectively and identifying real risks and not sending phantom reports that that did that chase inappropriate or or mistaken threats and instead focus on actual threats.

And you may remember during 2020 when Washington State Fusion Center released a report saying that Antifa was starting the wildfires, and California law enforcement was chasing all over the country during time of heightened protests trying to find these Antifa buses that apparently were taking people around the country to create harm. It's a waste of resources when they're not operating in a manner that can stand up to public scrutiny, and that public scrutiny is necessary to make sure they're acting appropriately.

To put a finer point on what former FBI agent Mike German just said, the main product of fusion centers are suspicious activity reports or SARs. To give you an example of, you

know, how useless this information is, here are what they have said. Quote, Middle Eastern men buying several large pallets of water, end quote. That is an SAR produced by a fusion center. Another one, female subject taking photos of Folsom Post Office. That's the second one.

Two Middle Eastern men look two Middle Eastern looking men taking photographs of Folsom Dam. Another one, suspicion suspicious photography of Folsom Dam by Chinese nationals. That is what these fusion centers are producing. To put an even finer point on it, the twenty twelve senate sub subcommittee, report that Senator Cervantes referenced noted that in their overview of thirteen months of fusion center productivity is a generous way to say it.

Their conclusion was, quote, subcommittee investigation could identify no reporting which uncovered a terrorist threat nor could it identify a contribution such fusion center reporting made to disrupt any active terrorist plot.

Fusion centers do not produce useful information. To make matters worse, that same report found fusion center surveillance of innocent constitutionally protected activity was, quote, a regular problem. There was no issue with trying to see what these fusion centers are actually doing. And lastly, I'll just say this is just an audit. We are not shutting down fusion centers.

They're free to do our whatever they want until the audit is completed.

Thank you. Appreciate that. And perhaps I would be a little bit more open to the constructive criticism if the agencies had actually bothered to show up. So with that, any other questions? We will now open this up for public comments.

Any any statements of support? Please just your name, your organization, and whether you support the audit or not.

Chao Jun Liu with the Electronic Frontier Foundation in support of the audit. Thank you.

Thank you. Seeing no other public comments, Senator, would you like to close?

Thank you. Again, this audit is essential for fostering transparency and clarifying the role of fusion centers in our state and respectfully ask for an aye vote.

Thank you. And I will have a strong I recommendation when we actually have a quorum. I appreciate you bringing the audit. Thank you to the witnesses. We do not have a quorum, so we cannot take a motion.

But I do see, Senator Perez, who I believe is the next signed in, Senator. Actually, excuse me. Senator Allen is the next signed in. Unless you guys wanna arm wrestle and and decide who goes next, I'm happy to Okay.

Senator Allen, is signed in next, and his audit twenty twenty five one twenty six public utilities commission utility timely timeliness oversight.

Senator, great to see you. You can start whenever you're ready.

Well, good afternoon, mister chair, members. Thanks for allowing this opportunity to present this, audit request to evaluate the Public Utilities Commission's enforcement efforts on missed interconnection timelines for customer, site of storage and, solar projects, namely large and non NEM storage projects. Now these systems are primarily designed for on-site consumption, not for selling power back to the grid. Historically, this is typically included solar and storage installed by hospitals and schools and apartment complexes, businesses. Although homes are now increasingly installing non NEM projects as well.

Now when customers install these projects, they can't turn their system on, of course, until the utility reviews it and gives its repu approval. Over the last five years, our two largest investor on utilities have repeatedly missed state mandated timelines to review and approve these new projects, particularly for large projects exceeding 30 kilowatts and non NEM projects.

So the PUC has something called rule 21, which mandates specific timelines by which utilities need to reach certain milestones, yet some of those milestones are missed as much as 73 of the time. Despite these existing requirements, the PUC has yet to enact meaningful enforcement actions.

Senator Allen, if I may just interrupt you really quickly so that we can get a quorum established, and then I'm going to allow you to finish that sentence. Madam secretary? I think we do have a quorum now. False alarm. Please continue. You were doing so well too.

So so we have these existing requirements, but the PEC has yet to enact meaningful enforcement actions. And I'm certainly aware that they've recently conducted some workshops and discussions, where the topic of Internet interconnection timelines, was brought out. That's a good thing, but but those actions don't alone constitute meaningful enforcement of rule 20 one's mandates. We obviously know California's, you know, led, the nation, in in many of these areas with regards to cleaner energy.

But the real concern now is with these significant delays, it it creates some uncertainty for a project completion, and and that can have real consequences.

Not only can it increase, the cost for consumers, but it also may reduce incentives to install those needed, solar and storage projects for various folks around the state. Just to give you one little example, in the city of Richmond, a nonprofit community center waited three years for PG and E to approve their solar and storage system that would have served as a community resilience hub in an area frequently affected by PG and E brownouts.

In 2023, an apartment complex for low income seniors in Inglewood submitted their application for solar system that would have lowered housing costs for their residents, and they they didn't receive permission to operate for, you know, over two years. Now while these are, you know, two particularly egregious examples of delayed approvals, there there are many more common occurrences, especially among our growing residential installations. So this audit seeks to provide an overview of how PUC is enforcing rule 21, if at all.

It will provide recommendations that the PUC may consider in order to improve compliance and enforcement. Given the length of time that this issue has persisted, I believe the results of this audit would could help to guide further action on this issue by the PUC. So here with me today, I've got, two important, perspectives to support this audit request. We have Brad Heavner, who's the executive director of the California Solar and Storage Association, and then Rick Brown, who's a member of the school energy coalition executive committee.

And as a former school board member, I know, what its challenges has become for a lot of school districts that have been looking to, install solar on their, school facilities, and yet they've gotten jammed up because of these long, long interconnection wait time. So I'd love to turn it over to my witnesses.

Thank you. Gentlemen, two minutes each.

Okay. Good afternoon, mister chairman, members of the committee. I'm Brad Heavner. I'm the executive director of the California Solar and Storage Association, CALSA. I've been with CALSA for twelve years now.

And throughout all that time, one of my top priorities has been streamlining the interconnection process. And we have worked through some challenges. But on the issue of utility timeliness, I have to say we really have not made any meaningful progress in all of those years. The utilities are very skilled at making it seem like they're making changes to to be quicker and and and meet the guidelines, but do not make meaningful progress.

And now they're playing down this issue both here and at the PUC saying it's not as bad as as we say it is, but their information is misleading.

They talk about getting things done in a handful of days, but they're really just talking about one step in the process. And there are other steps in this interconnection review process that can take a hundred days, two hundred days, even more than that. And they say that their performance has recently improved, but looking at high level analytics, it's really not true. We just looked at the last half of last year, and this 73% figure for the one very important step has gone up 82% noncompliance.

So this is this is hurting customers financially because they take out loans often to develop projects, and they don't see the benefits of the projects for months or even years later than expected.

So what we're talking about here is not cookie cutter residential solar systems. We're talking about three things. Larger systems for hospitals, schools, apartment buildings, and businesses. Batteries without solar, which should not be more difficult for utilities to approve than solar. And also, systems that don't export energy to the grid.

They're just for on-site consumption. And a lot of customers are are are seeking to do that now as they add electric vehicles and heat pumps. And so we are slowing down electrification if we make it hard and and expensive for customers to add their own generation as they add EVs and and other electrification technologies. PUC staff

And that is two minutes. So I'll let you I'll let you finish up. Okay. Yeah.

You good? Yeah. Two two quick things. PUC staff are obviously well intentioned smart people, but they feel powerless. They nudge the utilities in the right direction, but when the utilities dig in, they give up.

And then senior PUC leadership really appears to me to not consider this a top priority. And so the question I have is if they did truly seek to solve this problem, what tools would they have? What could they do that they're not doing now? I wish I understood that better. I wish we all understood that better.

I wish they understood that better. And I think the state auditor can help

Thank you. Mister Brown?

Yes. Thank you. Rick Brown, I'm here representing the School Energy Coalition, which is a group of schools and private companies that work to educate and advocate on behalf of schools around their energy needs and costs. And as Brad mentioned priorities, if you talk to the members of our coalition, frankly, if you talk to anybody involved in schools, the issue of electricity costs and electrification needs is one of the top priorities. It's something that has gone from being, you know1520 years ago.

Yeah. We'd like to save money, but our electric bills aren't too bad to as any many of you know, today, electricity is one of the fastest growing costs that they're facing. And yet when they try to and when our members try to address those costs by implementing things like energy efficiency or solar or battery storage, they run into the kind of problems that Senator Allen and and mister Hevner's talked about.

