Special Districts: Improving Oversight & Transparency

Special Districts: Improving Oversight & Transparency Report #239, August 2017 Milton Marks Commission on California State Government Organization and Economy Dedicated to Promoting Economy and Efficiency Little Hoover Commission Pedro Nava in California State Government Chairman Sean Varner Vice Chairman The Little Hoover Commission, formally known as the Milton Marks “Little Hoover” Commission on California State Government Organization and Economy, is an David Beier independent state oversight agency. Iveta Brigis By statute, the Commission is a bipartisan board composed of five public members Anthony Cannella appointed by the governor, four public members appointed by the Legislature, two Senator senators and two assemblymembers. Joshua LaFarga In creating the Commission in 1962, the Legislature declared its p urpose: Chad Mayes Assemblymember ...to secure assistance for the Governor and itself in promoting economy, efficiency and improved services in the transaction of Don Perata the public business in the various departments, agencies and instrumentalities of the executive branch of the state government, Bill Quirk Assemblymember and in making the operation of all state departments, agencies and instrumentalities, and all expenditures of public funds, more directly Richard Roth responsive to the wishes of the people as expressed by their elected Senator representatives... Janna Sidley The Commission fulfills this charge by listening to the public, consulting with Helen Iris Torres the experts and conferring with the wise. In the course of its investigations, the Commission typically empanels advisory committees, conducts public hearings and Former Commissioners Who visits government operations in action. Served During The Study Scott Barnett Its conclusions are submitted to the Governor and the Legislature for their consideration. Recommendations often take the form of legislation, which the Jack Flanigan Commission supports through the legislative process. Sebastian Ridley-Thomas Assemblymember Jonathan Shapiro Contacting the Commission Commission Staff All correspondence should be addressed to the Commission Office: Carole D’Elia Little Hoover Commission Executive Director 925 L Street, Suite 805, Terri Hardy Sacramento, CA 95814 Deputy Executive Director (916) 445-2125 littlehoover@lhc.ca.gov Former Commission Staff This report is available from the Commission’s website at www.lhc.ca.gov. Jim Wasserman Deputy Executive Director In Memoriam Matthew Gagnon Research Analyst Letter From The Chair August 30, 2017 The Honorable Kevin de León The Honorable Patricia Bates President pro Tempore of the Senate Senate Minority Leader and members of the Senate The Honorable Anthony Rendon The Honorable Chad Mayes Speaker of the Assembly Assembly Minority Leader and members of the Assembly Dear Governor and Members of the Legislature: California’s most prevalent form of government – special districts –is often its least visible. In a year-long review, the Commission looked at how California’s more than 2,000 independent special districts provide vital services ranging from fire protection to healthcare, cemeteries to sewers. It wanted to better understand if California taxpayers were well-served through this additional layer of specialized bureaucracy and to analyze whether consolidation or dissolution of some special districts could lead to improved efficiency in governance and operations. The Commission found no one-size-fits-all answer. The districts are as diverse as the geographic locations they serve and the millions of Californians who support them through taxes and fees. What might provide an appropriate pathway for five small water districts in rural Northern California who want to consolidate but need help sorting out water rights, likely would not make sense for their powerhouse counterparts, the Metropolitan Water District or Santa Clara Valley Water District, who serve millions of customers in Southern California and the Bay Area. And water districts are just one of 29 types of independent special districts ranging from airport districts to veterans memorial districts. As part of this study, the Commission considered the role of the Legislature, which gave life to this form of local government in 1877 and retains the power to create or dissolve districts and amend the practice acts that guide district activities. As California began its rapid growth and urbanization after World War II, the Legislature realized that decision-making over local government growth was best done by local officials. In 1963, the Legislature and Governor Edmund G. “Pat” Brown created a local mechanism for overseeing local boundary decisions – and formed 58 Local Agency Formation Commissions (LAFCOs). LAFCOs have the authority to initiate special district consolidations or dissolutions. In 2000, the Legislature expanded the authority of LAFCOs to conduct Municipal Service Reviews. These reviews provide information to guide districts in performance improvement and can serve as a catalyst for LAFCOs to initiate consolidations or dissolutions. Like many great ideas in government, particularly in a state as large and diverse as California, these 58 different commissions are not uniformly effective. The Commission also used this review to assess the progress of its recommendations from a 2000 report, Special Districts: Relics of the Past or Resources for the Future? In that study, the Commission found an expansive government sector, largely invisible, serving constituents who know little about them or how the money they provide is used. Letter From The Chair | 1 The Commission found some progress but also saw a missed opportunity for special districts – many have a great story to tell. Very rarely are taxpayer dollars so closely tied to services provided in the community. And still people do not seem to know much about these local governments and their locally-elected boards. As much as the Commission wanted to find a magic bullet to ensure these 2,000 districts were performing efficiently and effectively, it didn’t. The LAFCO process may not be working as it could and should in every corner of the state, but special districts remain best served by local decision-making. To that end, the Commission recommends the Legislature curtail its practice of bypassing the local process. Additionally, the Commission offers a number of common-sense recommendations to help LAFCOs exercise their authority. Two ideas have already resulted in legislation, AB 979 (Lackey) and SB 448 (Wieckowski). The Commission recommends the Legislature enact SB 448 and requests the Governor’s signature on AB 979 and SB 448. This report also includes a rare recommendation to infuse a small one-time grant fund to pay to initiate the most urgent consolidations or dissolutions, which should lead to taxpayer savings in improved government efficiency. The Commission heard extensive testimony on reserve funding – a thorny issue first raised in its 2000 report. The State Controller’s Office has convened a task force to standardize reporting on reserves, a necessary first step before anyone can assess the adequacy of each district’s rainy day fund. The Commission also urges special districts to adopt prudent reserve policies and make these policies public. The Commission found significant improvements since its last review in the way that districts communicate their activities and finances with their constituents although not every district has a website. All districts should have a website with basic information including how to participate in decision-making and an easy guide to revenue sources and expenditures. The Commission did not evaluate every type of special district, but it did take a deeper look at one type – healthcare districts. Originally formed in the 1940s to build hospitals where none existed, less than half of the current healthcare districts run hospitals today. But even within healthcare districts, the Commission found significant differences. In rural communities, districts largely continue to fulfill their original mission – providing a hospital that otherwise would not exist. Among healthcare districts no longer operating hospitals, the Commission found some districts assessing local needs and filling a void in preventative healthcare service. But this was not consistent and the Commission suspects that in some locations, LAFCOs should do more to assess whether every healthcare district should continue to operate. To guide this work, an essential step for the Legislature is an update to the 1945 practice act to reflect the modern healthcare landscape. As part of the vigorous discussion on reserves, special districts were asked how they were planning and using their reserves to adapt to climate change, particularly those districts with large infrastructure investments. Building on its 2014 report, Governing California Through Climate Change, the Commission in this report recommends special districts and their associations take more active roles in existing state government process and in sharing best practices. During its study process, the Commission discussed some rather extreme solutions that generated intense interest. Through a very robust public process, however, the Commission ultimately concluded that local institutions are best served by local decision-making. The important recommendations in this report will lead to improved efficiency. The Commission stands ready to assist. Pedro Nava Chair, Little Hoover Commission 2 | Little Hoover Commission Contents 5 Executive Summary 13 Introduction 13 The Commission’s Study Process ........................................................................................... 16 Background Numbers Rising Nationally, but Declining in California .......................................................... 18 What Californians Can Find Online About Special Districts .................................................... 19 A Brief Recap: The Commission’s 2000 Study and Changes Since .......................................... 20 23 Appropriate State Oversight 23 It Begins with Local Agency Formation Commissions (LAFCOs) ............................................. Dealing with Property Tax Inequities ..................................................................................... 26 The Prickly Question of Reserves ........................................................................................... 28 Recommendations 1 – 8 ......................................................................................................... 29 31 Improving Transparency Improving Transparency on Websites .................................................................................... 31 Low Visibility = Public Engagement Challenges ...................................................................... 35 Recommendations 9 – 11 ....................................................................................................... 38 40 What Role for Healthcare Districts? 41 Nearly Half of Districts Still Operate Hospitals ....................................................................... California Healthcare Districts: A Brief Introduction and History ........................................... 41 Dissolution Has Proved Itself a Persistent Question ............................................................... 44 Seeking a New Paradigm for Healthcare Districts .................................................................. 46 Advisory Meeting: What Makes Healthcare Districts Special? Are They? .............................. 47 How to Avoid Redundancies in Services Provided by Counties and Special Districts ........... 47 Making Healthcare Districts Better ................................................................................ 47 Start with One Thing (and Share it) ................................................................................ 48 What Should LAFCOs Decide about Healthcare Districts? ............................................. 49 Recommendations 12 – 14 ...................................................................................................... 49 Contents | 3 Contents 51 Readying California for Climate Change As Imported Water Dwindles, a Climate-Driven Rush to New Sources .................................. 54 The Rancho California Water District (Riverside County) ............................................... 55 The East Bay Municipal Utility District (Alameda County) .............................................. 57 The Wastewater World Already is Complicated; Now Comes Climate Change ...................... 58 The East Bay Municipal Utilities District (Wastewater Division) ..................................... 59 Sanitation Districts of Los Angeles County ..................................................................... 60 When Faraway Imported Water Runs Short .......................................................................... 60 Humans vs. Wildlife: The Regulatory Conflicts of Too Little Water ........................................ 61 A Rising Ocean and 1,000-Year Storms: What Awaits Flood District Managers? ................... 62 Fresno Metropolitan Flood Control District ................................................................... 62 Santa Clara Valley Water District .................................................................................... 63 Recommendations 15 – 20 ..................................................................................................... 65 67 Appendices Appendix A: Public Hearing Witnesses .................................................................................. 67 Appendix B: Meeting Participants ......................................................................................... 68 Appendic C: Cover Photo Credits ........................................................................................... 70 71 Notes 4 | Little Hoover Commission Executive Summary Special districts, the workhorses of public service what they pay in taxes to sustain them. The Commission delivery created by the California Legislature during the nearly two decades ago questioned the soundness of earliest days of statehood, represent the most common special districts’ financial management and asked if their form of local government. They have prevailed through numbers might be pared back through consolidations. endless upheaval as California morphed from a state of Yet Commissioners also acknowledged in their 2000 rural open spaces into one of the world’s most powerful analysis that special districts provide Californians valuable economic engines and home to nearly 40 million people. services and are “physically closest to their communities.” Today special districts generate some $21 billion in annual The Commission concluded that despite its range of revenues and employ more than 90,000 local government criticisms, special districts should remain, in the end, local workers.1 institutions best served by local decision-making. In 2016 and 2017, the Little Hoover Commission In its newest review the Commission heard from some reviewed and analyzed California’s 2,071 independent who still contend that special districts are ripe for special districts and the State of California’s role and consolidation and represent convoluted, dispersed, responsibility in overseeing them.2 The Legislature not under-the-radar government. Frustrated with the local only created special districts and enacted the practice oversight process, various local special district issues acts by which they are governed, but it retained the percolated up into bills in the 2015-16 legislative session power to create new districts and also to dissolve as the Commission began its study, potentially signifying them. In the early 1960s, the Legislature had the that the current system of oversight fails to work as well foresight to develop a local oversight mechanism, Local as intended. Agency Formation Commissions (LAFCOs) tasked with bringing more rational planning practices and reining in In this review, the Commission found special districts inappropriate growth by considering local government themselves could do a better job of telling their own boundary decisions. LAFCOs have the authority to story to overcome the stigma that they function as initiate dissolutions and consolidations of special hidden government. During an advisory committee districts, although ultimately local voters have the final meeting, Chair Pedro Nava encouraged special districts to say. The process is slow -- intentionally slow according “tell your story.” There are very few government entities to some --and occasionally frustrated parties attempt in a position to let people know that they work directly to bypass the local process by taking issues directly to for the public and that the taxes and fees they collect the Legislature. This tension, in part, prompted the fund local services, he said. Commission to update its 2000 review of special districts to consider whether the local oversight process works as In testimony, the Commission also learned that despite intended or whether a different process or a greater role the perception that special districts continue to for the Legislature would be more effective. proliferate in California, the number of special districts has declined 5 percent since 1997, while the number The Commission’s review broke new ground, but also nationally increased by 10 percent.3 Thirty-three states revisited issues first identified in its May 2000 report, have more special districts per capita than California. Special Districts: Relics of the Past or Resources for the Despite frequent calls for dissolving or consolidating Future? The 2000 report declared that California’s these local governments, special districts seem to have expansive special district sector often amounted to a pluses that render them tolerable to those they govern poorly overseen and largely invisible governing sector and able to forestall movements to purge them or fold serving residents who know little about who runs them or their work into city and county governments. Executive Summary | 5 The Commission’s 2016-2017 review delved into four Clearly, special districts can be improved. Given the primary arenas concerning special districts: routine front-line services they provide, the historic climate challenges these districts face in keeping California  Oversight of special districts, specifically, stable, as well as the need to provide the best possible opportunities to bolster the effectiveness of Local healthcare to millions of residents, LAFCOs and the state Agency Formation Commissions (LAFCOs). have obligations to see that they succeed. To that end, the Commission offers 20 recommendations to guide the  The continued need for districts to improve Legislature and Governor going forward. The first eight of transparency and public engagement. those recommendations address the basic structure and  The frequently-controversial evolution of governing issues revolving around special districts: California’s healthcare special districts, which in Recommendation 1: The Legislature and the Governor the 1940s and 1950s built a far-ranging system should curtail a growing practice of enacting bills to of hospitals that are mostly now gone due to a override LAFCO deliberative processes and decide tremendous transformation in healthcare from local issues regarding special district boundaries and hospitalization to preventive care. operations.  The urgency of climate change adaptation in California and the front-line roles that special The Legislature and Governor have reason to be frustrated districts, particularly water, wastewater treatment with slow and deliberative LAFCO processes. But these and flood control districts, play in preparing their are local institutions of city, county and special district communities and defending them from harm. members often better attuned to local politics than those in the State Capitol. Exemptions where the Legislature gets involved should be few, and in special cases where the Toward Higher-Quality Local Control local governing elites are so intransigent or negligent – or so beholden to entrenched power structures – that some As in 2000, the Commission held fast to the concept that higher form of political authority is necessary. special districts are essentially local institutions. Whether their individual endeavors are praised or panned, special Recommendation 2: The Legislature should provide one- districts seemingly reflect the wishes of local voters. time grant funding to pay for specified LAFCO activities, They also reflect the politics of LAFCOs, unique oversight to incentivize LAFCOs or smaller special districts to bodies in each county with authority to judge their develop and implement dissolution or consolidation performances and recommend whether they should plans with timelines for expected outcomes. Funding continue to exist. The Commission again determined should be tied to process completion and results, that LAFCOs should be the leading voice on the status of including enforcement authority for corrective action special districts in California – and that they need more and consolidation. tools to do the job well. The Commission rarely recommends additional funding Commissioners perplexed by the seemingly slow progress as a solution. However, a small one-time infusion of $1 in dissolutions and consolidations at one point during million to $3 million in grant funding potentially could the study asked if a lack of money prevented LAFCOs save California taxpayers additional money if it leads to and special districts from initiating consolidations or streamlined local government and improved efficiency in conducting the mandated Municipal Service Reviews service delivery. This funding could provide an incentive that can identify opportunities for improved efficiency for LAFCOs or smaller districts to start a dissolution or in service delivery. A chorus of stakeholders suggested consolidation process. Participants in the Commission’s a small, one-time infusion of grant funding, tied to public process suggested the Strategic Growth Council or specified outcomes to ultimately improve efficiency and Department of Conservation could administer this one- save taxpayer dollars, was indeed warranted. They also time funding. called for various statutory changes that could bolster the effectiveness of LAFCOs. 