Time is money, and the time delays that occur in this interconnection process are costing these schools in the project development cost, but it's also lost cost savings from implementing those projects.

I'm gonna ask you to wrap up

if you can. What I wanna make. One of the things that's not recognized is these large projects very often offset the need for grid upgrades, which actually saves money for rate payers. So the delays in these projects not only are hampering school costs, they're also impacting rate payers.

Thank you very much. Mister Parks.

Thank you. Senator Allen and Becker are concerned with CPC not enforcing interconnection thus some utilities have not been held accountable while the resulting delays hurt customers financially as they incur leasing or loan costs on expensive solar and storage systems that they cannot use. The audit primarily has three audit objectives, shown as objectives two through four. Objective two has us focusing on whether or not CPUC is effectively monitoring compliance with rule 21.

This would include looking at what resources CPUC commits to monitoring the types of data that it receives and how it ensures utilities take corrective action when they themselves acknowledge that they have not been meeting rule 20 one's requirements.

Objective three has us focusing on what enforcement tools CPUC has available. That would also include determining the frequency and the extent to which it is actually used to those enforcement tools and actual practice in response to violations that they have identified. And objective four has us evaluate whether or not CPUC has any data explaining why utilities struggle so much to comply with rule 21. This is a medium sized audit that would require, we estimate 3,500 hours to complete.

Thank you, mister Parks. Colleagues, questions? Mister DeMaio?

So I'm very supportive of the goal because I hear in my community the same complaints I'm sure you're dealing with. This is not a partisan issue. This is a a a rate payer, a consumer issue. But my big question is because there's a lot of things we have to audit in the state government, and we wanna be strategic in our use of the auditor's office.

Is this the is is the audit an appropriate vehicle, the most appropriate vehicle, the only vehicle to achieve the the goal of holding the CPUC accountable?

Why don't we go to them and say, we as a legislature consider this to be unacceptable. We want to see these issues resolved. We and then we just start asking them through our Senate and assembly oversight committees to report monthly on on the data. And to come to us and say, if you need more legislative authority, let us know because we're happy to carry the bill. But why do an audit?

And I'm speaking specifically to the auditor and then the the the the supporter or the the the, proponent of the audit. Could we just get the CPUC to do this in the legislature, to hold them accountable?

And we are going to hear from the CPUC. I I should have noted. Any questions for these? You can answer that. I'm gonna bring the CPUC up right after this, but go ahead.

I greatly appreciate the question. You know, my view as state auditor, and I never take positions on audit requests, it's to share with the committee what the audit entails and ultimately, fundamentally, it's the members of the committee to decide what's in the best interest of the legislature to get information via an audit. So I view my office as a information resource tool for you, and members get to decide how you want to use my office.

I know. But the question is, why use the state auditor? Because when you talk about an audit, it really is a specific discipline. There's specific methodologies that auditors use. There's specific queries that they're expert in.

This seems to be an accountability failure, and you go to the agency that manages the program day to day and say, here are your performance metrics. We're not gonna ask you for it yearly. We're gonna ask you for it monthly, And it's your rear end on the line. You know, Peter Drucker said, what gets measured gets done. I don't think that you need an audit to achieve the results here.

I think you could literally just say the legislature has a concern here. Here are the metrics we want you to report, and you're gonna report them to the chairs of both chambers monthly. And if you're not meeting them, we're gonna haul your rear ends in here, and we're gonna figure out why.

So I appreciate your your similar commitment to our to us on this topic. And we coauthored a letter expressing, this issue with similar to Addis. It took four months for the APOC to reply. They just highlighted that they've been holding some workshops on the issue. They're evaluating the issue through a proceeding.

But, you know, the FAQ, you know, the we we we basically we we talk about here in our in our request that the scope's vague. The proceedings take forever. They have an exhibit to take years. So we're we have been trying to put pressure on the PUC. I I don't disagree with the the the tenor of your of your, your questioning.

This has become a a a kind of an increasing area of frustration for a number of us, given their lack of real responsiveness. So we turn to this as a mechanism. There was even a bill that, Berman did a couple years ago, that didn't make it through on this topic. So this has become an an area of frustration for legislators. But I I it's a so I I I wish we could I wish they would be more responsive given the the normal avenues that we've tried.

Great. Thank you. Mister Brown Hefner, if you could retreat, I'm gonna bring up the CPUC representative. Is Matthew Coldwell here? And I do see him, and he will come and and give us his response, if you will.

I will give you three minutes, sir, whenever you're ready, and then we can finish with the questions.

So, yeah, thank you, chair and and members, for the opportunity to appear today. So my name is Matt Coldwell. I'm with CPUC's energy division. So the commission recognizes the importance of timely interconnection for customer sided, solar and storage, both for affordability and for advancing California's clean energy goals. So we understand understand the concerns that have been raised regarding interconnection timelines, particularly for the larger and and non m systems.

So in 2020, the commission adopted decision which established 19 defined timelines for the interconnection process instead of press a 95% compliance benchmark, and required utilities to report their performance on a quarterly basis. So since 2021, this data has been publicly available providing transparency into into the interconnection process and the utility performance really enabling ongoing monitoring by both the commission and stakeholders. So the commission has continued to actively pursue this issue. Staff convened a a public workshop in 2023 to review compliance and identify potential improvements.

The commission is currently considering refinements to the interconnection process in an open proceeding, including modifying timeline rules and compliance requirements.

So in parallel, the commission is also currently reviewing alleged violations of interconnection timelines in a separate proceeding. So both of these actions currently underway are former are formal proceedings and the commission must base its decision on the evidentiary record developed in this legal forum. So these formal proceedings are specifically examining compliance with the established timelines and what additional measures including enforcement may be may be appropriate to improve performance.

The CPC remains committed to improving interconnection processes, insurance ensuring transparency and accountability, and supporting the timely deployment of distributed energy resources while maintaining grid safety and reliability. So we really appreciate the committee's consideration of this audit request and look forward to working construct constructively with the state auditors should the audit be approved. So thank you.

Thank you very much. I'll bring it back to my colleagues again if there's any further questions. Mister DeMaio, please.

Can I just. this is your job, And now we're gonna have to spend money on another agency to do your job? And so I know it may not even be your your problem. It may be higher ups at the CPUC, maybe your commissioners. I have no idea whose problem it is, but it is your agency's job. And so now we are spending two times to do one job that you could have done.

My colleague sent a letter. Community members are upset that they're not getting an answer from the investor owned utilities, municipal utilities. That's your job to oversee them. You approve their rates. I think they would probably take your opinion on these things relatively strenuously.

And so what what what ticks me off is we have a lot of programs we should be using the limited bandwidth because we only have a few audits we can do in here. We are using that bandwidth because you haven't done your job despite the fact that legislators have questioned the lack of progress.

And I want every state agency to hear that if we have to have an audit done of every program when when legislators send a letter and we don't get a response, I think at that point, we need to start reconsidering budget allocations and FTE.

So please, you know, convey to the higher ups at your agency that, it's not just an audit, but I think the legislature is is gonna have to get to a point where we don't sic the auditor on an agency when the agencies are simply not doing their job.

Thank you. Mister Becker, you are a a co requester of this audit as well, and I know that you wanted to chime in. So please.

Thank you. Just a quick comment. Thank you, Senator Allen, for his presentation of witnesses. It has been good to see progress on interconnection timelines for projects that have minimal upgrades, but we really need to figure out how to speed up projects that require upstream upgrades, particularly on these projects that are high priority, for the state. So, you know, I do wanna acknowledge and appreciate that there has been work done.

There was issue of resource allocation, and we took care of that with some, some of that with SB410. And we've seen a a reduction of the backlog for PG and E on some of the projects that have minimal upgrades. But we need to really dig into these timelines for some of these other projects that are the focus of this audit here, where we're still seeing, very large timeline.

So I just appreciate the, appreciate the request and the focus and and, respectfully ask for my vote.

Thank you, Senator. Vice chair Cabaldon.

Yeah. Thank you. And also, mister chair, sorry for my tardiness. I had five bills up in committee just now. So just for the PUC, so you mentioned that you began that you're on the case and that you had a pub you had a public workshop in 2023, and then now you have a pending proceeding happening. Is is there was there anything in between? Or

So the the proceeding itself was initiated in 2024 late 2024 early 2025. And just recently and so we we've gotten a lot of stakeholder feedback and comments on this on that. We we call it an OIR or instituting rulemaking. And we've put several issues related to interconnection within that. We recently issued a scoping memo that really prioritizes this issue around interconnection timelines.