6 | Little Hoover Commission Recommendation 3: The Legislature should enact individual LAFCO members are expected to exercise their and the Governor should sign SB 448 (Wieckowski) independent judgment on LAFCO issues rather than simply which would provide LAFCOs the statutory authority represent the interests of their appointing authority. But to conduct reviews of inactive districts and to dissolve this is easier said than done when representatives serve them without the action being subject to protest and a on an at-will basis. The CALAFCO hearing witness said costly election process. unpopular votes have resulted in LAFCO board members being removed from their positions. Fixed terms would There has been no formal review to determine the number allow voting members to more freely exercise the of inactive special districts – those that hold no meetings appropriate independence in decision-making. and conduct no public business. Rough estimates gauge the number to be in the dozens. Simplifying the LAFCOs’ Recommendation 6: The Legislature should convene an legal dissolution process would represent a significant step advisory committee to review the protest process for toward trimming district rolls in California. The Commission consolidations and dissolutions of special districts and to supports SB 448 and encourages the Legislature to enact the develop legislation to simplify and create consistency in measure and for the Governor to sign the bill. the process. Recommendation 4: The Governor should sign AB Complicated and inconsistent processes potentially 979 (Lackey), co-sponsored by the California Special impact a LAFCO’s ability to initiate a dissolution or Districts Association and the California Association of consolidation of a district. If 10 percent of district Local Agency Formation Commissions. The bill would constituents protest a LAFCO’s proposed special district strengthen LAFCOs by easing a process to add special consolidation, a public vote is required. If a special district district representatives to the 28 county LAFCOs where initiates the consolidation, then a public vote is required districts have no voice. if 25 percent of the affected constituents protest. Additionally, the LAFCO must pay for all costs for studies The Cortese-Knox-Hertzberg Reorganization Act of 2000 and elections if it initiates a consolidation proposal, (AB 2838, Hertzberg) provided the option to add two whereas the district pays these costs if it proposes or special district members to county LAFCOs to broaden requests the consolidation. Various participants in the local governing perspectives. Nearly two decades later, Commission’s public process cautioned against setting 30 counties have special district representatives on their yet another arbitrary threshold and advised the issue LAFCOs alongside city council members and county warranted further study before proposing legislative supervisors. This change provides LAFCOs a more diverse changes. They called for more consistency in the process. decision-making foundation and stronger finances. But 28 counties, mostly in rural California have not added Recommendation 7: The Legislature should require special district representatives to their LAFCO governing every special district to have a published policy for boards, citing scarce resources. Presently, a majority of a reserve funds, including the size and purpose of reserves county’s special districts must pass individual resolutions and how they are invested. within one year supporting a change. This has repeatedly proved itself a formidable obstacle to broadening the The Commission heard a great deal about the need for outlook of local LAFCOs. AB 979 (Lackey) would allow a adequate reserves, particularly from special districts with simple one-time election process where districts could large infrastructure investments. The Commission also easily – and simultaneously – decide the question. heard concerns that reserves were too large. To better articulate the need for and the size of reserves, special Recommendation 5: The Legislature should adopt districts should adopt policies for reserve funds and make legislation to give LAFCO members fixed terms, to ease these policies easily available to the public. political pressures in controversial votes and enhance the independence of LAFCOs. Recommendation 8: The State Controller’s Office should standardize definitions of special district financial The California Association of Local Agency Formation reserves for state reporting purposes. Commissions (CALAFCO) testified on August 25, 2016, that Executive Summary | 7 Presently, it is difficult to assess actual reserve levels held Recommendation 9: The Legislature should require that by districts that define their numbers one way and the every special district have a website. State Controller’s Office which defines them another way. The State Controller’s Office is working to standardize Key components should include: numbers following a year-long consultation with a task  Name, location, contact information force of cities, counties and special districts. To improve transparency on reserves, a subject that still eludes  Services provided effective public scrutiny, they should push this project to the finish line as a high priority.  Governance structure of the district, including election information and the process for constituents to run for board positions Improving Transparency and Public  Compensation details – total staff Involvement compensation, including salary, pensions and benefits, or a link to this information on the Because there are thousands of special districts in California, State Controller’s website performing tasks as varied as managing water supply to managing rural cemeteries, the public has little practical  Budget (including annual revenues and the ability to ascertain the functionality of special districts, sources of such revenues, including without including the scope of services these local districts provide, limitation, fees, property taxes and other their funding sources, the use of such funds and their assessments, bond debt, expenditures and governance structure. Although publicly elected boards reserve amounts) manage independent special districts, constituents lack adequate resources to identify their local districts much less  Reserve fund policy the board members who collect and spend their money.  Geographic area served The Commission saw a number of opportunities for special  Most recent Municipal Service Review districts to do a better job communicating with the public, primarily through improvements to district websites and  Most recent annual financial report provided more clearly articulating financing policies, including to the State Controller’s Office, or a link to this adopting and making publicly available fund reserve information on the State Controller’s website policies. Existing law requires special districts with a website to post meeting agendas and to post or provide links to  Link to the Local Agency Formation Commission compensation reports and financial transaction reports that and any state agency providing oversight are required to be submitted to the State Controller’s Office. The State Controller’s Office – despite having a software Exemptions should be considered for districts that fall platform from the late 1990s – attempts to make all the under a determined size based on revenue and/or number information it receives as accessible as possible. of employees. For districts in geographic locations without reliable Internet access, this same information should be Many special districts already utilize their websites to available at the local library or other public building open effectively communicate with their constituents and and accessible to the public, until reliable Internet access voluntarily follow the nonprofit Special District Leadership becomes available statewide. Foundation’s transparency guidelines and receive the foundation’s District Transparency Certificate of Excellence. Building on this recommendation, every LAFCO should But often, these districts are the exception and not the have a website that includes a list and links to all of the rule. The Commission makes three recommendations to public agencies within each county service area and a copy improve special district transparency and to better engage of all of the most current Municipal Service Reviews. Many the public served by the districts: LAFCOs currently provide this information and some go further by providing data on revenues from property taxes 8 | Little Hoover Commission and user fees, debt service and fund balance changes for which emphasizes preventative care over hospitalization. all the local governments within the service area. At a Amid uncertainty about the future of the Affordable Care minimum, a link to each agency would enable the public to Act, many of these districts claim they are carving out better understand the local oversight authority of LAFCOs new roles in preventative care. Yet the Legislature, local and who to contact when a problem arises. grand juries, LAFCOs and healthcare analysts continue to question their relevance and need to exist. Presently, Recommendation 10: The State Controller’s Office just 37 of 79 California healthcare districts operate 39 should disaggregate information provided by hospitals, mostly in rural areas with few competitors or independent special districts from dependent districts, other alternatives – and few suggest the need to dissolve nonprofits and joint powers authorities. those districts. Over the course of this study, the Commission utilized Controversy tends to afflict districts in former rural areas data available on the State Controller’s website to that became suburbanized in recent decades and grew into attempt to draw general conclusions about independent competitive healthcare markets. The 2015-16 legislative special districts, such as overall revenues, number of session included a rash of legislation that considered employees and employee compensation. Presently, it is whether to force district dissolutions or modify district difficult to do this without assistance as information for boundaries – even though those decisions are the independent districts is mixed with various other entities. responsibility of LAFCOs. Nonetheless, most healthcare districts officials continue to maintain they are more Recommendation 11: The California Special Districts flexible than counties in defining priorities and are Association, working with experts in public outreach pioneering a new era of preventative care under the and engagement, should develop best practices for umbrella of “wellness.” Officials say their districts are independent special district outreach to the public on misunderstood by critics who lack understanding about opportunities to serve on boards. how much the healthcare landscape is changing. They also say that local voters generally support their local The Commission heard anecdotally that the public does missions and how they allocate their share of property not understand special district governance, does not taxes in the community. often participate or attend special district board meetings and often does not know enough about candidates As part of its special districts review, the Commission running to fill board positions. Often, the public fails to convened a two-hour advisory committee with experts cast a vote for down-ballot races. Two county registrars to shed light on healthcare districts. During the provided the Commission information that showed in course of the Commission’s study, the Association of many instances those who voted for federal or statewide Healthcare Districts convened a workgroup to develop offices did not vote for local government officials at the recommendations, in part, in response to legislative same rate, whether they were city council positions, scrutiny. These recommendations were considered and special district positions or local school or community discussed during the November advisory committee college district positions. meeting. Participants analyzed whether counties or healthcare districts are best positioned as local and regional healthcare providers and discussed the role of What is the Role for Healthcare Districts? LAFCOs in consolidating, dissolving or steering healthcare districts toward more relevant roles. During the meeting Commissioners also pushed districts to share and adopt The Commission found in its review that special districts best practices and define better metrics to measure what were as diverse as the services provided and the they are accomplishing with their shares of local property millions of Californians served. To gain deeper insight taxes. Three Commission recommendations arose from on one type of local government service provider, the the discussion as well as numerous interviews with Commission took a closer look at an often-controversial experts during the study: group: healthcare districts that no longer operate hospitals. These entities struggle to explain their relevance within the rapidly evolving healthcare industry, Executive Summary | 9 Recommendation 12: The Legislature should update How are they assessing future climate change impacts the 1945 legislative “practice acts” that enabled voters when amassing reserves for long-range infrastructure to create local hospital districts, renamed healthcare spending? That question, rooted in the Commission’s districts in the early 1990s. 2014 climate adaptation report Governing California Through Climate Change, became the genesis of a deeper Experts widely agree that statutory language in the acts exploration of awareness of and preparations for climate no longer reflects the evolution of healthcare during the change among special districts. In an October 27, 2016, past seventy years, particularly the shift from hospital- hearing focused on special districts efforts to adapt to based healthcare to modern preventive care models. climate change, the Commission learned that: Recommendation 13: The Legislature, which has been  Special districts, even while vastly outnumbering increasingly inclined to override local LAFCO processes cities and counties in California, have and authority to press changes on healthcare districts, generally not participated at the levels of should defer these decisions to LAFCOs. cities and counties in the state’s emerging climate adaptation information gathering and LAFCOs have shown successes in shaping the healthcare strategizing. Often that is because they lack land- district landscape and should be the primary driver of use authority. Nonetheless, it is critical that their change. Given the controversies over healthcare districts, experienced voices be at the table. the California Association of Local Agency Formation  Many larger infrastructure-intensive water, Commissions and LAFCOs should be at the forefront of wastewater and flood control districts stand studying the relevance of healthcare districts, potential at the forefront nationally in preparing for consolidations and dissolutions of districts. To repeat a the varying, changing precipitation patterns – theme of Recommendation 1, the Legislature should retain too much or too little water – at the heart of its authority to dissolve healthcare districts or modify anticipated climate change impacts. boundaries, but this authority should be limited to cases in which local political elites are so intransigent or negligent – The Commission found it encouraging that many special or so beholden to local power structures – that some form districts are reducing the need for imported water by of higher political authority is deemed necessary. diversifying supplies and producing vastly more recycled water. Districts also are steering more stormwater runoff Recommendation 14: The Association of California in wet years into groundwater recharge basins for use in Healthcare Districts and its member districts should dry years. The actions that all agencies must eventually step up efforts to define and share best practices among take are already being done by some. The Commission themselves. agreed that these leading-edge actions and infrastructure spending strategies represent models for other districts A Commission advisory committee meeting discussion to follow. Accordingly, the Commission makes six clearly showed that not enough thought or interest recommendations focused on climate change adaptation: has been assigned to sharing what works best in rural, suburban and urban areas among members. The Recommendation 15: The Legislature should place a association should formally survey its members and requirement that special districts with infrastructure subject collectively define their leading best practices and models to the effects of climate change should formally consider for healthcare, as well as guidelines to improve the long-term needs for adaptation in capital infrastructure impacts of grantmaking in communities. plans, master plans and other relevant documents. Most special districts, especially the legions of small Front-line Roles for Climate Change Adaptation districts throughout California, have their hands full meeting their daily responsibilities. Many have few At the Commission’s August 25, 2016, hearing, Chair Pedro resources and little staff time to consider long-range Nava asked a simple question of special district attendees issues, particularly those with the heavy uncertainty of vigorously defending their need for robust reserve funds: 10 | Little Hoover Commission climate change adaptation. Making climate change a spills into public waterways. The Oakland-based East Bay consideration in developing capital infrastructure plans Municipal Utility District has instituted an ordinance that and other relevant planning documents would formally requires property owners to have their private sewer and legally elevate issues of adaptation and mitigation, laterals inspected if they buy or sell a property, build especially for districts where immediate concerns make it or remodel or increase the size of their water meter. If too easy to disregard the future. the lateral is found to be leaking or damaged, it must be repaired or replaced. The state should consider Recommendation 16: The California Special Districts implementing this policy statewide. Association (CSDA), in conjunction with its member districts, should document and share climate adaptation Recommendation 18: State regulatory agencies should experiences with the Integrated Climate Adaptation explore the beginnings of a new regulatory framework and Resilience Program’s adaptation information that incorporates adaptable baselines when defining a clearinghouse being established within the Governor’s status quo as climate impacts mount. Office of Planning and Research (OPR). Similarly, CSDA and member districts should step up engagement With climate change what has happened historically will in the state’s current Fourth Assessment of climate often be of little help in guiding regulatory actions. State threats, a state research project designed to support the regulations designed to preserve geographical or natural implementation of local adaptation activities. The CSDA conditions that are no longer possible or no longer also should promote climate adaptation information exist already are creating problems for special districts. sharing among its members to help districts with fewer Wastewater agencies, for example, face conflicting resources plan for climate impacts and take actions. regulations as they divert more wastewater flows to water recycling for human needs and less to streams The OPR clearinghouse promises to be the definitive historically home to wildlife that may or may not continue source of climate adaptation planning information to live there as the climate changes. While it is not easy for local governments throughout California. At the for regulators to work with moving targets or baselines, Commission’s October 27, 2016, hearing, an OPR climate change is an entirely new kind of status quo that representative invited more district participation in requires an entirely new approach to regulation. state climate adaptation processes. It is critical that special districts and their associations assume a larger Recommendation 19: The California Special Districts participatory role – both within state government and Association, and special districts, as some of the closest- among their memberships – to expand the knowledge to-the-ground local governments in California, should step base for local governments statewide. up public engagement on climate adaptation, and inform and support people and businesses to take actions that Recommendation 17: The state should conduct a increase their individual and community-wide defenses. study – by either a university or an appropriate state department – to assess the effect of requiring real estate Special districts are uniquely suited to communicate transactions to trigger an inspection of sewer lines on with and help prepare millions of Californians for the the property and require repairs if broken. impacts of climate change. Nearly all have public affairs representatives increasingly skilled at reaching The responsibility to safeguard California and adequately residents through newsletters, social media and public adapt to climate change impacts falls on every resident forums. District staff grapple constantly with new ways of California. This begins at home with maintenance and to increase their visibility. Many will find they can build upgrading of aging sewer laterals. Requiring inspections powerful new levels of public trust by helping to prepare and repairs during individual property transactions is their communities for the uncertainty ahead. an optimum way to slowly rebuild a region’s collective wastewater infrastructure in the face of climate change. Recommendation 20: The California Special Districts At the community level, repairs will help prevent Association and special districts should lead efforts excess stormwater during major climate events from to seek and form regional partnerships to maximize overwhelming wastewater systems and triggering sewage climate adaptation resources and benefits. Executive Summary | 11 Water, wastewater and flood control districts are already bringing numerous agencies to the table to pool money, brainpower and resources for big regional projects. The East Bay Municipal Utility District has arrangements with many Bay Area and Central Valley water agencies to identify and steer water to where it is most needed for routine demands and emergencies alike. The Metropolitan Water District and Sanitation Districts of Los Angeles County also increasingly pool their joint resources to steer more recycled water to groundwater recharge basins for dry years. Likewise, the Santa Clara Valley Water district and other state and federal agencies are collectively planning and funding 18 miles of levees to protect the region from sea level rise. These partnerships among special districts and other government agencies clearly hint at what will be increasingly necessary as climate impacts begin to mount. 12 | Little Hoover Commission Introduction The Commission’s Study Process “Celebrated as the best example of democracy, cursed as the worst form of fragmented The Commission, in keeping with its mission to seek government, and generally misunderstood even by economy and efficiency in California government, the experts, special districts are California’s unique decided at its May 2016 business meeting to undertake contribution to local government.” a fresh look at the vast, interwoven political landscape of special districts that it first reviewed in 1999 and 2000. What’s So Special About Special Districts? 2010. Senate Local A new generation of Commissioners studied the basics Government Committee. of special districts and examined changes spurred by the Commission’s 2000 report. In following up during 2016 and 2017, they evaluated districts generally, At any given moment in any random neighborhood, but also specifically through the present political millions of Californians whirl through their lives uncertainty regarding healthcare delivery and the lens of within the boundaries of special districts. During their infrastructure planning for climate change. relentless proliferation over the past 75 years or more they have become the backbone of California’s vast public services delivery system and the state’s most “Districts were popular because they could be put common form of local government. The largest of these in place quickly, had flexible boundaries, and could districts, each individually established by their inhabitants efficiently provide those specific services in greatest to perform a specific function, provide healthcare, water need without saddling citizens with creation of delivery, transportation, flood control and fire protection. complex municipal bureaucracies. They were a Hundreds more special districts operate airports, harbors, perfect fit for the dominant, low-density suburban cemeteries, sewer systems, parks and libraries. Still more lifestyle that characterized California almost from keep the street lights on, limit the spread of mosquitoes the beginning.” and operate memorials and halls for veterans. Growth Within Bounds. January 2000. Commission on Local Typically, most residents living in these districts know Governance for the 21st Century. little about them, how they operate, who runs them and what they pay in taxes or fees to support them. Yet California has an estimated 2,071 independent special Similarly to the 2000 study, this review largely focused on districts – many with the power to collect property taxes, the 2,071 independent special districts. An August 25, 2016, to send monthly bills and collect fees and frequently to introductory hearing helped the Commission explore make voters scratch their heads over a list of unfamiliar the broad background of special districts and consider candidates during election time. recommendations about their structures, operations and oversight. An October 27, 2016, hearing focused more Generally, it is the state’s 482 cities and 58 counties that narrowly on how special districts, as critical front-line attract all the media and social media attention with service providers, are mapping out climate adaptation their noisy, divisive issues and controversial political strategies, investing their financial reserves and budgeting campaigning. But it is the quiet, below-the-radar for long-range infrastructure to prepare for anticipated special districts where most of the grunt work and local climate impacts across California. governing of California gets done. Introduction | 13 Additionally, a November 16, 2016, advisory committee Nevada water delivery infrastructure that supplies water to meeting zeroed in on numerous controversies that continue East Bay Municipal Utility District customers. to arise within the Capitol around healthcare districts and whether those districts without hospitals should continue Throughout the Commission’s study process, the evolution to exist. The Commission examined the historic roles of of special districts was viewed through California’s hospital districts in California, noted the disappearance spectacular population growth since World War II. The of many district hospitals and asked if redesigned Commission learned that newcomers created special successor healthcare districts remain a viable entity in an districts by the hundreds, then thousands, to bring basic industry that has shifted from disease-focused care to an public services to developing rural areas and small towns emphasis in preventative care. Finally, on June 22, 2017, as the California population rose from nearly seven million the Commission held a roundtable meeting to discuss in 1940 to 20 million in 1970 and to nearly 40 million today. potential recommendations for this report, with 17 invited Many quiet places with ranches and single stoplights participants and approximately 40 others who provided morphed into bustling suburbs, cities and urban counties input and comments to help guide the Commission’s review. during a frenzy of residential, commercial and industrial development. Often, competing agencies were established During the course of the study, the Commission and to fight fires, build parks and control floodwater. Today, staff interviewed dozens of special district officials and this vast interlaced and unruly governing landscape of city, members of their trade associations, government analysts, county and special district service providers is locked into legislative consultants, members of special district place, the vestige of seven decades of hurry-up growth and oversight bodies and many others. Staff also toured Sierra hyperactive local agency creation. Institute for Local Government: A Guide to Special Districts Special districts are public agencies created to provide one or more specific services to a community, such as water service, sewer service, parks, fire protection and others. • Independent Special Districts. Many special districts operate under a locally elected, independent board of directors, which oversees district functions. These kind of special districts are called “independent special districts.” About two-thirds of special districts are independent. • Dependent Special Districts. Sometimes the governing board of either a city or county will also serve as decision-makers for a special district. These kinds of special districts are called “dependent special districts.” About one-third of special districts are dependent. Most special districts perform a single function, such as water service, parks and recreation, fire protection, pest abatement or cemetery management. Other districts have multiple functions, such as community service districts. Some special districts provide services for residents in both cities and counties, while others provide services only for residents who live outside city boundaries in the unincorporated areas. In California, cities must be located in one county, and city boundaries may not cross county lines. On the other hand, special districts may cross city and county boundaries. For example, the Metropolitan Water District of Southern California serves residents in six different counties and most of the cities within those counties. Special districts generate revenue from several sources including property taxes, special assessments, and fees. • Enterprise Special Districts. These agencies run much like business enterprises and provide specific benefits to their customers. They are primarily funded by fees paid by service recipients. • Non-Enterprise Special Districts. These deliver services that provide general benefits to entire communities. They are primarily funded by property taxes. Source: Institute for Local Government. “About Special Districts.” Sacramento, CA. http://www.ca-ilg.org/post/about-special-districts. Accessed July 18, 2016. 14 | Little Hoover Commission The Commission quickly learned that the status quo is a the Commission. The findings and recommendations in formidable political force and amply able to quash reform the report, however, are the Commission’s own. efforts. As it began its 2016-2017 study, it assessed the failure of many reformers during the past quarter century to spur mass consolidation of older special districts or simply absorb them into cities and counties. Consistently, in reports, studies and books, they have argued for centralizing government to create efficiencies and make optimum use of tax revenues. Yet special districts largely continue to prevail. They seem to possess advantages – or conversely, lack wide-scale harms – that make them mostly tolerable to their constituents in the larger scheme of governing and able to forestall movements to purge them on a significantly large scale. Likewise, in California as elsewhere, voters still tend to prefer government that’s closest to them. The Little Hoover Commission, in lieu of reemphasizing past reform perspectives that California is broken, cracking up and encrusted with too much multilayered or “barnacled” government, elected to provide a newer understanding of districts’ collective role, shine fresh light on old and emerging issues and find ways for the state to oversee better order among local and regional service providers. The Commission, as it assessed the role of special districts in a state that has largely matured in its growth patterns, considered potential ways to clean up poorly-organized local and regional governing systems lingering from chaotic episodes of growth and better prepare them for a new kind of California – one that is:  Much more densely populated and urban  Implementing concepts of wellness to create a healthier population and greatly reduce catastrophic healthcare costs, and  Increasingly focused on economic stability and reliable service delivery as climate impacts begin to mount. Public hearing witnesses and advisory committee meeting participants are listed in the appendices. Throughout this study, Commission received much valuable input from interviews and correspondence with special district officials, legislative advocates, government analysts and other experts on governing California. All gave generously of their time, providing great benefit to Introduction | 15 Background Special districts are a unique creation of California, has a narrowly-defined budget and a singular focus for a governing mechanism dating to the Legislature’s interested constituents during its public meetings. Wright Act of 1877 authorizing Stanislaus County farmers to form the Turlock Irrigation District and capture Sierra “By focusing only on providing the highest level of snowmelt to water their crops. Water districts led the emergency services to the communities they serve, way in formation of special districts in a vast rural state they avoid being sidetracked or competing for resources with approximately 1.5 million people in 1900. In 2017, with other governmental services,” North Tahoe Fire with a population nearing 40 million, they still supply Protection District Chief Michael Schwartz told the approximately 90 percent of the developed water in Commission in August 25, 2016, testimony. “Along with California.4 a focused mission comes a certain level of organizational expertise, do one thing, do it efficiently and do it well.” Cemetery districts likewise came into being when California’s population growth overwhelmed the One example from late 2015 testifies to the flexibility traditional role of churches in providing and maintaining enjoyed by single-purpose special districts in contrast burial grounds.5 Nearly 250 cemetery districts still exist to cities, counties and state or federal agencies. When statewide.6 New districts in the 1930s built levees and Amador and Calaveras counties were overwhelmed after airports and brought electricity to residential areas. Yet the 70,000-acre Butte Fire and the federal government most of today’s 2,071 independent districts – the focus couldn’t immediately move to begin watershed of this review – came into being after World War II to restoration, the East Bay Municipal Utilities District accommodate millions of newcomers who migrated to (EBMUD) board voted to loan the U.S. Bureau of Land the state’s bounty and warm climate. Hospital districts Management (BLM) $1 million for helicopter time to formed to provide intensive medical care. Library quickly re-seed the Mokelumne River watershed which districts put books on the shelves. Harbor districts drains into the district’s Pardee and Camanche water created shelter for fishing boats and new community storage reservoirs. “We really pushed the envelope of services districts took on most of the responsibilities of a what could be done. We were like ‘let’s get going, let’s get small town with fire trucks, parks and night lighting. going,’” said Chris Swann, ranger supervisor of EBMUD’s Mokelumne River Watershed and Recreation District. The state’s largest districts tend to be located in long- Unfortunately, said Mr. Swann, the BLM bureaucracy could developed coastal areas and include such regional giants not find a way to accept the loan to begin a response.8 as the Metropolitan Water District, Santa Clara Valley Water District and East Bay Regional Parks District. Most of the smaller districts, which are more narrowly focused and limited in service scope, are located in more recently developed inland areas of California.7 Proponents of special districts say their best quality is the ability to concentrate on one service. A city parks department is one among many competing for funding during budget season – and may share a city council meeting agenda with dozens of items on proposed shopping centers, gang prevention, pavement conditions, flooding and the homeless. A special district 16 | Little Hoover Commission Special Districts: How Many Are There? “What makes special districts an effective and efficient form of local governing is the Number of California Local Government Entities empowerment of local service specialists with • School Districts: 1,022 the revenue and budget authority. When you • Cities: 482 empower the specialists with the authority • Counties: 58 combined with the resources necessary to get • Independent special districts: 2,071 the job done they will do it in a focused manner • County-run dependent special districts that results in efficiency and effectiveness. They (including more than 800 county service areas): 1,495 will be more prudent, more innovative and more • City-run dependent special districts: 254 sustainable. As this Commission looks forward to • Joint Powers Authorities and Nonprofit its next hearing let’s not undermine this unique Corporations: 957 and invaluable tool, the independent special district, that local voters throughout California Number of Independent Special Districts by have established to make a difference in their Category communities. Let’s instead work together to • Airport districts: 10 strengthen these local specialists.” • Water districts: 132 • Water storage districts: 8 • Citrus pest districts: 9 Kyle Packham, Advocacy and Public Affairs Director, • Community services districts: 321 California Special Districts Association, addressing the • Cotton pest abatement districts: 1 Commission August 25, 2016. • County sanitation districts: 37 • County water districts: 169 • Fire protection districts: 346 State Auditor Elaine Howle on the • Harbor districts: 7 Strengths and Challenges of Special • Healthcare districts: 79 Districts • Irrigation districts: 92 • Levee districts: 13 Strengths: “Special districts are typically formed to • Library districts: 13 provide specific services and serve certain areas or • Mosquito control and vector control districts: regions that are not necessarily tied to a city or a 47 county and thus, often understand their constituents’ • Municipal utility districts: 5 needs better than a government entity that provides • Municipal water districts: 37 many services and may be a bit further removed • Park and recreation districts: 95 from the constituents. Special districts may be able • Police protection districts: 3 to customize services and provide more tailored services to their customers.” • Port districts: 5 • Public cemetery districts: 248 Challenges: “Special districts may have less resources • Public utility districts: 54 or administrative staff than a city, county or state • Reclamation districts: 150 entity. With limited resources it is sometimes difficult • Resource conservation districts: 99 to incorporate management controls and proper • Sanitary districts: 66 oversight that mitigate errors, irregularities, or • Transit districts: 17 mismanagement.” • Water conservation districts: 13 • Water replenishment districts: 2 Source: California Special District Magazine. October 15, 2015. “Interview • Veterans memorial districts: 27 with State Auditor Elaine Howle: Auditing in the Course of Checks and Balances.” Sacramento, CA. http://www.csda.net/districts-in-the-news/ interview-with-state-auditor-elaine-howle-auditing-in-the-course-of-checks- Sources: See endnote 73. and-balances/#sthash.8PmlL0z2.dpuf. Accessed July 18, 2016. Background | 17 Numbers Rising Nationally, but Declining in  California has 7.5 percent of the nation’s special districts with 12 percent of the nation’s California population. Nationally, the proliferation of special districts is The leveling-off trend continues, according to the CSDA, increasing, numbering 38,266 in the U.S. Census which reported a half dozen district consolidations and Bureau’s 2012 Census of Governments, and raising dissolutions from mid-2015 through the end of 2016. familiar concerns about too much government and too They include: little oversight.9 In California, the number has peaked, however, and is falling. The California Special Districts  Lompico Water District in Santa Cruz County Association (CSDA), testifying at the August 25, 2016, hearing and citing 2012 Census of Governments data  Los Trancos Water District in San Mateo County stated:  Rabb Park Community Services District in Amador  The number of special districts in California has County declined 5 percent since a 1997 peak, while the  Del Rio Woods Recreation and Park District in number nationally increased 10 percent since Sonoma County 1997.  