And so it's a it's an active proceeding, gives parties an opportunity to put evidence on the record to support their arguments, allowing us to build an evidentiary record where we can then make decisions based on that. So sort of the way the CPUC process works, procedural process. In the,

the background materials that were supplied by the requesters, they included I I think it's a CalMatters article from last fall. And in that article and I don't know whether this is typical or not, but the as the request for additional information from the CPUC about, about the issue was, I I think I think, to to paraphrase, was, you know, this potential is or potentially is part of an an adjudicatory proceeding, so we we can't comment.

Is that a is that is that the case with all of all interconnection cases, or is or is that limited to that specific case?

I'm not familiar with the CalMatters article, but I would say, you know, issues that are in front of the commission in a proceeding, the deliberative process, yeah, it's it's information that we ... that we can't we can't share outside, you know, of our internal deliberations.

And given what you know from internally and all the work that the PUC has done on this, do you know what the likely findings of I mean, can you imagine what the likely findings of an audit if it were to be undertaken would be?

I mean, I can't say because I don't know exactly, you know, what types of questions the auditor would ask the CPUC staff or data requests that they would make. So it's be premature for me to say what an outcome of an audit would be. I'll I'll just note that the interconnection data that the utilities have been providing, is public information. I think it was referenced earlier.

And so it's you know, there are certain timelines that the some of the utilities aren't doing a great job of meeting. I think we can agree to that, and that is precisely why we have prioritized this issue in our in our open proceeding is to address some of those, those issues.

Yeah. I think the I mean, the request articulates two pages of questions. I think that that that at least the requesters are are anticipating the the auditor would would ask, but it's trying to get to whether we because we don't we're not privy to individual cases, and it's well known to the POC already. Look.

We get there's a problem, and here are the here are the precise four reasons why, and here you know, and maybe that's why that's what you're working on now, or that you also don't know the answers to the questions, and the auditor is going to find us the answer.

I'm just trying which which of those lanes are we are we in? Is it do you know something that we don't know that will help us know, respond to the to the queries that are here? And maybe you could just share it with us now, and then we could agree with, Assemblymember DeMaio. Or is it that you don't know the answer either yet to these questions, and we might want to pursue an audit?

You're gonna get an award for saving millions of dollars if you answer correctly.

I mean, what I would say is did do I have a great answer to every question that was posed in the the auditor's letter? No. Again, I think that's what our proceeding is for, is to address a lot of these issues, allow parties to put evidence on the record to support the the arguments that they're making. They really I think form a lot of the basis of where those questions are coming from. And so that's how the CPUC does its decision making.

Okay. Well, I mean, that's it. I I I my my my own view is that this is, based on on on that testimony and and the request itself that this is precisely what an audit is for, that, without without teasing through some of these issues and the underlying cases and what have you, We're not flying blind. Obviously, the chairman of the utilities committee is here and is a close compatriot in the senate as well.

So it's not as though we don't we don't have theories, but that the audit is essential for us to really ease them out and also just to disconfirm some of what we might already might might already believe.

Audits are not I mean, just just a quick ad. My my view, audits are not they're not punishment. You know, they are not accountability for the purpose of, like, having somebody's head on a stake and running around and saying we we we we beat it out of you. We're just trying to get the answers, and understand this. And and the budget subcommittees have been unable to get the answers that are needed for us to do our job.

And so with the policy committees, they have they have limitations, but the but the the audit, statutes provide the auditor with more both more more more capability and more legal authority to get them. So to me, this this is an appropriate, matter for an audit. It's well scoped, and I'd be supportive be supportive of it as well.

Thank you. Any other questions or comments before we open it up for public comment? Seeing none, public comment, you will have up to one minute to speak either for or against this audit.

Good afternoon to the governors, and thank you to senators, Allen and Becker. Kim Stone and Stone Advocacy, there's a number of groups in support of this request, including the local government sustainable energy coalition, the tribal energy and climate collaborative Environment California, the Clean Coalition, Cut Loose, which is a business in San Francisco, Citadel Roofing and Solar, which is a business in West Sac127 Energy, which is a business in West Sac, and Bright Sky Renewables. Thank you very much.

Hello. Brandon Ebeck, on behalf of Pacific Gas and Electric. We have concerns with the audit, mostly about process. We we don't disagree with the fact that we are missing the timelines for the large projects. The audit does not cover the several thousand projects we do every month for the much smaller projects.

Those are on time. We believe that the PUC's rule 21 proceeding will allow us to set new appropriate timelines and benchmarks and also set the fees that we charge to do the studies. These projects are large. They have been becoming more complicated. Particularly these non export projects are more complicated to analyze how they interact with our system.

The fees have not been changed. We need to reallocate those to make sure that the program is fully funded. We do know what the delays are, which all the things that affect new housing, its permits, supply chain timelines, customer redesigns, name list goes on and on. So there's a lot of work that we can do productively at the commission. There's several dozen stakeholders that are part of that process.

And ultimately, we just don't want to have our folks who are working to connect these projects every day, responding to the proceeding, also have to deal with additional data requests that will be redundant from the state auditor. So that's just where we have concerns. Thank you.

Afternoon. EJ Aguay on behalf of Sunrun. Support. Thank you.

Thank you. Seeing no further public comment, Senator Allen, would you like to close?

Yeah. Just I I appreciate this discussion. I mean, I, you know, I shared a lot of the frustration that's been voiced here. And it's unfortunate to some extent that this is the path we find ourselves in.

I will say, I I do think the audit process can can lead to recommendations that could help hope to and hope to also shed some light on some of the complexities, some of the power dynamics within the PUC, and help us better understand how all of the processes work over there so we can have a so so we can push them more.

So, you know, thankfully, I've I've heard you know, the the auditor has assured me that this is, you know, we're not talking about a, a 7 figure, cost here. This is a more modest, audit, but but I I, you know, I think in a perfect world, none of these audits would be necessary. It's really not this one. But I I do think this is worthwhile.

I think we're gonna get some important information about a topic that is really impacting a lot of our constituents and our goals.

And with that, I respect you guys tonight.

Thank you very much, Senator. And I will have a strong eye recommendation for this once we have a quorum. So I appreciate the presentation. Thank you to our auditor. I would ask for any Senator who isn't here, who is on this committee to please report to Room 126 so that we could establish a quorum.

I'd ask all the members here. Thank you for being here. Please, even though we don't have a presenter ready to go, we do need to establish a quorum. I believe, Senator Perez will be here shortly to present her audit and Senator Umberg as soon as he's done with chairing judiciary. But we are one Senator away from from establishing quorum, and hopefully we can get one here shortly.

Senator Umberg has arrived. He has an audit request. His he he has an audit request. He is not a member. Senator Umberg, please, you can step up to the

I like how you do business.

Yeah. We're very efficient. We have this room for another hour and ten minutes. So thank you.

Exactly. We will continue to operate as a sub oh, I'm sorry, mister Umberg. Senator Perez is here, and she does she signed in before you. So I'm sorry. You but can you please stay?

Because then we will we will have you. Senator Perez first

age before

Senator Perez, welcome. For the record, Senator Perez represents the the best district in the state. It includes my assembly district, so it's always great to have her here. And she will be presenting, and her co requester was Senate member Fong. And the audit is Audit 2025-133 Department of Transportation, State Route 710 extension project.

Thank you for being here. You can start, Senator, whenever you are ready.

Okay. Give me one moment. Thank you, mister chair and members. I'm here today to request an independent audit of Caltrans administration of the former 710 extension project properties, including its implementation of the SR 710 affordable sales program. This program was created with the important goal of returning homes along the SR 710 corridor back to the community as affordable housing after they were originally acquired for a freeway project that was never built.

Unfortunately, for years now, residents across these communities have expressed to my predecessor's office and now to mine that the program is not being administered as intended. Instead, constituents have brought forward serious concerns about mismanagement, inconsistent application of policies, and an overall lack of transparency.

These issues that are not just bureaucratic, but in some instances directly affect people's health, their financial stability, and their ability to remain in their homes. An independent audit is necessary to provide a clear assessment of how this program is being implemented to ensure accountability and to restore public trust. Let me briefly highlight three examples of the issues we are seeing. First, there are significant concerns about property conditions. Tenants report ongoing past infestations, serious mold problems, and structural hazards that are not being adequately addressed.

In one case, a family dealing with a leak that caused mold exposure was displaced from their home for nearly one year. After proper improper remediation worsen the problem and later face demands for substantial background. Second, there are troubling inconsistencies and a lack of transparency in the sales process itself. Tenants report receiving inconsistent information about eligibility, unclear and frequently changing requirements, and uneven enforcement of policies such as lot splits. Some tenants have even received conflicting notices about whether they qualify for affordable purchase options.