Gold Springs Lighting District in Tuolumne County  Thirty-three states have more special districts per capita than California.  Niland Fire Protection District in Imperial County. Slight Declining Trend in Number of Special Districts After 75 years of relentless formation and growth to accommodate the rapid development of California, the number of special districts within the state has leveled off. Source: U.S. Department of Commerce. U.S. Census Bureau. Census of Governments. “List & Structures of Governments. Number of Special Districts.” Washington, D.C. https://www.census.gov/govs/go/number_of_special_districts_by_county.html. Accessed July 18, 2016. 18 | Little Hoover Commission The Imperial County Local Agency Formation Commission currently pending consideration by the Legislature. moved to dissolve the Winterhaven Fire Protection District, in May 2017. The district had ceased to provide fire protection to the small community and its board What Californians Can Find Online About had stopped meeting regularly, according to a May 2017 Special Districts report from the LAFCO’s executive officer.10 Studies also were underway to consider dissolving the West Special districts report financial data annually to the Contra Costa Healthcare District and Rollingwood Wilart California State Controller and California State Treasurer for Recreation and Park District in Contra Costa County, public review. The Controller’s office annually updates the according to CSDA analysts.11 Likewise, representatives number of independent districts and their employees and of five Tuolumne County special districts gathered on reports their statewide and individual salaries and wages January 18, 2017, to discuss possible consolidation of paid per district. Data on individual districts can be found their sanitary, parks, cemetery, lighting and fire districts by entering the name of the district. Many special districts – with combined annual revenue of $2.1 million – into also provide links to the State Controller’s website. One a single community services district. “I think through challenge, as described in greater detail later in this report, consolidation we would be more efficient,” said one is that the State Controller combines information on board member quoted by the local newspaper. “We may independent special districts, joint powers authorities and spend the same amount of money, but I think we would nonprofit corporations making it difficult to assess trends be increasing services to the community. 12 in the aggregate. Upon request from the Commission, the State Controller provided the following details on the In May 2017, the Commission received a copy of a letter 1,895 independent special districts that have data available from four water districts and one flood control and water on the State Controller’s website15: conservation district in the Ukiah Valley of Northern California seeking assistance from the Governor in  These districts have revenues of $21.5 billion. resolving water rights issues so that the five districts could voluntarily consolidate into one Joint Powers Authority.  These districts employ 90,461 people. The letter highlighted the challenges that willing water districts working in conjunction with their LAFCO encounter  The total payroll for these districts was nearly in attempt to consolidate to become more efficient. The $6 billion. districts hoped to provide a statewide model for voluntary The Controller also updates a Top 250 list of the largest water district consolidation using the LAFCO process.13 districts, an activity spurred by legislation codifying a recommendation in the Little Hoover Commission’s 2000 The special districts community maintains there are an report. For historical information, the Controller’s Office unknown number of inactive districts statewide – all maintains a list of annual financial transaction reports candidates for further rounds of dissolutions. A handful from fiscal year 1995-1996 through 2011-2012. In 2014, of them, according to CSDA, include the Alpine Resource the Controller’s Office updated its financial reporting Conservation District, Corcoran District Hospital, Mootamai to an open data format, allowing the public to sort and District Hospital, Odessa Water District and Reclamation compare data in a variety of ways. The Treasurer’s District 2120, Silver Creek Drainage District, Valley Health office tracks special districts’ outstanding debts on its System Healthcare District and Willow Springs Water DebtWatch website. According to the State Treasurer’s District.14 The California Association of Local Agency DebtWatch website, California special districts issued Formation Commissions (CALAFCO) suggested at the $10 billion in debt from July 2016 to July 2017. Commission’s August 25, 2016, hearing that its member agencies would benefit from having statutory authority The California Special District Association also has a wealth and funding to unilaterally dissolve inactive districts of information on special districts on its website, including without protest votes and costly elections. Presently, an interactive map of California that includes the name when either a LAFCO or a district (even an inactive one) and contact information for a majority of special districts formally initiates its own dissolution residents can protest by county with links to many local district websites. and upend the process. Legislation to resolve this issue is Background | 19 financial reserves held by some “well-heeled” districts, Relevant Websites to View Special suggested that consolidating small districts into larger Districts Data districts would yield efficiencies and stated that Local Agency Formation Commissions (LAFCOs) needed to be Special Districts Annual Report – Top 250 Districts better-equipped and tougher to bring more order to the http://lgrs.sco.ca.gov/sb282/index.asp state’s checkerboard of districts. Salary Database for Special Districts http://publicpay.ca.gov/Reports/SpecialDistricts/ “When special districts first emerged, they were SpecialDistricts.aspx state-of-the-art government. All of their attributes Top 1,000 Special District Salaries were tailored to the unique needs of their http://publicpay.ca.gov/Reports/SpecialDistricts/ communities – their boundaries, their functions, SpecialDistricts.aspx?fiscalyear=2015&rpt=2&chart=1 their governance and their finances … Many of these independent government entities continue Annual Special District Financial Transaction reports to evolve in ways that increase their value and 1995-2011 http://www.sco.ca.gov/ard_locarep_districts.html relevance to the citizens they serve. But others are reluctant to change and to open themselves to Special Districts By the Numbers Open Data Website scrutiny. Their boundaries are meaningless relics of https://bythenumbers.sco.ca.gov communities that have lost distinctions. They spend money on their defined missions, regardless of Debtwatch (California State Treasurer’s Office) other community needs. In some cases, they hold http://debtwatch.treasurer.ca.gov vast financial reserves that have simply not been Special Districts Map (California Special Districts publicly examined. In extreme cases, the governing Association) boards are only “governing” contracts with private http://www.csda.net/special-districts/map/ service providers. Little Hoover Commission. “Special Districts: Relics of the Past or Resources for the Future.” May 3, 2000. A Brief Recap: The Commission’s 2000 Study and Changes Since The Commission’s five major recommendations in 2000: In a May 3, 2000, letter to Governor Gray Davis and  The Governor and Legislature should enact the Legislature following its initial year-long study, the legislation to make special districts more visible Commission summarized that it found special districts and accountable to those they serve. were slow to change their ways, invisible to most citizens and often lacking in scrutiny until it was too late to head off  The state should provide LAFCOs the direction scandal. “Ironically, these governments that are physically and resources necessary to make them a catalyst closest to their communities are oftentimes unknown to for the effective and efficient evolution of the people they serve. And in the absence of community independent special districts. involvement, the mechanisms for public accountability are dulled and the value of public scrutiny is lost.” Wrote then Commission Chair Richard R. Terzian: “It also  The Governor and Legislature should establish a is ironic that when they were created, these districts program at the California Policy Research Center, were tailored to the needs of their communities. But as or similar institute, to equip policymakers and the those communities have grown and changed, the districts public with tools necessary to assess and guide themselves have been slow to change their boundaries, the organization of independent special districts. functions and governance to reflect their communities.” The program should develop guidelines and In its 2000 report, the Commission criticized excess protocols for special district consolidations. 20 | Little Hoover Commission It also should study outcomes of consolidations report now provides the public specific data and reorganizations, establish a cadre of trainers about districts’ reserves, revenues, expenditures and develop performance measures. and cash and investments on hand.17  The Governor and Legislature should enact  The California Special Districts Association in policies to ensure prudent management of 2001 issued a publication to its members which special district reserve funds. Those reserves cited Little Hoover Commission concerns about also should be incorporated into regional and reserves. It outlined methods to establish statewide infrastructure planning. “prudent” reserves. The association updated its “Special District Reserve Guidelines” in 2013.  State policymakers should consider whether continuing to allocate property taxes to  The CSDA’s Special District Leadership enterprise districts which bill their customers for Foundation, formed in 1999, now issues services provided is appropriate. certificates of excellence to districts that adhere to principles identified in the Commission study The Commission’s May 2000 report and recommendations – ethics, transparency, accountability, efficiency have spurred few large-scale structural changes in the and good policy choices.18 arena of special districts. There was no jump start in  Most special districts now have websites – unlike consolidations. There was no alteration of property 2000 – and post notices of board meetings, tax allocations to enterprise districts. Explaining the minutes and financial and budget information lack of action, policymakers within the orbit of special online. Water districts, especially, make strong districts told the Commission in 2016 that property use of social media to engage customers and tax policy is too intricate and convoluted to change keep them in the know.19 allocations without tampering with Proposition 13. They also defended district reserve funds as a tool to  The Cortese-Knox-Hertzberg Act of 2000 – pay for infrastructure or special programs such as the AB 2838 (Hertzberg) – authorized Local Agency Metropolitan Water District’s drought-inspired $350 Formation Commissions to occasionally analyze million lawn removal initiative in Southern California.16 the organization and relevance of individual Many LAFCOs, meanwhile, remain as resource-challenged special districts. Most LAFCOs are doing these as they were in 2000, continuing to lack adequate funds studies, called Municipal Service Reviews, to more aggressively initiate and study formation, according to state LAFCO officials. dissolution or consolidation of districts.  LAFCOs also have become more independent of Still, August 25, 2016, hearing witnesses, as well as other local government organizations that could others in interviews, told the Commission its 2000 report sway their decisions. In 2000, some 70 percent prodded many smaller changes and results: Among of LAFCOs relied on county employees for staff. them: In 2016, approximately one-third rely on county employees.  Numerous county grand juries conducted their own reviews of special districts following  The number of county LAFCOs with special the Commission’s report. These grand juries district representatives on their governing documented many of the same issues locally boards has increased from 25 to 30 since the as those raised by the Commission. Many Commission’s 2000 report. In 2017, the California questioned reserve levels and district spending Special Districts Association and California and suggested district consolidations. Association of California Local Agency Formation Commissions is co-sponsoring legislation  Governor Davis in 2001 signed legislation – SB 282 to remove a legal constraint that requires a (Dunn) – requiring the California State Controller majority of special districts within a county to publish an annual online report of 250 special to pass resolutions favoring special district districts with the largest revenues. This annual Background | 21 representation on their LAFCO within a one- year period. The proposed change would allow a one-time election process where a majority of districts could vote on the question. 22 | Little Hoover Commission Appropriate State Oversight The Legislature gave life to special districts in 1877 Legislature has reacted by bypassing LAFCOs altogether and retains the power to create them to meet new through legislation to directly create, expand, dissolve needs, dissolve them when they become irrelevant and or alter the operations of special districts. Governor adjust their boundaries to meet changing circumstances. Schwarzenegger and Governor Brown have largely Generally, the Legislature is free to intervene in operations approved reorganization bills that reach their desks. An of special districts any way it sees fit – and has repeatedly uptick in these types of bills introduced during the 2015- done so. 2016 legislative session signaled the LAFCO process was not living up to its potential equally across the state. Many outside the Capitol told the Commission the Legislature increasingly is too quick to override local The Legislative action however raises red flags among oversight of special districts – and ill-informed while local government watchers. One 2016 Senate Governance weighing issues complicated by fractious local politics. and Finance Committee analysis stated that “continuing to Yet Capitol insiders say local oversight processes for enact special legislation circumventing the LAFCO process special districts can be interminably slow and ineffective. for individual local government boundary changes and It often requires higher political authority to break reorganizations may set a precedent that invites regular logjams, shut down troubled districts, consider the legislative involvement in all manner of disputes over local fairness of property tax allocations and scrutinize the service delivery and boundary issues.”20 scale of financial reserves. Despite marked improvements since the last major The standoff is a constant in Capitol politics. What, reform effort in 2000, the enactment of the Cortese- indeed, is appropriate state oversight for special governing Knox-Hertzberg Reorganization Act of 2000, the LAFCO entities that are local and regional in scale, run by locally- process has generally not spurred an abundance of elected boards, subject to local oversight authorities and, dissolutions or consolidations of special districts. in theory, reflecting the wishes of local constituents? In August 25, 2016, hearing testimony, Pamela Miller, executive director of the California Association of Local It Begins with Local Agency Formation Agency Formation Commissions (CALAFCO) told the Commission her member agencies oppose bills that bypass Commissions (LAFCOs) LAFCO authority and are increasingly being introduced in the Legislature. She also cited negative implications of The Commission’s 2000 report found LAFCOs were the Legislature powerfully inserting itself into purely local slow, underfunded and even unreliable when captured disputes and issues, often of late involving healthcare by local politics – and some still are. A frustrated districts, an issue discussed more fully later in this report. Appropriate State Oversight | 23 What is a LAFCO and What Does it Do? Many consider county Local Agency Formation Commissions, in theory, one of the best ideas of any state in helping guide the orderly growth of local government as communities develop and change. In practice, this task is often made much more difficult by local politics that can occasionally override the broader public interest. LAFCOs are dominated by local elected officials with varying ideologies about accommodating growth or development while the institutions are sometimes thought to be controlled by various city or county factions favorable or unfavorable to developers. A dissenting vote can lead to a member’s removal. (The California Association of Local Agency Formation Commissions testified at the August 25, 2016, hearing that it would like to see statutory authority providing fixed terms for LAFCO members to ease political pressures in controversial local votes). LAFCOs exist in each of California’s 58 counties and are generally governed by five or seven members that include two county supervisors, two city council members and one public member – and in 30 counties, also two special district representatives. In most of those 30 counties, the cities, counties and special districts each pay one-third of a LAFCO’s annual budget – though funding ratios can vary. In counties without special district representation cities and counties generally split the cost. The Legislature and Governor Edmund G. “Pat” Brown created LAFCOs in 1963 as part of a tide of planning reforms enacted to prevent practices in which “many landowners engaged in leapfrog development – jumping far ahead of municipal boundaries and urban services to build subdivisions without central water and sewer systems,” according to author William Fulton’s “Guide to California Planning.” Cities, wrote Fulton, “happily annexed distant property” and counties “permitted growth wherever landowners wanted to put it.” LAFCOs were assigned to bring a rational view to these decisions, in essence, having the final say over city boundaries and also creation of special districts and their boundaries. The Legislature has added many new responsibilities to LAFCOs since their creation. A 1993 reform law, AB 1335 (Gotch), gave LAFCOs the power to initiate consolidations among special districts while adding the option of including two special district members on LAFCOs. Another major reform effort in 2000, the Cortese-Knox-Hertzberg Reorganization Act of 2000, AB 2838 (Hertzberg), gave LAFCOs authority to conduct reviews of the efficiency and effectiveness with which special districts deliver services. These are called Municipal Service Reviews (MSRs). While LAFCOs have no direct regulatory authority over special districts, these MSR’s provide information to help districts improve their performance – and also serve as the basis for LAFCO decisions to recommend and take the initiative to consolidate or dissolve districts and make boundary changes. Local voters, however, have the final say on consolidations and dissolutions. Sources: William Fulton. Guide to California Planning. Second Edition. Solano Press Books. 1999. Point Arena, CA. Pages 58-59, 76-77. Also, Pamela Miller, Executive Director, California Association of Local Agency Formation Commissions. August 25, 2016. Written testimony to the Commission. 24 | Little Hoover Commission Recent Legislation Overriding LAFCO Authority in Special District Controversies • SB 1374 (Lara), creating the Lower Los Angeles River Recreation and Park District without requiring the usual LAFCO study and approval process for new local government boundaries. Governor Brown signed the bill on September 22, 2016. • AB 2414 (Garcia), allowing the Desert Regional Healthcare District in Riverside County to expand its boundaries into the eastern Coachella Valley without a full LAFCO review. Governor Brown signed the bill on September 21, 2016. • AB 2471 (Quirk), expediting the dissolution of the Eden Township Healthcare District in Alameda County by ordering the LAFCO, under conditions specified in the legislation, to dissolve it. The bill was ordered to the Inactive File on August 29, 2016, at the request of Senator Loni Hancock, D-Oakland. • AB 2737 (Bonta), bypassing LAFCO and the board of Eden Township Healthcare District to cap the district’s administrative expenses at 20 percent of its annual revenue. Governor Brown signed the bill on September 21, 2016. • AB 2470 (Gonzalez), requiring the San Diego County Water Authority to provide water outside its boundaries to the Sycuan Band of the Kumeyaay Nation if asked – bypassing LAFCO review and circumventing the annexation process. Governor Brown signed the bill on September 12, 2016. • AB 3 (Williams), creating the Isla Vista Community Services District to administrate a long-neglected student- occupied neighborhood near UC Santa Barbara. The bill specifically prohibited the local LAFCO from disapproving the application to create it. Governor Brown signed the bill October 7, 2015. • SB 88 (Committee on Budget and Fiscal Review), granting the State Water Resources Control Board power to bypass LAFCOs to force consolidation of local water districts to serve disadvantaged areas. Governor Brown signed the bill June 24, 2015. • AB 2453 (Achadjian), establishing a special process to create a new Paso Robles Water District in San Luis Obispo County that included exceptions to the customary and statutorily-required LAFCO process. Governor Brown signed the bill September 16, 2014. • AB 1232 (Huffman) allowing a special process for the consolidation of the Sewerage Agency of Southern Marin and its member districts, after notice and hearing, but without protest hearings. Governor Schwarzenegger signed the bill October 11, 2009. Source: : Legislative Information System. Bill analyses. Appropriate State Oversight | 25 Ms. Miller suggested that although ongoing funding to “LAFCOs have been criticized for not doing enough support LAFCO mandates is appropriate, she indicated when it comes to dissolving or consolidating CALAFCO fully supports a one-time infusion for LAFCOs to districts. Simply reorganizing agencies does not conduct certain activities. necessarily improve services – ultimately, LAFCO She also acknowledged to the Commission that CALAFCO recommendations are designed to improve the is seeking middle ground with the Legislature. “We are provision of service. Each district has its own willing to work with the local government committees to funding approach and some have distinctly look at LAFCO processes on what could be streamlined different levels of service. Consolidation or and still get the job done,” Ms. Miller said. dissolution for the sake of change is not as simple or logical a path as one presumes and often Several “nuts and bolts” types of fixes were proposed to leads to unintended consequences. LAFCOs must the Commission during the study. Two recommendations always recognize and respect that a special district – one that would make is easier for LAFCOs to dissolve board is locally elected and is accountable to its inactive districts and another that would make it easier constituents when making local decisions, even if to add special districts to LAFCOs in the 28 counties in stark contrast to a LAFCO recommendation.” where this currently is not the case, were introduced in the Legislature in 2017. The first bill was under Pamela Miller, executive director, California consideration by the Legislature and the second was sent Association of Local Agency Formation Commissions. to the Governor’s desk in August 2017. Other proposed August 25, 2016, testimony to the Commission. improvements including establishing fixed terms of service for LAFCO members and simplifying the consolidation and dissolution process. In her testimony, Ms. Miller told the Commission that the Legislature is prone to ignore or override the local Dealing with Property Tax Inequities circumstances and conditions behind a particular special district dispute. She also said the extensive and time- The Commission spent considerable time in 1999 and consuming deliberations involved in LAFCO processes are 2000 examining a peculiar aspect of special districts necessary to ensure quality decision-making. The LAFCO that stems from rushed efforts to address the 1978 studies required to consolidate, dissolve, change or create voter-created property tax limit measure, Proposition a district can take one to two years and cost thousands of 13. The Commission then – alongside several other dollars in staff time, she said. “The Legislature made the prominent task forces at the time – recommended process very deliberative so it takes a while. A dissolution reforms for fairer, more equal and sensible property tax is messy. There are a lot of factors. What are the assets? distribution among local service providers. None of it Who will take over the assets and liabilities? It’s time- gained traction due to powerful public entities, including consuming and costly. Some entities think it’s less costly special districts, fearing lost revenue and defending their to run a bill through the state and nothing could be locked-in property tax shares. The Commission revisited further from the truth,” she told the Commission. the topic at its August 25, 2016, hearing and heard a whole new round of opposition and protest from special Witnesses at the Commission’s August 2016 hearing districts and their trade associations. This opposition and participants at the June 2017, advisory committee was repeated during and following the Commission’s meeting suggested part of the reason for the inconsistent June 2017 advisory committee meeting. It is clear that effectiveness of LAFCOs across California was insufficient opportunities for property tax reform and more equitable funding. A small, one-time infusion of grant funding distribution locally are little better in 2017 than in 2000. – particularly targeting the most critically needed reorganization studies by LAFCOs or smaller special Some districts – such as water districts – collect property districts – could lead to improved local governance. taxes and charge fees for services to their customers. This enables them to prosper, build strong reserves and 26 | Little Hoover Commission keep fees lower. Meanwhile, some neighboring water Mr. Coleman acknowledged the difficulty of reforming an districts can’t collect property taxes, have few reserves entrenched tax system fiercely defended by the winners. and must charge customers higher fees. But he proposed a novel vision – one also floated during the early 1990s by the Legislative Analyst’s Office – to spend property tax dollars more efficiently in California by “The allocation of property tax revenues is difficult better aligning local property tax revenues with demand to administer and understand, complicating the for services. “Communities should be empowered with the authority they need to allocate revenues according work of policymakers and confounding taxpayers. to their particular needs and preferences,” Mr. Coleman Formulas for allocating property taxes enacted in testified. “We have a local property tax apportionment the late 1970s often fail to reflect the contemporary system that fragments local governance: no local needs and desires of local communities. Formulas authority exists to allocate revenues among the core are now locked in place that provide subsidies municipal services to better match local service level to some districts, prevent others from delivering preferences as they exist today, not 30 or 40 years ago.” services that the public wants, and preclude understanding by the public of what their property Under Mr. Coleman’s scenario, the Legislature would give tax buys and from whom.” counties and cities responsibility to provide all services within their boundaries, even those now provided Special Districts: Relics of the Past or Resources for the independently by special districts. Cities and counties Future. Little Hoover Commission. May 3, 2000. would decide local service levels – for police, fire, parks, libraries, water and others – and have authority to shift annual spending of local property taxes to best provide This inequality prevails throughout California’s special them. In this manner, Mr. Coleman testified, a single districts landscape. It is due to AB 8, a quick, reactive government authority would set service priorities within measure which passed in 1979 and has defied solution ever its boundaries through an annual open budget process, since. AB 8 locked in a tax system in which special districts he testified, rather than the current system of numerous that levied their own property taxes in the mid-1970s get independent entities making those decisions irrespective a similar share of their county’s 1 percent property tax rate of one another and the region’s overall needs and wants. today. Districts that didn’t levy property taxes in the 1970s – often due to politically-conservative boards – get no shares “The authority to reallocate revenues from taxes should of their county’s property taxes. This inability to redistribute be tied at the hip with the responsibility for the service county property taxes for new program realities means for which those taxes are intended,” Mr. Coleman told libraries and parks may deteriorate due to taxing decisions the Commission. Policymakers with the power to shift made in the 1970s while nearby fire districts buy the best, revenues from one program to another should shoulder newest fire trucks and healthcare districts give tax-funded the responsibilities for those programs.” grants to sometimes-questionable recipients – all while also maintaining reserve funds. “Special districts could continue to be service providers under arrangement with cities and counties, but would August 25, 2016, hearing witness Michael Coleman, no longer be ‘taxing entities,’” Mr. Coleman stated in a Davis-based government finance expert speaking his written testimony. Orally, he told the Commission, for himself and not on behalf of his clients, told the “I have said this many times, and I should reemphasize Commission that special districts shouldn’t routinely be here again, that special districts, are in many cases, I do able to simultaneously receive property taxes and charge not doubt, the very best, most efficient and effective customer fees. He testified that the current system service provider for an area. What I’m suggesting is (inherited from the state government’s hurried, clumsy that that decision can be made through contract, as it implementation of Proposition 13) often increases a is in many cases, as opposed to a locked-in allocation of region’s tax load – a struggling public library system must revenues so that a community has the choice to think seek an additional parcel tax, for example, even as a nearby about what’s the best alternative for providing the water district has seemingly outsized financial reserves. service in the area.” Appropriate State Oversight | 27 Special district representatives disagreed vigorously with to increase since 2000 among the 25 top enterprise Mr. Coleman’s proposal. Kyle Packham of the California districts cited in the Commission’s original report. Special Districts Association told the Commission it “fails on multiple levels” and noted the fact that it’s never been The California Special Districts Association and individual implemented suggested that it’s too difficult or “it may special districts in 19 instances of public comment be it’s just a bad idea.” “The linchpin to the effectiveness forcefully contested Mr. Coupal’s figures as well as his of special districts, which Mr. Coleman recognizes in his criticism. Mr. Coupal defended his testimony, stating, written testimony, is their authority over revenues and “It’s been said that we don’t understand reserves. I would expenditures. They’re independent,” Mr. Packham testified. submit that we do, very well.” “The moment that authority is subjugated to another body like cities, the district is completely undermined.” In his written testimony, Mr. Packham stated, “There are many factors to maintaining sufficient reserve levels and Mr. Packham added: “Giving another body the purse ultimately the fact that one agency has larger or smaller strings might as well be handing them chains and reserves than another is not, in and of itself, a bad thing.” shackles. He who controls, or she who controls, the He added, “The key is for agencies to establish a clear revenue controls the outcomes. Therefore, turning over and well-articulated rationale for the accumulation and revenue control to the cities would inherently eliminate management of reserve funds.”22 the purpose for which voters established special districts and the foundation for their effectiveness and efficiency.” Special districts have likewise continued to dispute the numbers cited for special district reserves in the The Commission clearly recognizes that intense opposition Commission’s 2000 report, labeling them inaccurate to a different, more rational model of tax sharing creates and misleading. In 2016, a Commission discussion with formidable political obstacles to reforms. Yet, reflecting on special districts about their reserve figures cited by the obvious inequities of property tax allocation and the the State Controller’s Office led to the same impasse locked-in formulas that have created winners and losers as districts told the Commission they use different for nearly four decades after Proposition 13’s passage, it definitions and calculations for their reserves than those considers Mr. Coleman’s proposal worth keeping among reported by the State Controller. The bottom line: it policy options for the longer term in California. is nearly impossible under the current state reporting system to draw conclusions that won’t be challenged by special districts as inaccurate. Trade associations The Prickly Question of Reserves for special districts told the Commission the State Controller’s Office has established a task force including representatives of cities, counties and special districts, The August hearing also revisited a sensitive topic to work on standardizing definitions used in its reporting of financial reserves held by special districts. In its of reserves to eliminate this constant discrepancy. The 2000 report the Commission issued a finding, noting: Commission hopes that work remains a priority and is “Hundreds of independent special districts have banked soon concluded to help the public properly assess the multi-million dollar reserves that are not well publicized reserves held by their local districts. and often not considered in regional or statewide infrastructure planning.”21 The Commission found that Special district executives repeatedly told the “some reserves appear unreasonably large” and reported Commission during its August 25, 2016, hearing that at length on ways to define a “prudent” reserve. strong financial reserves are necessary for district operations and represent good fiscal judgment. The At the Commission’s August 25, 2016, hearing, Jon Coupal, discussion, highly focused on the need for expensive president of the Howard Jarvis Taxpayers Association, infrastructure to do their work today and into the future, reiterated many of those criticisms, stating, “Few can prompted Commission Chair Pedro Nava to ask district deny that many government entities have abused the representatives if they are considering the impacts of public trust by hoarding vast sums of money. The problem climate change when investing their reserve funds. That remains, as it did in 2000, especially acute with enterprise discussion prompted additional research and a second districts.” Mr. Coupal added that reserves have continued 28 | Little Hoover Commission hearing on October 27, 2016, on districts’ reserve policies Recommendation 2: The Legislature should provide and climate change adaptation, a subject that will be one-time grant funding to pay for specified LAFCO discussed in a later chapter. activities, particularly to incentivize LAFCOs or smaller special districts to develop and implement dissolution or consolidation plans with timelines for expected RECOMMENDATIONS outcomes. Funding should be tied to process completion and results, including enforcement authority for corrective action and consolidation. Many of the concerns raised about special districts continue to be repeated in 2017. Within Capitol policy The Commission in its 2000 report and again in this study circles, some still contend that special districts are ripe heard that certain LAFCOs and smaller districts lack the for consolidation and represent convoluted, dispersed, resources to propose consolidations and dissolutions. As under-the-radar government. The Commission, while part of the August 2016 hearing and June 2017 advisory recognizing that many districts could still be consolidated, committee meeting the Commission was told a small believes that number may be more in the dozens than the one-time infusion of $1 million to $3 million in grant hundreds. It takes at face value the fact that the number funding could save California taxpayers money if local of districts has continued to level off since 1997. Yet the government is streamlined and efficiency is improved. Commission remains frustrated with this seemingly slow This funding could provide an incentive for LAFCOs or process and at one juncture during the study process, smaller districts to start a dissolution or consolidation even considered recommending broad and sweeping process. Participants in the Commission’s public process changes or encouraging a larger role for the Legislature. suggested the Strategic Growth Council or Department of Conservation could administer this one-time funding. After significant additional public input and several deliberations, the Commission still largely agrees, Recommendation 3: The Legislature should enact as it did in 2000, that keeping or dissolving a special and the Governor should sign SB 448 (Wieckowski) district remains more of a local choice than a choice which would provide LAFCOs the statutory authority to be exercised within the Capitol. Governing issues to conduct reviews of inactive districts and to dissolve remain, however, and special districts operations can them without the action being subject to protest and a be improved. The state can help through a one-time costly election process. infusion of funding, combined with additional statutory improvements for LAFCOs. But these recommendations, The Commission’s study found that there are inactive if implemented, should be analyzed and measured and special districts that hold no meetings and conduct no if additional progress does not occur, further reforms public business. The exact number of inactive districts is should be considered. not known and no formal effort to quantify this problem has occurred. A preliminary review by The California Recommendation 1: The Legislature and the Governor, Special Districts Association found seven examples. should curtail a growing practice of enacting bills to Making the legal dissolution process for inactive districts override LAFCO deliberative processes and decide easier for LAFCOs would represent a significant first step local issues regarding special district boundaries and in trimming district rolls in California. operations. Recommendation 4: The Governor should sign AB The Legislature and Governor have reason to be frustrated 979 (Lackey), co-sponsored by the California Special with slow and deliberative LAFCO processes. But these Districts Association and the California Association of are local institutions of city, county and special district Local Agency Formation Commissions. The bill would members often better attuned to local politics than those strengthen LAFCOs by easing a process to add special in the State Capitol. Exemptions where the Legislature district representatives to the 28 county LAFCOs where gets involved should be few, and in special cases where districts have no voice. the local governing elites are so intransigent or negligent – or so beholden to entrenched power structures – that some higher form of political authority is necessary. Appropriate State Oversight | 29 The Cortese-Knox-Hertzberg Reorganization Act of 2000 local governance, but the Commission was cautioned (AB 2838, Hertzberg) provided the option to add two against recommending specifics on the process without special district members to county LAFCOs to broaden significantly more stakeholder input. The June 2017 local governing perspectives. Nearly two decades later, meeting participants agreed this topic warranted further 30 counties have special district representatives on their review and suggested the local governance committees LAFCOs alongside city council