In one case, Caltrans initiated a sale, imposed strict conditions, and then disappeared for five years while the property deteriorated and its value rose. When the agency returned, it increased the price, rejected a lower independent appraisal, and continued to alter the requirements. Nearly a decade later, the family still has no contract, no reliable price, and now faces major repair costs and the risk of displacement. Third, there are concerns about whether the program is fully complying with state law.

For example, some tenants were not informed of their right to pursue limited equity cooperative ownership, and in certain cases, that option was not presented at all.

These gaps raise serious cons questions about whether residents are being given a fair opportunity to access the benefits the program is designed to provide. These are not isolated incidents. They point to broader systemic issues that warrant an independent review. And as a body, as the state legislature, it is our responsibility to ensure that our state agencies are best serving our constituents. Today, you're going to hear directly from a tenant, missus Paige Phillips.

And I wanna share with you all just to highlight how local and personal this issue to me. Miss Phillips is not just a Caltrans tenant and has owned her home in South Pasadena for over thirty years. She's also my drama teacher from Markeppel High School, where I graduated from back in 2010. And I attended that high school with her son as well. She has been a pillar of our community for many years now.

She has received many accolades for the teaching that she's done within Marcepa High School and within Alhambra Unified School District. And I think you'll be really impacted by her story that you'll hear from her today. In addition to that, I also have with me one of our local elected officials, mayor Sheila Rossi from South Pasadena, who's been working closely with residents in her community to help to resolve some of the issues that these Caltrans tenants are facing.

And I wanna highlight and as assembly member Harabedian well knows, these are issues that are not just impacting the city of South Pasadena, they impact the communities of El Sereno, they impact the communities of Pasadena as well. This is an issue that has gone on since my grandparents first bought their home in Alhambra nearly sixty years ago.

It is time for us to bring resolution to these tenants, and it is time for us to deliver these homes to the rightful owners. Thank you all so much. And I'll turn it over now to them.

Thank you so much, Senator. Miss Phillips, madam mayor, good to see you. Please, two minutes each, and whoever wants to go first can proceed.

I'll go first. Chair, members of the committee, thank you for the opportunity to speak with you today. I'm here to present concerns raised by residents regarding Caltrans disposition management of 710 corridor properties. Concerns that point to potential gaps in transparency, contract fairness, property oversight, and administration of affordability requirements. These concerns are not limited to a single issue.

Residents have reported limited access to valuation information needed to evaluate purchase offers, contract terms that shift risk without full disclosure, ongoing habitability and maintenance issues under state management, and difficulty obtaining documentation related to affordability determinations. These concerns also reflect challenges in process consistency over time. Residents have reported repeated unconsummated purchase attempts over a period of years, sometimes decades, with changing valuations and inconsistent access to appraisal information.

In some cases, tenants have engaged in multiple rounds of financing and independent valuation that they've paid for, only for the process to stall and restart at a higher price point. Just last night, I received a letter from a tenant who first started a process in 2016, and this is now their fourth round of offers.

In that time, they have paid for appraisals four times. They have gone to seek financing four times. And in that time, the valuation of the property has increased by $1,000,000. At the same time, tenants have documented significant structural and maintenance issues during state ownership that directly affect value. Taken together, this raises questions about how valuation, timing, and property conditions are being accounted for within this process.

These issues extend beyond properties currently held by Caltrans. Residents of properties sold under affordability covenants have also reported difficulty accessing documentation related to rent calculations and compliance, raising additional questions about continuity of oversight and following, disposition. I wanted to bring to you one particular example that brought raised my eyebrows.

When residents were seeking appraisal information to respond to their offers, instead of being provided with appraisals, they were offered an alternative pathway conditioned on signing a nondisclosure agreement, while their public records acts request were remained unanswered and were delayed beyond the time frame in which the tenants were asked to respond to the purchase offers. Formally, the access existed.

In practice, access was, constrained by timing and conditions. So I'm not here to make any legal conclusions, but I am here to and I'm not opposing the sale of these properties. I support the goal to sell these properties as quickly as possible, quite frankly. But I wanna make sure that it's done in a way that is transparent, consistent, and fair. Thank you.

Thank you. Miss Phillips.

Thank you so much for letting me speak with you today. My husband and Aye, and along with our three children, have lived in our Caltrans home for just over thirty years. It is more than a property to us. It is, it is our home. We have built a life there.

We've celebrated holidays and birthdays. We've come to love our neighbors as family, and it has always been our goal to be able to purchase our home like all the other Caltrans tenants along the 17 Corridor. And in 2019, when the state mandated that Caltrans sell the properties, we all thought this is our opportunity to purchase our homes. Unfortunately, the sales process has not been transparent nor equitable, and we're on phase four of the process.

So in September '25, we were given a purchase price for a Caltrans home. And as you know, that was six years after the sales began. And in six years, interest rates and cost of homes have gone up exponentially. I could go on to talk about the conditions of the homes and the maintenance that has not been done on the homes or that has been done, but not in a very appropriate or or proper manner, making it be done over and over again.

But instead, I'd like to tell you how much the homes mean to me and to my home means to me and I know it means the same to the Caltrans tenants. I began my teaching career in that in that home and I'm gonna be retiring this May after twenty seven years of teaching.

Eight weeks and three days to be exact, but who's counting? And I know that it means so much to me as well as my family and all the other Caltrans tenants to be able to keep our homes. Please allow us to stay in our homes to be able to continue to write the stories we have already began to write. Please don't let a a bad process be the reason that we have to lose our homes. Thank you so much.

Thank you. Thank you to both of you and and for the personal touch and the and the testimony and and appreciate highlighting the connection that you have with the Senator. Mister Parks.

Thank you. Senator Perez and Assemblymember's Fong's audit request has eight primary objectives shown as objectives two through nine in your materials. Objectives two and three essentially asks whether or not Caltrans is complying with the Roberti Act when selling property. This work would include determining how and whether Caltrans prioritizes its sales to the current occupants and accurately identifies income eligible buyers. Objective four focuses on how does Caltrans establish affordable sales prices for eligible tenants.

This objective will have us evaluate whether or not Caltrans is consistently and accurately calculating affordable home purchase prices. Also including evaluating the cost inputs and source documentation Caltrans uses in its calculations. Objective five has us evaluate the timeliness and adequacy of property appraisals and buyer options to appeal appraisal values. Objective six has us focus on whether or not Caltrans ensures that its real estate agents communicate clearly and consistently with potential buyers.

This would include focusing on whether Caltrans adequately resolved concerns from potential buyers or tenants claiming that the terms of their sales contracts were in unclear or inconsistently communicated.

Objective seven focuses on whether or not Caltrans is accurately accounting for the rent owed and paid on its properties. Objective eight focuses on whether or not Caltrans is adequately maintaining properties under its control, including repair work and pest control work. And finally, objective nine has us follow-up on a number of recommendations from an audit we did in 2012, where we had a number of recommendations for Caltrans.

Thank you for that. Mayor Rossi, missus Phillips, I'm gonna ask you to kindly take a seat back in the gallery while I welcome up representatives from Caltrans to testify. I believe there are three individuals here. And as they make their way up, I'll give each of you two minutes if you'd like to respectfully testify or or one of you. I'm not sure exactly how you do you plan to divide it up.

But if you could try to keep it to two minutes each, that would be great.

Good afternoon, chair Harabedian the members of the joint legislative audit committee. Thank you for the opportunity to appear before you today. My name is Carolyn Dabney, office chief of Excess Lands and Caltrans headquarters here in Sacramento office. I'm here today with my colleague Dan Murdock, who is the deputy district seven director of right away in the Los Angeles office. Thank you to Senator Perez and assembly member Fong for the points raised in your letter regarding the State Route 710 sales and the rental programs.

We take the concerns you have raised seriously and appreciate the opportunity to engage in a thoughtful discussion. Transparency, accountability, and effective program administration are essential to our work, and we are committed to continuous improvement. Caltrans is committed to managing these properties and administering the programs in alignment with statutory requirements, while supporting their core purpose of expanding affordable housing opportunities. At the same time, it is important to note the complexities of the state route 710 sales program and the statutory and regulatory framework that governs the sales.

Caltrans remains committed to carrying out these statutory duties fairly and consistently while improving implementation whenever wherever possible.

We are committed to working constructively with the state auditor and this committee to ensure the program is operating as effectively and transparently as possible. I'd like to highlight some of the successful, notable successes we have seen in the program, specifically the completion of 59 property sales since beginning of fiscal year twenty four twenty five. Among these sales, several properties were purchased by the cities of Pasadena and South Pasadena and were subsequently sold on the open market, generating millions in proceeds.