members and county in the Legislature convene an advisory group to propose supervisors. This change provides LAFCOs a more diverse specific legislative changes. decision-making foundation and stronger finances. But 28 additional counties, mostly in rural California, have Recommendation 7: The Legislature should require balked, citing scarce resources. Presently, a majority of a every special district to have a published policy for county’s special districts must pass individual resolutions reserve funds, including the size and purpose of reserves within one year supporting a change. This has repeatedly and how they are invested. proved itself a formidable obstacle to broadening the outlook of local LAFCOs. AB 979 would allow a simple The Commission heard a great deal about the need for one-time election process where districts could easily – adequate reserves, particularly from special districts with and simultaneously – decide the question. large infrastructure investments. The Commission also heard reserves were excessive and district policies on how Recommendation 5: The Legislature should adopt reserves are set aside, invested and earmarked for future legislation to give LAFCO members fixed terms, to ease use are not readily available for public review. To be political pressures in controversial votes and enhance more responsive to constituents, special districts should the independence of LAFCOs. better articulate the need for and the size of reserves, by adopting explicit policies for reserve funds. These policies The California Association of Local Agency Formation should be readily available for public review. Commissions testified on August 25, 2016, that individual LAFCO members – members of city councils, Recommendation 8: The State Controller’s Office should county boards of supervisors and special districts – are standardize definitions of special district financial expected to exercise their independent judgment on reserves for state reporting purposes. LAFCO issues rather than simply represent the interests of their appointing authority. It is a sometimes difficult Presently, it is difficult to assess actual reserve levels held expectation when members serve at will of their by districts that define their numbers one way and the appointing authority. The CALAFCO hearing witness said State Controller’s Office which defines them another way. unpopular votes have resulted in LAFCO board members The State Controller’s Office is working to standardize being removed from their positions. Fixed terms would numbers following a year-long consultation with a task make voting members more willing to exercise the force of cities, counties and special districts. To improve appropriate independence in decision-making. transparency on reserves, a subject that still eludes effective public scrutiny, the State Controller’s Office Recommendation 6: The Legislature should convene an should push this project to the finish line as a high priority. advisory committee to review the protest process for consolidations and dissolutions of special districts and to develop legislation to simplify and create consistency in the process. The Commission heard that an overly complicated and inconsistent process provides another obstacle to implementing district dissolutions or consolidations. There is one set of rules if a LAFCO initiates a dissolution or consolidation and another if the same process is initiated by a district. There was general agreement that a simplified and consistent process could improve 30 | Little Hoover Commission Improving Transparency Modern technology provides government a broad Additionally, the California Special Districts Association array of tools for providing information to the public has partnered with Streamline, a division of Digital and to solicit input and involvement from constituents. Deployment, a web development company, to develop The Commission found dramatic improvement in the a website builder. With no startup fees and no way special districts used websites to reach the public as commitment, association members can create and launch compared to its prior review in 2000. But this is still not a website that meets all legal requirements as well as true statewide. And, it still is difficult for the public to the Special District Leadership Foundation’s transparency know which districts receive their property tax dollars, guidelines for as little as $10 per month.23 how to participate in their district’s public process and how to pick the best board members to run their districts Current law mandates four requirements for any local from an often obscure list of potential candidates. agency with a website: 1. Agendas must be posted 72 hours before a meeting occurs. Improving Transparency on Websites 2. Annual compensation reports, or a link to the In its 2000 report, the Commission found many districts State Controller’s website that contains the provided minimal information to the public and many report, must be posted. were still in the practice of posting meetings and agendas only at the district headquarters. In the subsequent 17 3. Financial transaction reports, or a link to the years, many special districts have embraced technology State Controller’s website that contains the and provide much more information online. Some of report, must be posted. the small and rural districts, however, still lack sufficient 4. Enterprise system catalogs must be posted. revenue and the consistent Internet access that would allow them to create and maintain a web presence. For The fourth requirement – to post enterprise system these districts, it is more feasible to have no website catalogs – is a fairly new requirement unique to local at all rather than comply with state mandates for local governments enacted though legislation in 2015, SB government websites. Social media such as Twitter and 272 (Hertzberg). This law requires local governments to Facebook provide new, less-costly outreach options. include a list of all software and computer systems that it uses to collect, store or analyze information. By creating The California Special Districts Association in partnership the new rule as part of the Public Records Act, the law with the nonprofit Special District Leadership Foundation technically did not create an unfunded mandate for local can be credited with making significant strides in government. Local governments, however, point to this improving online transparency for many special districts type of legislation as state micromanagement as this since the Commission’s 2000 report. The Special District website feature may add little value to local government Leadership Foundation has developed specific criteria constituents, but does require ongoing staff resources to special districts must meet to be awarded a District keep the feature up-to-date. Transparency Certificate of Excellence. Currently, 118 special districts have received this certification. Improving Transparency | 31 Certificate of Excellence Website Requirements The Special District Leadership Foundation encourages special districts to apply for a District Transparency Certificate of Excellence. These certificates indicate the district meets certain criteria and maintains a website with the following required items: • Names of board members and their full terms of office to include start and end date • Name of general manager and key staff along with contact information • Election/appointment procedure and deadlines • Board meeting schedule (Regular meeting agendas must be posted 72 hours in advance pursuant to Government Code Section 54954.2 (a)(1) and Government Code Section 54956 (a)) • District’s mission statement • Description of district’s services/functions and service area • Authorizing statute/Enabling Act (Principle Act or Special Act) • Current District budget • Most recent financial audit • Archive of Board meeting minutes for at least the last 6 months • Link to State Controller’s webpages for district’s reported board member and staff compensation (Government Code Section 53908) • Link to State Controller’s webpages for district’s reported Financial Transaction Report (Government Code Section 53891 (a)) • Reimbursement and Compensation Policy • Home page link to agendas/board packets (Government Code Section 54957.5) SB 272 compliance-enterprise catalogs (Government Code Section 6270.5) The foundation also encourages additional items – and requires websites to include at least four of the items below: • Post board member ethics training certificates • Picture, biography and e-mail address of board members • Last (3) years of audits • Financial Reserves Policy • Online/downloadable public records act request form • Audio or video recordings of board meetings • Map of district boundaries/service area • Link to California Special Districts Association mapping program • Most recent Municipal Service Review (MSR) and Sphere of Influence (SOI) studies (full document or link to document on another site) • Link to www.districtsmakethedifference.org site or a general description of special districts • Link to most recently filed FPPC forms • Machine readable/searchable agendas (required in 2019) Source: Special District Leadership Foundation website. Accessed August 7, 2017. https://docs.wixstatic.com/ugd/ e1128e_2a54d6cdbed247a19f30556c297daee0.pdf 32 | Little Hoover Commission In written comments to the Commission following the June compile aggregate data as the State Controller combines 2017 advisory committee meeting, Mr. Packham from the independent and dependent special districts along with California Special District Association noted that between joint powers authorities and nonprofit corporations. April and June 2017, one district website had 289,133 Disaggregating independent special district data on the unique page views to its homepage, but only 16 unique website would enable the public and policymakers to page views of the enterprise system catalog link. In the more easily draw general conclusions. With assistance same letter, Mr. Packham urged the Commission to not from State Controller’s Office staff, the Commission was only consider the upfront costs of developing or updating able to learn that independent special districts generate a website to comply with statutory requirements, but also some $21 billion in annual revenues and employ more the ongoing personnel costs required to maintain and than 90,000 local government workers.25 update information on the website. He and others also suggested that any new requirements related to special The Commission also found that it is difficult, if not district websites be consistent across all levels and types impossible, for taxpayers to understand where their of state and local government and that consideration be property tax dollars are spent locally. Although many given to small special districts with limited revenue and special districts, as previously described, do receive a inconsistent access to the Internet.24 portion of their revenue from property taxes, not all do. SB 448 (Wieckowski), the legislation that would Improving websites was a significant discussion topic at make it easier for LAFCOs to dissolve inactive districts, the Commission’s June 2017 advisory committee meeting. also included provisions requiring all county tax bills to Chair Pedro Nava encouraged districts to “tell their story” include a list of all services provided by a city, county, in plain language. There are very few government entities special district or school district that are funded by the that are in a position to let people know that they are out general ad valorem property tax. Ad valorem taxes there working directly for them and that the taxes and are levied on property based on its value. In California, fees they pay fund local services, he said. the ad valorem property tax is restricted by a formula set by Proposition 13, a ballot proposition enacted by The goal of additional transparency is not micro- voters in 1978. An analysis of SB 448 by the Senate managing, another Commissioner stated at the meeting, Appropriations Committee concluded this provision but rather consistently making information available would create “significant reimbursable mandate costs, that answers basic questions about a district: how many likely in the millions annually related to requirements for employees are there and what are they paid, where does counties to report specified information regarding services the revenue come from and how is money spent in the provided through the ad valorem property tax on every district. The goal, he said, it to build trust. tax bill.”26 As a result of the cost, the bill was amended to delete the provision related to tax bills. The Legislature During the study process, the Commission also found it should continue to work with county officials to develop difficult to draw basic conclusions about independent an alternative that would allow taxpayers to better special districts even though much information is publicly understand the use of their ad valorem property taxes available on the State Controller’s websites. Government without causing an excessive burden for counties. Compensation in California, includes employee salary, benefits and pension costs for every special district that submits this information as required to the State Controller’s Office. Another State Controller’s Office website, By the Numbers, provides access to the financial information provided by special districts including revenue, expenditures, long-term debt and other data points and allows the website user to compare up to five different districts. This information on these two websites is valuable and helpful, particularly if the interested party knows where to look and the name of the special district they want to review, but it is difficult to Improving Transparency | 33 Source: Data obtained from Kyle Packham, Advocacy and Public Affairs Director, California Special Districts Association. Sacramento, CA. June 21, 2007. Written communication. Citing State Controller’s Office Financial Transaction Report Data obtained through www.bythenumbers.sco.ca.gov. 34 | Little Hoover Commission At the Commission’s April business meeting, in Riverside County receiving approximately 3 percent Commissioners asked if it was possible to look at one of total ad valorem tax revenues and Monterey County or two counties and view how much of the ad valorem receiving approximately 25 percent of the total.28 property tax went to each of the districts operating within the county – with the understanding that many districts straddle more than one county and many districts Low Visibility = Public Engagement Challenges receive no property tax revenue at all. In response, the California Special Districts Association, using data from The public often does not know what government entity the State Controller’s By the Numbers website, compiled provides a particular service, according to testimony at information for two urban, two suburban and two rural the Commission’s public hearings and discussion at its counties. In the six counties analyzed, the ad valorem advisory committee meetings. Mr. Packham and others property tax generated ranged from 2 percent of total suggested that K-12 civics education should include more special district revenue in Riverside County to 27 percent information about local government, particularly since of total special district revenue in Santa Clara County. cities, counties and special districts provide government Data show the vast majority of revenue for special districts services most relevant to local communities. in each of these six counties came from fees charged for services, not property taxes. Approximately 47 percent There was an ongoing dialogue throughout the study of the 256 special districts identified in the six counties process about public outreach including opportunities received no property tax at all.27 The data provided also to create greater awareness for public participation at included the total ad valorem property tax provided to district board meetings and opportunities to serve on county government, city government and all the special boards as well as the need for better information on districts within each of the six counties. The chart below candidates running to serve on boards. reflects the variances in each county, with special districts Source: Data obtained from Kyle Packham, Advocacy and Public Affairs Director. California Special Districts Association. Sacramento, CA. June 21, 2007. Written communication. Citing State Controller’s Office Financial Transaction Report Data obtained through www.bythenumbers.sco.ca.gov. Improving Transparency | 35 When Districts Go Bad Given the Commission’s general interest in this review of working within existing institutions and the established system to regulate special districts, Commissioners also considered what legal or other mechanisms exist to deal with districts (or district officials) that go off the rails with poor ethical decisions or illegal behavior. The Commission learned of a number of options to right wrongs within the existing system: • Residents of the district can vote perceived offenders on the board out at the next election. • Residents of the district can mount a recall effort of board members who exercise questionable conduct. • The county District Attorney can file criminal charges. • Whistleblowers can use the State Attorney General’s whistleblower system. The Attorney General also has authority for criminal matters. • County civil grand juries can investigate special districts and report on findings. • County Local Agency Formation Commissions can do a Municipal Service Review and initiate a process for dissolution or reorganization. • The California State Auditor has statutory authority to identify, audit and issue reports on local government agencies, including special districts deemed at “high risk for the potential of waste, fraud, abuse, and mismanagement or that has major challenges associated with its economy, efficiency, or effectiveness.” Audited districts must file reports every six months on their progress implementing corrective action plans until the auditor is satisfied with results. • The California Public Employees Retirement System (CalPERS) can administratively address pension issues such as reports of pension spiking related to special districts and district members. • The state’s Fair Political Practices Commission has authority to investigate and fine special district officials for elections or campaign financing violations. • Voters have power to qualify a local ballot initiative regarding a special district. • Depending on the type of district or situation there may also be recourse through various regulatory bodies, such as the State Water Resources Control Board, the Public Employment Relations Board and others. Sources: California Special Districts Association. Commission staff research. As previously noted, one of the benefits of special government, you’re going to have a ghost public,” Oliver districts is that they typically focus on one service quipped).29 The media infrequently attends and reports area. This, however, lowers their visibility – hence such on special district meetings and most receive little local nicknames as ghost governments, invisible governments scrutiny until a scandal arises. and under-the-radar governments. Low visibility also can inhibit public participation. A 2016 “Last Week Tonight Low visibility of special districts contributes to challenges with Jon Oliver” parody on special districts made fun of with public engagement. How do districts reach out about the fact that no one attended a public meeting of the climate change or other topics to residents who are busy Litchfield, New Hampshire, Mosquito Control District, with their lives, aren’t overly familiar with the district in at which two board members recited the Pledge of the first place, don’t know about the district’s social media Allegiance by themselves and faithfully asked of the sites and typically throw away most of the unsolicited empty room if there was public comment on individual paper that comes in their mail? Moreover, how do agenda items. (“I guess when you’re a member of ghost they broaden a governing board with new voices from 36 | Little Hoover Commission underrepresented communities where many working comparatively lower – just 43 percent of registered voters people don’t have time, money or inclination to run for cast a vote for a gubernatorial candidate.32 In these three office or serve long hours for a minimal volunteer salary? elections, on average, about 47 percent of registered voters in Orange County turned out to cast a vote in Special districts impact quality of life dramatically, yet special district or city elections.33 voters often have the least information about those candidates during an election. District candidates often Commissioners asked special district representatives do not have websites or the visibility typically found