These funds are now being directed toward the development of affordable of 66 affordable housing units, further advancing the intent of the Roberti Act to expand affordable housing. Additionally, Caltrans is on track to close 12 more properties with the city of South Pasadena this spring, and we are actively preparing to finalize sales of several more properties to tenants.

Recently, Caltrans extended offers for 35 properties to private housing related entities with bids expected to be submitted by late April. Caltrans is also currently awaiting feedback from the cities of Pasadena and South Pasadena regarding 28 properties that were offered to them last fall. These milestones highlight our ongoing partnership in expanding affordable housing opportunities and moving the program mission forward.

Caltrans will continue to cooperate and provide access to the information, staff, and documentation necessary to support a thorough and objective review, and I look forward to the discussion today. Thank you.

And I'm Danny Yost, the assistant deputy director of legislation at Caltrans, and that's our open statement today. Thank you.

Appreciate it. Thank you very much. I'm gonna bring it back to my colleagues, mister Fong, as you also requested this audit. Please.

Thank you so much, mister chair. Co signer, I strongly support this request with Senator Perez, and thank you so much to Mayor Rossi and to missus Phillips. We were just there actually on Friday. And for decades and thank you for the testimony here from Caltrans as well. For decades, tenants of Caltrans owned properties have reported egregious experiences trying to get repairs done to their homes, trying to buy their homes, as well as from neighbors of vacant Caltrans owned properties who are concerned about safety.

Caltrans tenants across the 710 cooridor have reported health issues due to mold and rodent infestations, unsafe housing conditions due to deferred and an inadequate maintenance, unclear, conflicting, or delayed communications from Caltrans and their contractors when attempting to purchase their homes. And also fear of retaliation for speaking out about their experiences. We've have also heard horror stories about dead rats, gas leaks, weeks without heat in the middle of winter, holes in kitchen floors, and delays and contradictions in communications from Caltrans right away division and their contractors.

For families looking to purchase their homes, both at affordable and market rates, this process has been anything but smooth. Tenants have been left in limbo, but unclear communications and little guidance.

One tenant who qualifies for an affordable purchase was initially told she made too much money, and then told she made too little money to buy her home. She was offered entirely different affordable prices without explanation, and then given less than thirty days to decide if she would agree to enter into a sales agreement, but without any answers to her questions. Another tenant who qualifies for a market rate transaction was provided with an appraisal by Caltrans until that their purchase price would includes the cost of repairs.

That's just spending thousands of dollars out of their own pocket to do their own appraisal and inspection. They discovered a descrepancy of hundreds of thousand dollars between the offer price and appraisal price.

Meanwhile, their neighbors just down the street also a Caltrans tenant was able to purchase their home for a much lower price even though both homes are similar in every way. I've also heard directly from neighbors of vacant Caltrans owned properties. We're concerned about safety and structural integrity at these properties as many of these properties have seen little to new maintenance in years.

And over the break, I did, over the winter break, I personally visited these properties and have a deep concerns about how slow moving the process has been to get the home sold so that they can see the love and care that they deserve. The goal of the Roberti Act was to return seven ten Caltrans homes back to the community through affordable housing opportunities.

Ultimately, as a state, our goal is to ensure that tenants have a feasible way to stay in their homes that they have lived for lived in for decades and to keep our neighborhoods and communities intact. And missus Phillips actually was the, drama teacher for my district director as well, and and you heard the story from the center. A lot of folks have been in these homes for many, many years and deeply rooted in our communities.

And doing that requires transparency and accountability from the Caltrans right away division and all parties involved in the management and sales of these homes. This audit will shed light on whether Caltrans has administered these programs in accordance with the law, and it will also help us determine the best path forward.

And Infin State audit is another important step towards accountability, oversight, and solutions for Caltrans tenants in South Pasadena and across the corridor. I look forward to important work ahead, and thank you so much again to everyone for your testimony today and supporting our community members. Thank you.

Thank you, Senator Fong, and for your work on this as well. Any other comments or questions from the days? And seeing none, I'm gonna open this up for public comment. If there are any members of the public that would like to comment on this. And seeing none, I'll just say, Senator, thank you for your leadership on this issue.

I couldn't thank you enough. This obviously is very personal to me as well and my district. And I do appreciate Caltrans being here and responding, but I think this is long overdue. And I appreciate your leadership in bringing this to the forefront, and I think we look forward to the questions that are answered in this audit. And, hopefully, we can we can do this with all due expediency and and try to resolve this issue and the ongoing issues of these homes.

I'll let you close now, Senator.

Thank you so much, chair Harabedian, and I I appreciate it, and I know how important this is to you and to your team. I know our staffs have been communicating and working very closely on this issue because we have received so much feedback from so many tenants across the San Gabriel Valley that have been impacted by this issue. You know, I I I want to be clear.

The reason why we are moving forward with this audit is because I wanna ensure that we all have the same goal here and that we're all working towards the same goal, which is making sure that we are helping these tenants with becoming homeowners, that those that desire to purchase these homes, that we're helping that them with making that a reality.

And when our focus on making this process so so focused on bureaucracy and policy ends up creating a mess for those tenants and causing undue stress, that's a real problem.

There are so many families that I've spoken to over the past year who so desperately want to be the rightful owners of these homes that have invested their lives and their times into trying to take care of these homes, and I think that we need to honor that.

In addition to that too, I just wanna highlight because I've heard from so many homeowners or from so many tenants in the Caltrans homes that have expressed and their desire to become homeowners that they worry that this audit may slow things down. They've expressed all sorts of concerns about the expediency of this, and I just wanna highlight, I want to ensure that we continue to move forward with the processes that you all have in place.

I know there's not just tenants, but there's nonprofit providers that are seeking to purchase these homes as well. And we we need to make sure that we're doing both things at the same time, and so, I there needs to be no further delays.

I mean, this has gone on for years now. And to know that there's now three generations of my family that have been talking about this issue, it it is truly time to lay this to rest. So I urge an aye vote, and I appreciate this committee for allowing me to bring this audit request forward.

Thank you so much. You'll have a strong I recommendation from me. We still do not have a quorum. So I appreciate the presentation, appreciate the witnesses being here from the district, and appreciate Caltrans being here. We will take this up as soon as we establish a quorum. So thank you.

Thank you.

Senator Umberg, you are our last presentation, and you will be presenting your audit request 2026-106 Orange County Board of Education public administration oversight. Good to see you, and you can begin whenever you're ready.

Well, thank you, chair Harabedian, and members. I wanna thank the JLAC consultant, Tram Trong, for the fine work done on this audit request. I'm here to request that an audit be performed in regards to the Orange County Board of Education.

The audit asks for a comprehensive review of the OCBE's actions over the past five years, determine whether the board complied with civil rights, transparency, and other legal requirements concerning its decisions and how they may have affected student outcomes, complaint handling, protected student groups, and whether it's use of public resources, litigation decisions, and employee complaint or whistleblower processes were lawful, prudent, or within its statutory authority.

The other request includes a focused operational review of Orange County Board of Education's oversight and spending practices, determine whether it's charter school authorization, monitoring, contracting, and procurement and legal counsel selection are in compliance with the law.

The reason for this are transparency concerns. Specifically. March 2023 writ petition, alleged Brown Act violations tied to the 01/05/2023 meeting, including serial meetings. Public complaints also raised concerns, that legal spending was not publicly available. Student impact complaint handling, board actions, including reported firings of top administrators, how that may have affected school operations and its consequent impact on students.

Political or ideologic influence concerns concerning governance disputes centered on LGBTQ policies and curriculum, library content, and educator climate litigation costs. Litigation costs in particular as as someone who may return to the full time practice of law. Next year, I suppose I shouldn't be so concerned about litigation costs, but over the last five years, eight either spent or project to be spent $8,700,000 on litigation, even for a litigator that sounds like a lot of money, and how those decisions were made and their outcomes.

Also, charter oversight concerns concerning charter oversight of those charges that have been approved, contracting concerns, at least six recent instances of unlawful contracting under the education code, an estimated half $1,000,000 or more in potentially unlawful expenditures. In addition, employee retaliation whistleblower concerns, a settlement involving a former communications officer, Seth Stevens, followed by reported title six retaliation complaint.

All those issues and reasons are why I've asked for an audit, in connection with the Orange County Board of Education. With me to testify, is Lisa Hickman, president of Tustin Educators Association, and mister Andy Thorburn, the founder and CEO of Contemporary Policy Institute. I ask for an aye vote. Thank you.

Thank you, Senator. Mister Thorburn, miss Hickman, whenever you're ready, please.