during both public hearings how they engage with the in a city council or county supervisor election. And, public, particularly with underrepresented communities, local government elections typically yield lower voter about participating in public meetings and even running participation than national or statewide elections. A 2011 for office to ensure district boards reflect the diversity Legislative Analyst’s review of 42 special districts in San of the constituents served. Typically, representatives Diego County found little difference in voter participation, responded they make wide use of their websites and stating, “In our analysis of San Diego County local still wider use of social media sites – Facebook, Twitter, governments since 2002, we found that regardless of LinkedIn, Instagram and Next Door – to communicate the size of the district, special district voter turnout was with residents. Many go into schools with classroom substantially similar to the turnout for city and county presentations, erect booths at community fairs, use government elections.”30 inserts with bills and publish a monthly or quarterly newsletter mailed to residents. In 2016, the Sanitation Voter participation drops for down ballot contests, such Districts of Los Angeles County began a quarterly as school board or water district elections, in comparison workshop to educate the public and stakeholders on to participation in top of the ballot contests such as water issues related to climate change. As budgets have presidential or gubernatorial seats, according to election improved from the Great Recession, facility tours also are data provided to the Commission by county registrars a popular public engagement tool, they said. from Orange and Santa Cruz counties. Data collected on voter participation in Santa Cruz County since 1985 show The California Special Districts Association, in August 25, that, on average, voters participate in special district and 2016, hearing testimony, also cited a partnership with city elections at a much lower frequency than they do for the Sacramento-based Institute for Local Government presidential and gubernatorial elections.31 (ILG) to help build public outreach capacity within special districts. The institute, funded with a $300,000 Average Voter Turnout in grant from the James Irvine Foundation, in 2017 began providing engagement training to cities, counties and Santa Cruz County Elections Since 1985 special districts. The program provides a step-by-step Presidential General 78.90% approach to help local governments plan and execute their public engagement work in a systemic way. Sarah Presidential Primary 59.01% Rubin, ILG program manager for public engagement, said the program identifies up-and-comers in public Gubernatorial General 63.97% organizations who may be doing a variety of jobs unrelated to outreach, but are expected to become Gubernatorial Primary 47.85% leaders. They received training in systemic, continuous public outreach that goes beyond what cities, counties Special District or City Special Election 42.21% and special districts usually do – which is engage people to support one-time events such as voting for special Similarly, data from Orange County’s last three general taxes or benefit assessment districts. Ms. Rubin told the elections show that participation in top of the ticket items Commission, “We want them to think beyond the one-off is high. In 2012 and 2016, 67 percent and 78 percent of way. To think about who is in their community, to think, the county’s registered voters respectively turned out when you need new board members, how do you notify to vote for a presidential candidate. Top of the ticket the community to make sure they know about it.”34 turnout in 2014 for the state’s gubernatorial race was Improving Transparency | 37 RECOMMENDATIONS  Most recent annual financial report provided to the State Controller’s Office, or a link to this The Commission recommended improving transparency information on the State Controller’s website in its 2000 report and while it acknowledges significant  Link to the Local Agency Formation Commission improvement in this area, much more can be done. and any state agency providing oversight At the June 2017 advisory committee meeting, Commissioners agreed that the goal of increased Exemptions should be considered for districts that transparency was not to micromanage or create fall under a determined size based on revenue and/ unnecessary burdens or significant new mandates for or number of employees. For districts in geographic special districts but to improve trust in government. locations without stable Internet access, make this same Ultimately, it is in the best interest of special districts to information available at the local library or other public “tell their story.” Many are quietly providing excellent building open and accessible to the public, until stable services, often unnoticed until a rate hike is proposed, a Internet access becomes available. street floods or the power goes out. Building on this recommendation, every LAFCO should Likewise, the Commission commends efforts to improve have a website that includes a list and links to all of the public engagement by the California Special Districts public agencies within each county service area and a Association and the Institute for Local Government and copy of all of the most current Municipal Service Reviews. urges these organizations to continue to develop best Many LAFCOs currently do this and some even go beyond practices. by providing data on revenues from property taxes and user fees, debt service and fund balance changes for Recommendation 9: The Legislature should require that all the local governments within the service area. At a every special district have a website. minimum, a link to each agency would enable the public to better understand the local oversight authority of Key components should include: LAFCOs and who to contact when a problem arises.  Name, location, contact information Recommendation 10: The State Controller’s Office  Services provided should disaggregate information provided by independent special districts from dependent districts,  Governance structure of the district, including nonprofits and joint powers authorities. election information and the process for constituents to run for board positions The State Controller’s Office is a leader in making the information it has available to the public. Despite its  Compensation details – total staff significantly out-of-date database software, the public compensation, including salary, pensions and can find a substantial amount of data on the State benefits or a link to this information on the State Controller’s website, particularly if the search is focused Controller’s website and the name of the district is known. But the manner  Budget (including annual revenues and the in which data is stored on the State Controller’s Office sources of such revenues, including without website makes it difficult to draw general conclusions limitation, fees, property taxes and other about independent special districts, such as overall assessments, bond debt, expenditures and revenues or employee compensation as information for reserve amounts) independent districts is mixed with various other entities.  Reserve fund policy Recommendation 11: The California Special Districts Association, working with experts in public outreach  Geographic area served and engagement, should develop best practices for independent special district outreach to the public on  Most recent Municipal Service Review opportunities to serve on boards. 38 | Little Hoover Commission The Commission heard anecdotally that the public does not understand special district governance, does not often participate or attend special district board meetings and often does not vote in local elections. This was supported by information provided to the Commission by two county registrars that showed that many voters who voted for federal or statewide offices, did not vote for local government officials at the same rate, whether they were city council positions, special district positions or local school or community college district positions. Improving Transparency | 39 What Role for Healthcare Districts? Few public policy arenas in 2017 appear fraught with  Alternatively, despite the great uncertainty more political and financial uncertainty than healthcare. about a long-term direction of healthcare in And few public entities have more at stake in the outcome general and the Affordable Care Act and its than a particular subset of special districts known as potential replacement in particular, many healthcare districts. As part of this review, the Commission healthcare districts without hospitals are indeed, sought to better understand one type of special district. It carving out interesting and pioneering new roles specifically focused on a controversial class of healthcare in delivering preventive care. Some are receiving districts – those which no longer operate hospitals. Most national attention as models of a new paradigm of these districts, just like counties before them, have in healthcare. Are these districts onto something shed their hospitals in recent years due to deteriorating that has not yet jelled in public consciousness – a financial conditions within their operations. Instead, some notion that healthcare districts can reduce out- districts manage various prevention and community-based of-control healthcare costs locally in the long run wellness programs, often targeting specific identified by investing upfront in healthier lifestyles – what needs. Others provide grants and manage healthcare one healthcare district executive calls “preventing facilities, among many other activities. the preventable?”35 Scattered incidences of political turmoil, grand jury Each of these questions drove the Commission’s 2016- reviews and accompanying unflattering media in the 2017 review of healthcare districts (the new name the wake of these transitions shows that many districts Legislature gave hospital districts during the 1990s to without hospitals still struggle to explain their roles in reflect changes in healthcare). The Commissioners also a rapidly evolving era of healthcare that emphasizes considered related questions: preventive care over hospitalization. No category of  When a healthcare district primarily exists to special district is perhaps more misunderstood regarding manage real estate or redistribute its property its proper role within the local and regional governing tax allocations as community healthcare grants apparatus of California. to other entities, might its job be better fulfilled by county health departments or other local or The Commission heard two equally compelling views regional health organizations? of California healthcare districts that no longer operate hospitals:  Do critics who maintain that healthcare districts  One segment questioned whether public without hospitals should be dissolved have too narrow a focus and lack understanding of shifts in healthcare districts without hospitals remain the healthcare landscape? relevant – and more, whether they should continue to exist within the labyrinth of public,  In an era of higher emphasis on wellness and commercial, nonprofit and not-for-profit preventive care are healthcare districts the healthcare delivery in California. The Legislature, appropriate entities to model and offer a new local grand juries, LAFCOs and healthcare analysts menu of healthcare services? wondered if some of these districts are simply “money chasing a mission?” In other words, are The Commission in November 2016 convened an they outmoded public institutions protecting advisory committee meeting that brought together their turf as they defend and hold firm to their nearly two dozen experts to discuss how healthcare traditional financial bases of property taxes? 40 | Little Hoover Commission districts are rethinking their roles and relevance in an Commission staff, healthcare district executives told the era that favors preventive care over traditional hospital Commission: care – the original reason for the existence of California  They are more nimble and flexible than county healthcare districts. Participants discussed the role public health bureaucracies in defining and of LAFCOs in consolidating or dissolving healthcare funding the healthcare priorities of their districts and analyzed best practices and metrics to communities. define their accomplishments. Commissioners initially described a phenomenon of “mission creep” that comes  They are helping to pioneer a new era of cost over agencies defending their turf and asked what savings via proactive preventive care for children, makes healthcare districts special – whether in finance, adults and the elderly under the umbrella of management or governance – compared to county “wellness.” governments? Indeed, if California was to develop a healthcare system from scratch, might it best be done by  They are often misunderstood in this new mission counties instead of healthcare districts? The November by critics who lack understanding about how meeting is discussed in greater detail later in this chapter much the healthcare landscape is changing and and forms the basis of recommendations at the end. downplaying hospitalization.  Voters generally support their districts’ local Nearly Half of Districts Still Operate missions and the manner in which they channel their district property taxes to community groups Hospitals as healthcare grants. Approximately one-half of California’s 79 healthcare districts still operate hospitals, mostly in rural areas with California Healthcare Districts: A Brief few competitors or other intensive-care alternatives. No one has suggested a need to dissolve those rural districts Introduction and History and their hospitals, which provide essential emergency services to visitors and tourists, as well to their own Alongside the proliferation of large hospital chains, residents. private doctor’s offices, federally-qualified health centers and county health departments that dominate Debates about the mission and purpose of healthcare California’s healthcare landscape, 79 public healthcare districts, instead, tend to center on suburban healthcare districts – with and without hospitals – employ 32,000 districts. Created in former rural areas that have people and operate in 40 counties. More than two-thirds suburbanized, they now operate in competitive of these districts are established fixtures in small towns healthcare markets. The Legislature’s 2015-16 session, and rural areas, governed by volunteer elected boards for instance, considered whether to: force an East Bay and administered by professional staffs. The typical rural healthcare district to dissolve (not passed); rein in its healthcare district provides nearly one-third of its care to administrative overhead expenses (passed and signed low-income residents. by the Governor); and, require the Southern California Coachella Valley to expand its service boundaries to take Statewide, 37 of the 79 healthcare districts operate 39 in more lower-income residents (passed and signed by district hospitals, the Association of California Healthcare the Governor). This provides another example of the Districts (ACHD) reported in August 25, 2016, hearing Legislature bypassing the LAFCO process. testimony. Forty-two districts no longer own or operate a hospital, or never did.36 The 39 district hospitals make In the face of institutional criticism executives of up just 10 percent of hospitals in the state. The rest of suburban healthcare districts without hospitals continue the hospital landscape in California includes 209 nonprofit to tout their viability. Commonly, in formal Commission hospitals, 90 investor-owned private hospitals, 50 hospitals hearing testimony, remarks during an advisory committee run by health systems and 10 veterans hospitals, according meeting, in public comment and conversations with to the California Hospital Association.37 What Role for Healthcare Districts? | 41 Californians began to form hospital districts during the to continuing financial losses. The district’s contracted 1940s when the Legislature passed the Local District hospital operator attributed losses - $6 million in 2013 Hospital Law to deal with a shortage of local hospital alone – to “modern health care’s growing emphasis on beds and medical care in a growing state, particularly in managed care contracts, which funnel patients to specific rural areas. These new hospital districts steered property providers, and ongoing competition from other hospitals tax and fee revenues into a hospital building boom as the in the region.”39 The West Contra Costa Healthcare state added nearly 10 million new residents during the District, which struggled through years of financial losses 1950s and 1960s.38 at the hospital – attributed in part to low reimbursement rates for Medi-Cal and Medicare – filed for bankruptcy in By the late 1970s and into the 1980s, however, these and October 2016.40 other smaller hospitals struggled as public and private insurers increasingly implemented cost-saving strategies. Amid these trends, more hospital districts, including A new managed-care and cost-minded approach to West Contra Costa Healthcare District and Fallbrook financing hospital care added to deficits. Beds lay empty Regional Health District, have turned toward being as patients were discharged earlier. Growth in outpatient general community health providers. A 2006 California care due to better technology and pharmaceutical drugs Healthcare Foundation study noted that districts kept those hospital rooms vacant. Since then, a growing increasingly offer substance abuse and mental health emphasis on wellness and preventive care accelerated by programs, outpatient services and free clinics. They the passage of the Affordable Care Act in 2010 continues also run senior programs that include transportation to drive a trend of less hospitalization. Just as many to wellness and outpatient care. Others provide nurse counties earlier closed hospitals under these financial training, physician recruitment, ambulance services, pressures, special districts have in recent years closed at health education programs and a variety of wellness and least 16 hospitals and outsourced operations of five more rehabilitation activities.41 to for-profit and not-for-profit chains, stated the ACHD in written testimony to the Commission. At the Commission’s August 25, 2016, hearing, Amber King, senior legislative advocate for ACHD, expanded on The most recent closures include Doctor’s Hospital in San the 2006 list, testifying: “The range of services offered by Pablo in April 2013. Six months after Doctor’s Hospital healthcare districts are tailored to meet community needs closed, San Diego County-based Fallbrook Regional Health and include prevention and public health programs, District, in November 2014, closed its Fallbrook Hospital primary care, skilled nursing, ambulance, hospice and emergency room and stopped admitting patients due acute and emergency services. Despite their unique and New 50-bed Hillcrest Hospital opened 1957 by the Petaluma Hospital District. Courtesy of Petaluma Health Care District. 