Thank you. Thank you, Senator. Thank you to the to the committee. The Senator mentioned $8,700,000 of legal expenditures. I'd like to mention that in the four years prior to that expenditure going up, for four years, the total expenditure for outside legal counsel was $51,000.

And when this board came in with majority and started to pursue various kinds of governance issues that went up over five years to over $8,700,000. We think that an audit is the proper vehicle to look at three aspects of the activities of this board. One is when they approve or are functioning as the appellate body for denial of charter schools, they don't seem to ever apply the criteria that the state law asked them to apply.

They simply come into it with the attitude that all charters should be approved. They've actually I've been physically at meetings when they have approved charters against the advice of the staff of the Department of Education, which has pointed out legal deficiencies in the application.

In the governance issue, they actually handed in a budget that was illegal under state law and received a letter from the board of education here at Sacramento from the state board stating that it was not illegal and they sued under that issue. That's part of the $8,700,000.

So from the issue of charter school approvals, which they do not do in an even handed manner, from the issue of governance in which they appear to have violated the state law at least on two occasions and are suing under that basis. In addition to which, they use an outside counsel, possibly in violation of the law requiring them to use a counsel that was already available to the state to the county board and to this county department of education.

That's also a matter of litigation, both because of charter schools and governance issues which lead to this extraordinary expenditure for which we do not have full insight.

We don't have full transparency. We believe that an audit of this board would shed light that the public needs to see and that the regulatory bodies here in Sacramento need to see to find out if this board is operating in the public interest or pursuing some other private partisan agenda. Thank you.

Thank you. Miss Hickman.

Good afternoon chair, vice chair, and members of the committee. Thank you for the opportunity to address you today. My name is Lisa Hickman and I am the president of the Tustin Educators Association. I am here representing the California Teachers Association in support of Senator Umberg's request to audit the Orange County Board of Education's public administration practices. I am here not just on behalf of CTA, but on behalf of educators and students all across 28 school districts in Orange County.

The county board of education plays a critical role. They oversee interdistrict transfers and expulsion appeals and are responsible for approving district budgets and providing fiscal oversight. These responsibilities are significant as the board ultimately determines how effectively schools prepare youth for future success. And they demand transparency, accountability, and a commitment to serving students above all else. Every one of our 28 districts must open their books to the board for audit and approval.

It is only right that the same transparency be applied to the board itself. While they are tasked with overseeing how local districts spend their funds, they have redirected significant public education dollars towards lawsuits challenging California law, funds that should be directed towards students and classrooms. We are also seeing alarming trend of the board authorizing charter schools that bypass local school boards entirely.

The proposed audit would shine a light on the legality of these approvals and whether there are potential conflicts of interest or political influences in these decisions. Public education must remain equitable, transparent, and free from political agendas.

As teachers, we are taught to always bring the truth forward. And as I tell my second graders, if you're not doing anything wrong, you should have nothing to hide. This audit is not about politics. It is about accountability. It is about ensuring that public funds are used responsibly, the decisions are made transparently, and that the Orange County Board of Education is operating in the best interest of the students and the communities it serves.

I respectfully urge you to approve the audit request. Thank you for your time and your commitment to public education.

Thank you. Mister Parks, one minute. Madam secretary, could you call roll so we could establish a quorum?

[Roll Call]

We did it. We should all be very, very proud of the fact that we just established quorum. So thank you very much. We did. Mister Parks, please.

Thank you. Senator Umberg's request has my office address six primary audit objectives shown as objectives two through seven in your materials. Objective two has us evaluate the board's compliance with open meeting and transparency laws such as the Ralph m Brown Act, the Public Records Act, and the Political Reform Act. Objective three has us determine whether or not the board used its public resources in a manner consistent with applicable law, grant requirements, and program goals.

Objective four has us evaluate the board's procurement and contracting practices to determine, for example, whether the board's policies mirror best practices and were consistently followed, such as engaging in competitive bidding and following policies to identify potential conflicts of interest, and also whether or not the board monitored contractor performance and actually obtained expected deliverables from contractors.

Objective five has us quantify the litigation costs and the settlement costs associated with the board's activity. Objective six has us evaluate the board's process for approving charter schools and also exercising oversight of the performance of the charter schools that it approves. And objective seven has this focus on the board's whistleblower program and how it handles complaints of employee retaliation. I estimate this audit would take 4,200 hours to complete.

Thank you very much. Mister Thorburn and miss Hickman, if you could please sure. Absolutely. You can you can go. But while we do that, if we can bring up the County Board of Education, take your seat.

Go ahead, mister Vice Chair.

Yeah. Thank you. So I I wanted to turn specifically to the charter school provisions because I'm trying to understand what the specific what the specific issue is at stake here. So the testimony was largely it it sounded like what is the the typical disagreement that exists in maybe 110 of all the school districts and counties and across the state, which is that the districts and their collective bargaining agents all believe that the county over approves, typically.

Is there something specific about what's going on in Orange County, that you could describe that we're focusing here?

Because that that that that that that that broader issue is a major policy question. It's one the legislature, started to gravel with well, had been grappling with for years, but especially last year. But I've it's not clear to me that an audit of one of you know, one exemplar just the office in the entire state is the right way to get to the general topic.

But if there are there specific issues about how Orange County is is is dealing with charter school authorizers, both the authorizing and the review of authorizers subsequently, that is that is an issue here.

Senator Cabana, let let me start with an answer, then I'll ask my witnesses to correct me. So the the difference here is is is you're right. There are many disputes with respect to authorization between local school districts and, for example, the board of education. It's a bit unique in in that it's where the Board of Education's own staff points out deficiencies, where there are clear omissions. There are clear deficiencies, and and they are either ignored or overridden that that creates the the larger issue.

So when there are policy ish differences between, you know, for example, the the the local school board that says, you know, we don't need another charter school for whatever reason versus where the staff itself says this application is deficient. That's item one. And item two is after it's approved is where there are allegations of misconduct, where there are allegations of misspending. It it's then the board's responsibility to engage in some sort of investigation.

It's not just whether or not their the investigation was adequate, whether or not it even existed at all.

So let me now turn to my witnesses and see what I said that was wrong. So

Well, I don't think anything was wrong, but we could probably add some color to it. I think the point that we would make is that the evaluation at this appellate division by this board does not appear to be on the merits of the case.

I've been at a meeting of the Anaheim City Council for Anaheim Board of Education, for example, where an applicant was so sure that the county board would approve them if they were denied, that they didn't even show up at the Board of Education meeting in Anaheim to defend their application, knowing that they could get approved at the county level. As the county, it's a totally pro form a process. There's no investigation.

And even when the staff says that they don't meet the legal requirements financially or don't have qualified teachers, I've been in meetings where the board will overrule that. So I don't know if that goes on in the rest of the state. If it does, maybe we have to do more than one audit. But I I do think it goes beyond the policy problems that you alluded to, which I think are generally statewide.

I think this board has a has a very unusual pro form a approach to the whole process.

Alright. I appreciate that. I I mean, I think that as we if if audit move forward, I'm I'm I'm supportive of it is that we that the audit that that that that's what we're asking the auditors or or not. Is the origin is this the our best our best case example of what a board should do as opposed to is this board in the is it in the you know, within two two percentiles of the median or something? Is it a normal board in in in what is a universal controversy?

Of course, if there if there are other, you know, issues, you know, legal issues that we we'd wanna surface them. But I do think that the I think you mentioned shine a light on the on the bigger challenge. That's a that's more work than the honor, I think, can handle in this in this honor. And I think it it just the the more precise focus on the on irregularities and bias and that sort of thing in at this particular agency, it would be more useful

narrowing. So to to be clear, I'm quite proud of some of the charter schools in in Orange County. The School of the Arts is a nationally known school. Samueli Academy is a nationally known school. So this is not part of the charter anti charter fight.

I appreciate that. I'm going to pause here. And while we kinda transition witnesses, I'm going to take a or at least ask for a motion on previous audits. We're gonna continue this discussion about why we have members here. Could I get a motion on the consent calendar?

And that is actually just consisting of one audit, Senate member Lackey 2026 -108 on the DMV license revocation. So we have a motion and a second from Demayo and Fong. Madam secretary, please call the roll. Sure.

[Roll Call]

So it looks like that audit is approved. We'll keep it on call if other members show up. The next audit I will entertain a motion on is 2026 -126 Public Utilities Commission, utility timeless oversight from Senator Allen. Can I get a motion? Moved and seconded. Ransom and Hart. Madam secretary, please call the roll.

[ROll Call]

Aye.

That audit is approved. The next audit, I will consider a motion on is 2026-133 depart department we have a motion department of transportation by Senator Perez. We have a motion. Second. And a second, madam secretary.

[Roll Call]

And that is approved. I will entertain a motion on Senator Cervantes. Audit 2026 -134 California Fusion Center state and local oversight.

2020's motions to

Right. We don't have a motion yet. Could I could I get a motion to approve?

I'll move.

K. Motion from Becker. Second. And we have a second from Fong, madam secretary.

[Roll Call]

That will remain on call. And we now have our witnesses from the Orange County Board of Education. So please, gentlemen, when you're ready.

Honorable members of the committee, my name is Greg Rowland. I represent the Orange County Board of Education. Senator Umberg's audit request lacks any factual predicate whatsoever. We prepared a comprehensive legal review for the committee, including every possible allegation raised in the letter, including the mechanisms for resolution and multiple declarations under penalty of perjury. Here are the facts.

There has been no formal complaints against the Orange County Board of Education in the last five years. None. Going in order of Senator Unberg's concerns, there have been no title six, title nine, or IDE complaints filed against the board. There's been no Brown Act cure and correct demands. There have been no Public Records Act litigation, and there have been no Political Reform Act complaints against the board.

There's been no taxpayer actions. There's been no criminal referrals. There has been no whistleblower or retaliation cases brought against the board. Regarding charter school oversight, in the last five years, the board has rendered 33 decisions on charter schools, and only one has been challenged. And in that case, the State Board of Education ruled unanimously in the board's favor.

There have been no complaints alleging violations of public contracts code. All Board Members have their required ethics training, and the board has ruled on over 100 interdistrict trans fill up for appeals or expulsion appeals. In the last five years, that's their primary statutory responsibility, and yet there's been no challenge from either a parent or school district in that regard. Litigation, yes. The board has participated in litigation in accordance with state law.

And if their participation was impermissible or improper, the courts would have so ruled. They did not. And much like this legislature, the board is immune for Max taken in the course and scope of their employment. Some of Senator Umbergh's more subjective concerns such as ideological influence or fiscal prudence, there is no legal recourse. But there is recourse at the ballot box, and the board trustees have won eight of the last elections losing none.

So on behalf of the board, we ask if there's no complaints, where there's multiple statutory enforcement mechanisms available, yet none were ever invoked, and the voters have spoken and will continue to speak. What justifies this audit? And why now? Why now is this committee being asked to do something it's never been asked to do in the history of this committee, which is audit a county board of education?

And while considering that, please keep in mind that we're asking the auditor not only to second guess the decisions of an elected body for which they're immune, but also we're asking the auditor to second guess multiple rulings by the court and our own state board of education and for issues that the statute has lapsed years ago.

Thirty seconds. Thank you.

That's it.

Thank you, mister chairman. Tom Sheehy representing the Orange County Board of Education. I've represented them for four the last four years. Three times, mister chairman, in the last four years, members of, mister Umbert's caucus have introduced bills all with the same intent, explicit, to change the way in which the trustees on that border are elected. Why?

Because they haven't been able to beat them at the ballot box, and they don't like the fact that my client supports charter schools and parental rights. Three times, there have been bills introduced. It's failed all three times. Senator Minh, four years ago, his bill failed in the assembly. Senator Newman, two years later, his bill made it to the governor, but the governor vetoed his bill saying it stopped on local control.

It would be very expensive because of the state mandate, and he didn't see any problems with the board that would justify reconfiguring it and change how they get elected. Not to be deterred by any of that, despite the fact that Senator Umberg lives down in the district, he's never been to a single board meeting. He's never talked to a single one of my client trustees. Never. Okay?

He's never sent them a letter, put anything on the record, and then he introduces SB 249 last year, and it fails in the legislature. Not to be deterred on his mission to change this board through some method other than the voters, he now comes to you with what is a purely political request.

I'm just gonna just pause you to ask me for this off. Just gonna pause you really quickly. Just not to impugn anyone's motives as to why certain Are okay. Just stay on stay on point. Thank you.

Fair fair enough. I'm almost done. It appears to me and others that the request here on this audit is because they couldn't get their bills through. They couldn't beat my client at the ballot box. They don't like their pro charter school or pro parent stance. And now here they are asking what we think is a fishing expedition that the auditor come in, be the first time ever the state's directing the auditor to go audit a county board of education.

What's gonna happen next? Are you gonna have a city council whose decision you don't like? I don't mean you personally, sir, but remember the legislature gonna have a city council that they don't like their decision. They're gonna have the auditor come in and audit that. It's a misuse of scarce auditing resources.

As prior witnesses said in prior, not just mister Ullrich's matter, but other matters that have come here today, the auditor's resources are scarce. They have limited time, limited resources. Why are we having them audit a function that is clearly working so well? No complaints in the last 83 agenda items over the last five years. None. Not one.

Thank you very much to both of you. I'm going to let Senator Umberg respond to some of those points. But before that, do any members here? Actually, let me sir, let me just go to you. I usually don't do that, but given the the tenor of that testimony, I'm just gonna let you respond.

Well, let me just, apparently, Mister Sheehy doesn't like me, but number one. Number two is that some of his allegations with respect to me

The microphone, if you just make sure the microphone's in front of you.

Basically, interacting with Board Members are are simply factually not true. But let me just let me just go through some of the facts here. These are indisputable. Here are the seven lawsuits that are the predicate to this action. It's just separate and apart from not engaging in the role that the Board of Education is supposed to engage in with respect to oversight, with respect to compliance with the law concerning charter applications, compliance with the law concerning whistleblower allegations, and I'll let my witnesses also respond.

But here, budget authority lawsuit, number one. Each side engaged in litigation as between the Board of Education and the Superintendent of Education, which lasted six years. Budget level dispute, with California Education, Board of Education, that's lawsuit number two. Legal counsel authority lawsuit. That's number three.

Number four, the COVID law school excuse me. COVID school closure lawsuit against governor Newsom. That's number four. Number five is the mask mandate lawsuit. Number six is the education mandate challenges lawsuit.

Number seven is the parental notification lawsuit. So this has turned into be basically a litigation machine. I understand that we had indicated that $8,700,000 has been spent by the Board of Education. The cost to the state and the cost to the courts have not been estimated here. And just for those reasons alone, I would ask that we take a good strong look at the board of education and their practices.

Thank you. And I know there are other questions. So mister DeMaio.

Thank you. Mister chair, one second. I understand there were handouts that were provided to members of committee. If we could see those as well, that would be, I think, helpful.

Great. We we will make sure you have them. Mister DeMaio, we do only have twenty more minutes with this room. So I'm I do want the questions from the members to to be able to be entertained. So thank you.

Understood. And, you know, Senator, if someone disagrees with your proposal, it's not that they dislike you. They just like the proposal that you brought forward. I'm just gonna cut to the chase because we're limited, time, and I think mister Sheehy made a a good, overview of of, why this is not warranted. I am I'm appalled at the audit because it is politics.

When one of the tests of witnesses and provides some testimony, this audit is not about politics. That, my dear, is when it is about politics. I've looked at your board of directors, all union, the other group, but completely union, Democrat activists. The Senator did point out this seems to be a policy disagreement.

And if we, as legislators, decide to issue an audit when when the community gets to decide policy in elections, then we're gonna be wasting the precious resources and the bandwidth of our auditor, and it sets a very dangerous precedent.

A year ago, we were here with a school district in Riverside that has a laundry list of corruption and mismanagement and ethics violations and financial transgressions. But because a powerful Senator said that they did not wanna have an audit, the audit was killed. Now we are here with a school board of board of education that has a pretty darn good record, a stellar record.

Their only their only demerit is they allegedly are approving too many charter schools, that they haven't always caved into the the union, which there's a lot of Democrat run school districts around the state of California that don't always agree with their unions. And, of course, they've sued the state of California for bills that infringe upon parental rights.

Oh my goodness. So if you stand up and challenge a decision of Sacramento and take them to court and win, there's no apology from the legislature that we screwed up on the bill. The courts smacked us. Instead, we're going to weaponize our auditor to go and try to find and investigate every nook and cranny. What a chilling of constitutionally protected rights.

When there are lawsuits, it's because and and the board has won many of those lawsuits. When there are lawsuits, it's because we have violated people's constitutional rights or we broke the law. And we should not be weaponizing the auditor to punish people who bring valid claims to court. If they're not valid, the judges will decide they're not valid.

And if they continue to litigate and waste money and lose court cases, then the voters ultimately, I think, would be persuaded that we have a bunch of sue happy trustees that need to be replaced.

I hope my colleagues see this for what it is. I think you do see it for what it is. I don't want us to set up a precedent here though. Because then every single group that is unhappy with their board of education or school district will

be marching up and asking us to order an audit. And that is just an abuse of this function. I urge you, cooler heads need to prevail. Let's not, accept the audit and and vote against it.

Senator Hoover.

Thank you.

And I I am just gonna we do have a time check here. We have fifteen minutes. And so absolutely wanna get your points across, though. Go ahead.

So, you know, I have to align myself with my colleague. This this appears to me as a very clear first of all, it is terrible precedent. Second of all, it is a very clear weaponization of this committee for political purposes. There's no doubt of that. We can deny that all day, but that is exactly what is happening here.

I think my first question would be for the auditor is, how many audits has your office obviously, not necessarily you as auditor, but your office in in the history of the state auditor audited a county board of education. I'm actually just curious for the record just because, I I don't know the answer.

And to be honest to be honest, I I can't think off the top of my head what that number is, but if we have, I would imagine it's very small.

Has it have there been any during your time as auditor? I guess that would be a No. Okay. Thank you. And and it would be interesting to get that information, obviously.

But my guess is that the number would be very small. And I think it really goes to show that the type of precedent that we would be setting with this audit. You know, what what has been described today by the proponents of this audit has essentially been what goes on at every single county board of education in the entire state. Every single month. At every single hearing.

Which is using outside counsel, not something that's against the law, not something that is problematic. It's something that every school district in the state of California does. Approving charter school applications, that is quite literally one of the main roles of a county board of education in state law. So the idea that what has been described here is that 0 and I think this is the one that really bothered me the most. Going against a staff recommendation to approve a charter school.

This happens every single month in California because very often, the staff of an education board is very anti charter, while the board members are very pro charter. So so the idea that somehow overruling an administrative staff decision is somehow problematic is is not evidence of wrongdoing. I think the the opponents of this audit that spoke in favor of the Board of Education here, County Board of Education made it very clear. There there are no legal concerns that have been raised.

And and Senator, I wanna ask you a question because, you know, you're you're you're raising concerns about the amount that the Board of Education is suing the state.

I'm pretty sure do you know how many lawsuits that attorney general Rob Bonta has filed against the the president of The United States in just this term of the Trump presidency? I don't. No. Yes. Well, the answer is 44 lawsuits, at a cost of I believe this legislature actually passed a bill creating a pot of money for about $50,000,000 that I'm not gonna I don't know the voting record on that bill.

I would I would expect that many of the people in this room supported that, supported taxpayer dollars going to sue the federal administration. Now I don't wanna get into the merits of that. I don't think anyone wants to get into the merits of that. I think the question is is that when there is disagreement, it is often appropriate to take legal action. And and, you know, it was interesting in in the facts that you read on the seven lawsuits that have been cited.

It's just amazing to me, you know, sort of some of the the examples that you used. So, you know, suing the state government for the longest school shutdowns in the entire country that in retrospect, we now have evidence were detrimental to the outcomes and the health of our children, that is a lawsuit I would 100% get behind, and that is a lawsuit that they absolutely were right to bring forward.

Suing over a mask mandate that went on longer than any other mask mandate in the entire country. I was on a board of education, during the pandemic. We literally had a lot a a an ordinance passed at the county level that said, I, as a board member, could sit in my board of education chambers and not wear a mask.

Well, every student in every classroom in my district had to continue to mask. It was one of the most, I would say the worst examples of good government, and it was it was an absolute terrible time, I think, in our state when it came to the amount of mandates and amount of of over, you know, just mandates that were coming down from the state. Those those were absolutely lawsuits that should have been put.

And then the Supreme Court just recently ruled in favor of a lawsuit that came out of California that supported parental rights. So, you know, I think one of the really frustrating things to me is a lot of these lawsuits that you mentioned as evidence here actually were the right thing to do.

And and finally, to the point as my colleague brought up about this not being about politics, I I think it's absolutely clear that this is about nothing but politics. That's why we've had this history of bills that have been directed exactly at this board of education for the last few years that have been unsuccessful. This is now just the latest attempt, to simply silence a board of education that, some members of this legislature disagree with. I I think it's terrible precedent.

I think we absolutely are weaponizing the audit committee with this, and I would encourage my colleagues to vote no.

Vice chair, Kabal. Then we're gonna open it up for public comment.

Great. Right after the gold rush, when the Orange County Board of Education and the other 57 boards of education came together to form the state of California oh, wait. Wait. That that never happened. The well, county boards of education are purely an instrumentality of the state.

This analogy of the sovereign state of California being one of the states that is the basis of our federal system and the constitutional democracy, that that is the same as the Orange County Board of Education or the Davis Cemetery District or any other local government entity set up by this by the state of California. This is patently and constitutionally false. And in fact, here, we're talking about not even general taxpayer dollars.

The Orange County Board of Education, like all other county boards of education, derives most of its revenues from property taxes and from us, from proposition 98. So these are funds that are for the education of young people.

And although it can be enticing and seductive to say I wanna be on a on a board that can control money to that I can divert away from kids and the classroom and special needs kids and work job training programs and instead divert it to litigation, that is absolutely a question that's of concern to the state of California. And so I do think this is an appropriate audit, in this case to try to root out in this question.

And I I'd also note just you know, although this is my first meeting of actual business meeting of this committee, I've seen enough of the audit requests. I guess they're all they're all confidential other than the ones that are on our agenda. But but I've seen it.

This is not groundbreaking. The Casablanca notion that nobody's ever seen anything political in this process before is kinda ridiculous, and this one isn't that. This is trying to make sure that the dollars that we're appropriating for under Proposition 98 to support the education of children and job training programs in Orange County are being appropriately expanded in in that way. And so I appreciate the the the focus of the audit. I appreciate the the county's the county board's vigorous defense.

But this this narrow question about the use of these resources to generate what's what the the sponsors described as a litigation machine is an entirely appropriate one, messy and as uncomfortable and as public as it might be. And, if the other questions result in if there have never been anything filed, then great. The auditor will be able to spend virtually no time on some of the other questions that are in the in the in the request.

But the core question of the litigation machine diverting resources from from kids and from job training isn't perfectly legitimate one, and I'm also pleased to recommend and and I vote on the side on the senate side as well.

Thank you, mister vice chair. We're gonna open this up for a quick public comment, and then we're gonna have a close, and then we're gonna vote.

Chair, vice chair, committee members, Bryant Miramontes, California Kids Association in strong support. Appreciate the author for bringing this forward. Thank you.

Cassie Mancini about the California School Employees Association in support. Thank you.

Senator Umberg, please close.

Well, thank you very much. I have great confidence in our state auditor. I have great confidence that the examination will reveal exactly what has happened and what is happening with the Orange County Board of Education. If the audit determines that that this is just a a political fight, I don't think that's the case. But if the audit makes that determination, so be it.

If the auditor finds that the money was spent appropriately, so be it. If the auditor finds that they've basically adhered to state law, so be it. That's the purpose of the audit. And so, with that, I'll simply ask for this committee to authorize the state auditor to look at the practices, the procedures of the Orange County Board of Education, and let the chips fall where they may. Thank you, mister chair.

Thank you, Senator. I believe this is a bona fide, audit request. I do have an aye recommendation. I will entertain a motion, at this moment. I have a motion. Do I have a second? And I have a second. Madam secretary? I'm sorry? Sure.

So we will need a majority in both the assembly and the Senate. So the members here, you would need four from from the Senate and then four from the assembly. Madam secretary, please call the roll.

[Roll Call]

That's gonna be on call, I believe. Okay. Let while Senator Cortese is here, thank you for for being here. We're gonna go back to the audit that remains on call, and that is Cervantes 2026-134 California Fusion Centers. Let's open that back up.

[Roll Call]

So that is approved. I'm gonna lift the call on all audits. We can go down and and get votes before folks leave if they'd like. But if you need to go, it's fine. Just we're gonna run through the is there anything I think everything else has been approved. Thank you. If you wanted to add your vote, you're more than happy to add your votes.

Would you like to add your votes, Senator? Just a second. Well, let's go through let's go through all audits then while you're here.

[Roll Call]

Thank you very much. We're gonna leave the Senator Umberg, audit request on call, and we, Senator Becker, I believe, needs to come back. Okay. I I think Senator Valadares has voted on everything. So The

Okay. Thank you. And everyone here, I think, is on thank you very much. Appreciate you guys. We made it.

And we will wait for Senator Becker. We'll leave this open for a few more minutes. Thank you all. We're gonna reopen, the roll on any bill audit request that is on call.

[Roll Call]

And that audit is approved. Thank you.