42 | Little Hoover Commission varied nature, the mission of healthcare districts remains outside the district – with less than 10 cents per dollar the same: to provide critical health services to the of local taxes returning to district residents. Mr. Hickey, communities that created them,” testified Ms. King.42 a long-time board member who campaigns to dissolve the district, said it spent $10 million subsidizing nursing programs that didn’t require the nurses to work inside California Healthcare Districts at a the district.45 (A June 2013 San Mateo County Grand Glance: Jury report issued similar criticisms).46 During the Commission’s November 2016 advisory meeting on • Number of Districts: 79 healthcare districts, a fellow Sequoia board member, as • Districts that levy property taxes: 66 well as the district’s chief executive officer, countered the criticism by citing continued support of voters for district • Districts in rural areas: 54 operations and policies. • Districts without hospitals: 42 • Districts with hospitals: 37 • Number of hospitals: 39 Healthcare District Bills and Outcomes: 2015-16 Legislative Session • Districts that lease their hospitals: 5 • District hospitals that have closed: 16 During the 2015-16 legislative session lawmakers • District employees statewide: 32,000 grappled several times with the issues of healthcare districts. Many involved an issue explored at the • Number of board members: 400 Commission’s August 25, 2016, hearing: legislative Source: Association of California Healthcare Districts. Written end runs around the local process, which requires testimony to the Commission. August 25, 2016. Also, personal LAFCO approval to dissolve and expand boundaries communication. August 1, 2017. of districts. These issues clearly seemed to both frustrate and confound lawmakers, as nearly all were local issues with strains of local politics not always Another key development in the evolution of healthcare immediately apparent to legislators in Sacramento. districts without hospitals is their role as grant-makers The bills and their outcomes included: to community organizations. Critics question if people • AB 2414 (Garcia), allowing the Desert Regional want to pay property taxes so health district executives Healthcare District in Palm Springs to expand can act as a “middleman” and disburse them in grants. its boundaries into the eastern Coachella Valley Others also have questioned how the money is spent. without a full LAFCO review. Governor Brown A Senate Governance and Finance Committee analysis signed the bill on September 21, 2016. for AB 2471 (Quirk), which aimed, unsuccessfully in 2016, to force dissolution of Alameda County’s Eden • AB 2471 (Quirk), expediting the dissolution Township Healthcare District, stated, “In recent years of the Eden Township Healthcare District in Eden Township Healthcare District has spent district funds Alameda County by ordering the LAFCO, under on sponsorships of community organizations and events conditions specified in the legislation, to dissolve that appear to have relatively tenuous connections to it. The bill was ordered to the inactive file on community healthcare needs, including the Hayward Area August 29, 2016, before reaching a final vote. Historical Society’s ‘Martini-Madness Gala,’ a Rotary Club ‘Lobsters for Literacy’ fundraiser, charity golf tournaments, • AB 2737 (Bonta), bypassing LAFCO and the board and a community rodeo parade.”43 The district, which of Eden Township Healthcare District to cap the doesn’t run a hospital, also reportedly spends more on district’s administrative expenses at 20 percent administrative expenses than it allocates in grants.44 of its annual revenue. Governor Brown signed the bill on September 21, 2016. Jack Hickey, a director of Sequoia Healthcare District in San Mateo County, told the Commission his district Source: Legislative Information System. Bill analyses. funds a food bank that provides services to residents What Role for Healthcare Districts? | 43 Directors of El Camino Healthcare District in Santa Clara Dissolution Has Proved Itself a Persistent County also questioned whether $6.4 million in grants Question they approved in June 2016 were being put to good use considering failures by some of the same grantees to County grand juries have found healthcare districts that meet previous year’s expectations. The district grants do not run hospitals an inviting target. Four grand jury fund mobile dental clinics and school therapists, as well as reports over a decade successfully prodded the 2012 food giveaways and police-sponsored summer camp stays dissolution of the Mount Diablo Healthcare District in for at-risk youth.47 Statewide, however, testimonials from Contra Costa County. The district hadn’t run a hospital community grantees abound in healthcare district annual since 1996 and, according to a Contra Costa County reports and other publications about the importance of LAFCO consultant, “the health care district spent in the district grants to their operations. The ACHD, in August past decade 85 percent of its property tax proceeds on 25, 2016, written testimony also submitted successful overhead, elections and legal bills.” In March 2012, the grantmaking examples that included: county LAFCO voted 6-1 to subsume the Mount Diablo district’s responsibilities into a new subsidiary district  $738,700 in community-based mental health run by the City of Concord and transfer its property tax grants provided by the El Camino Healthcare allocation to the city, as well.48 District in 2015 and 2016.  $40,000 from Los Medanos Healthcare District Likewise, three grand juries over a decade criticized from 2013 to 2016 to sponsor a breastfeeding Pittsburg-based Los Medanos Community Healthcare program in response to low birthweights and District in Contra Costa County, which reportedly spent higher infant mortality within the district. half of its 2010-2011 revenue on community and health programs and half on “administrative and operating  $650,000 from Desert Healthcare District expenses, including stipends for the board of directors, from 2013 to 2015 to help target and register travel and election fees and a board retreat.”49 In 2017, approximately 90,000 area residents eligible for the district continues to exist and dispense grants in its Medi-Cal and Covered California. community.  $35,000 from Fallbrook Health District in San Mateo County’s Peninsula Health Care District also 2015 and 2016 to provide senior citizens free is the subject of several grand jury reports since 2000. transportation to medical appointments, grocery One in 2004 recommended that it and nearby Sequoia stores, the food pantry and senior centers. Beach Cities Health District “Walking School Bus” Program. Courtesy Beach Cities Health District. 44 | Little Hoover Commission Healthcare District (also the subject of five grand jury mutually exclusive, and all serve the needs of the district examinations since 2000) merge their operations to community.50 The district’s newest real estate project, a cover the entirety of San Mateo County. No action 124-unit assisted living and memory care center facility, is resulted. The county grand jury in 2013 questioned expected to open in early 2018. 51 whether Peninsula is, at its core, a commercial landlord, a real estate developer or a community health resource. Healthcare districts generally have deflected criticisms The report suggested a closer examination by the of grand juries about their missions and prevailed with county LAFCO and made no explicit call for the district’s their own counterarguments about the necessity of their dissolution. In response, the district disagreed with healthcare-centered real estate operations and grant the premise of the grand jury’s question, writing that programs. Yet the continuous public probing shows at none of the three roles cited by the grand jury are the very least, a significant perception problem among The Poster Child for Controversy: Eden Township Health District Perhaps no district in recent years has fended off more pressure to dissolve than Alameda County’s Eden Township Health District, formed in 1948, headquartered in Castro Valley and no longer running a hospital. As previously noted, AB 2471 (Quirk), which proposed to dissolve the district, passed the Assembly in 2016 and reached the Senate floor before being moved to the inactive file. The 2015-2016 Alameda County Grand Jury, in a report issued June 1, 2016, questioned whether the district should continue to exist. Grand jurors stated that the district: “…provides no direct medical services and its forecasted grant awards to service providers account for a mere 12 percent of the district’s total expenses. The Grand Jury found that 88 percent of the district’s budget is spent on real estate, administration, legal and consulting fees. In effect, ETHD is essentially a commercial real estate management operation rather than an indirect (or direct) healthcare provider for citizens of the community.” The grand jury report prompted a series of local actions that led the Alameda County LAFCO to conduct a special study – released in December 2016 – to help determine its future. (The county LAFCO conducted a similar study in 2013 and concluded the district should continue in its current form. Eden executives, too, contend that dissolving the district would eliminate the option of funding local nonprofits from a “readily available taxing authority”). The new LACFO-commissioned study has again determined that the health district “provides a service of value, including significant expenditure of funds for community healthcare purposes consistent with its mission as a healthcare district.” The study notes the district distributed nearly $12 million in grants to nonprofit community health organizations from 1999 to 2015 – largely funded by rent received from three district-owned medical buildings. Local elected officials have weighed in with dissenting views. The mayor of San Leandro said she believes the district has lost sight of its core mission and wants the district dissolved and its real estate assets used to support two other struggling area hospitals. An Alameda County supervisor has expressed similar sentiment. Further complicating this ongoing healthcare district controversy is who would be responsible for $17.2 million the district, if dissolved, still owes Sacramento-based Sutter Health after losing a recent prolonged legal battle over the operations of San Leandro Hospital. Sources: County of Alameda. 2015-2016 Alameda County Grand Jury Final Report. Page 43. June 1, 2016. Oakland, CA. https://www.acgov.org/ grandjury/final2015-2016.pdf. Accessed January 12, 2017. Jamie Wilkins. October 25, 2016. The San Leandro Patch. “San Leandro seeks Public Input for Eden Health District.” http://patch.com/california/ sanleandro/san-leandro-seeks-public-input-eden-health-district. Accessed January 12, 2017 Darin Moriki. January 6, 2017. The East Bay Times. “Mixed Opinions on Eden Health District’s Future.” http://www.eastbaytimes.com/2017/01/06/ mixed-opinions-abound-on-eden-health-districts-management-operations. Accessed January 12, 2017. Darin Moriki. December 29, 2016. The East Bay Times. “Eden Health District operations on track, study finds.” http://www.eastbaytimes. com/2016/12/29/eden-health-district-operations-on-track-study-finds. Accessed January 12, 2017. What Role for Healthcare Districts? | 45 the public in how they operate and what is defined as 24-member expert task force to review how districts are healthcare. perceived, where they are headed and how they might reposition themselves more effectively within a rapidly- changing healthcare environment that emphasizes Seeking a New Paradigm for Healthcare preventive care. The task force approved four strategic recommendations on October 5, 2016, which ACHD Districts shared with the Commission and others at the November 2016 advisory committee meeting. Those included: Mindful of the increasing political scrutiny and controversy regarding some of its member districts, the Association  Updating the 1945 healthcare district enabling of California Healthcare Districts in 2016 engaged a act and adding intent language to define today’s Beach Cities: Is This a Future of Healthcare Districts? The Beach Cities Health District, which serves residents of Hermosa Beach, Manhattan Beach and Redondo Beach, offers one hint of how districts might retool themselves. The district, established in 1955, has no hospital and calls itself “one of the largest preventive health agencies in the nation.” The district encourages and helps children walk to school, eat right and lose weight, provides relatively-low cost memberships at a district fitness center and helps older people remain living at home through personal visits and in-home care. The district’s innovative Blue Zones Project branding effort also encourages healthy habits at home and work and promotes local restaurants that offer nutritious menus. The district, which receives 73 percent of its revenue from fees and other sources beyond its $3.1 million annual property tax base (2016), also makes grants to community partners. Asked if critics who support closing districts without hospitals may be thinking narrowly and not understand shifts in healthcare, Dr. Michelle Bholat answered, “Yes.” In written comments provided to the Commission in November 2016, Dr. Bholat explained, “Beach Cities Health District successfully transitioned in 1998 from disease-focused care to preventive care health services – largely because research from the Centers for Disease Control shows 70 percent of chronic illnesses are preventable, and healthcare cost savings associated with keeping people healthy and out of hospitals are substantial. Currently, the U.S. spends roughly $3 trillion annually on healthcare costs.” The district counts a major success in reducing childhood obesity in Redondo Beach K-5 students from 20 percent of children in 2004 to 7 percent in 2016 by working closely with the district’s 21 public schools and parents. Parents attend district training and teach nutrition in schools, said Dr. Bholat. The district identifies gaps in Los Angeles County Department of Public Health Department services, uses science and data to target specific community needs and measures program impacts with data collection and analysis, she said. Beach Cities, often considered a model for transitioning California healthcare districts to preventive care, operates a Community Services Department which connects children and underinsured adults to medical, dental and mental health services; a LiveWell Kids program that provides elementary school students with daily physical education, nutritional and gardening information and fresh fruits and vegetables; and a Center for Health and Fitness with 3,000 members and free visits for police officers, firefighters and lifeguards. Their Community Services Department also works with nearly 20 percent of residents 85 and older to stay healthy at home. In June 2016, U.S. Surgeon General Vivek Murthy visited the district, and told representatives, “We tend to believe that America’s health problems are too big and intractable. You have proven that communities can take charge and reverse the trend.” Sources: Beach Cities Healthcare District. “BCHD Overview.” http://bchd.org/bchd-centers-programs/center-health-and-fitness. Accessed July 22, 2016. Dr. Michelle Bholat. Board Member. Beach Cities Health District. November 8, 2016. Written comments to the Commission. On file. Personal conversation with Beach Cities Health District officials on December7, 2016 and July 21, 2017. 46 | Little Hoover Commission mission of healthcare districts: achieving health A Southern California healthcare district executive, and wellness for the communities they serve. citing voters’ general preference for close-to-the-ground (The ACHD told the Commission the 1945 act government, suggested that public healthcare is better is woefully outdated and reflects a healthcare divided among many organizations than in a single county landscape that largely no longer exists. The system “where it can get lost. That is what I worry about.”52 statute also only broadly and vaguely defines “healthcare,” which contributes to districts being criticized for operating outside the realm How to Avoid Redundancies in Services Provided by of healthcare, they said. They aim to introduce Counties and Special Districts legislation in 2018 to modernize the act). Commissioners asked healthcare district representatives  Enhancing the oversight of healthcare districts how they work with their counties to weed out by working collaboratively with LAFCOs to ensure redundancies in their collective healthcare work – a timely, credible and relevant Municipal Service particularly important task, Commissioners said, if the Reviews of healthcare districts. Affordable Care Act is replaced and healthcare funding may become even more competitive. Bobbi Palmer,  Enhancing ACHD’s current Certified District executive director of Fallbrook Regional Health District in program to ensure that full transparency and San Diego County, said redundancies exist and continue good governance practices are met, as well as due to lack of coordination. She said when she assumed increase educational opportunities for healthcare command of the Fallbrook district in early 2016, she districts, district trustees, district chief executive approached county officials “with a baseball bat and a officers and district board clerks. smile, to say ‘we have needs that the county should be  Educating policymakers, the public and other addressing.’” Now, county public health nurses, funded stakeholders about the important role healthcare to provide the services, attend district wellness events districts already play within the greater health and give vaccinations that would otherwise cost the care system. district, Ms. Palmer said. Dennis Zell, a board member for Burlingame-based Advisory Meeting: What Makes Healthcare Peninsula Healthcare District said his district only does work not being done by San Mateo County. The Districts Special? Are They? district performs a health needs assessment, he said, to determine where the needs are and what services exist, At the Commission’s November 2016 advisory committee and then determine how the district can fill gaps. Mr. Zell meeting, participants helped the Commission understand said this includes seeking out nonprofit organizations, the complexities of healthcare delivery and advised it introducing them to county officials and in some cases, in deliberations that informed its recommendations. providing them seed money. He said Peninsula noticed District executives said healthcare districts manage a rash of teen suicides within the district, then contacted healthcare as a single-purpose mission, making them school districts to assess the problem and provided more flexible than counties, which typically are strapped funding to districts and Stanford University to assist. “We for funding and must balance many services beyond did that in seven months,” he said. “Find a problem, find healthcare. Counties generally do not want more a solution and get it going.” Mr. Zell said the fact that responsibility over healthcare, they said, noting that if Peninsula does not run a hospital is a positive, freeing the healthcare districts went away and their property tax district to be an “engine of innovation” in government. allocations were given to counties there is no guarantee that county supervisors would spend the money on healthcare. Already, district officials said, they are serving Making Healthcare Districts Better many residents neglected by their counties. Indeed, many healthcare districts were originally created to address Commissioners asked of the assembled experts, needs that counties weren’t meeting, they said. “There has to be things the Legislature can do to make What Role for Healthcare Districts? | 47 healthcare districts better. What can we recommend to Somewhat surprisingly to the Commission, the question the Legislature to improve things? If the Legislature were got little traction and sparked scant discussion. to be helpful [to healthcare districts] what could it do?” Healthcare district representatives said they are Among the responses: interested in best practices, but noted all their districts are different and what works in a rural district likely  Update and clarify the statutory language that, doesn’t translate to an urban or suburban district. One since 1945, has defined the roles, responsibilities healthcare district board member cited the principle of and practices of districts. Executives widely local control and the importance of maintaining it against agreed that legal language more than seven one-size-fits-all practices imposed by legislation. Another decades old speaks to a healthcare world that no district chief executive said that since healthcare districts longer exists. are locally funded and voters elect board members who hire staff, healthcare districts must be accountable first to  Empower LAFCOs to do stronger, smarter and more their constituents. He said the primary responsibility of relevant Municipal Service Reviews. “We need healthcare districts is to work within their areas and not LAFCOs in place to push us to be better,” said one. focus on how the work is done elsewhere or how districts  Curtail a growing practice in the Legislature to in the rest of the state might evaluate their work. pass bills that override and circumvent the LAFCO Another healthcare district board member, however, process to address healthcare district concerns. expressed support for a 58-county review of best Those decisions are better made at the local level. practices if conducted by impartial public health  Encourage districts to use better metrics to professionals. The board member agreed on a need to improve performance and measure outcomes. aggregate best practices across healthcare districts, to get And help them to incorporate the same results rid of programs that aren’t working and focus money and driven-accountability into their grant giving. energy on the four or five programs that work best.  Help districts address inequities within counties Pressing the question, the Commission asked how when considering how to measure and improve healthcare district hospitals share information with one healthcare outcomes. Many less affluent coastal another about common, and often unforeseen, issues that residents of San Mateo County, for instance, some may be dealing with for the first time. A California pay property taxes to the county, but do not live Hospital Association representative said she often within boundaries of the county’s two healthcare receives questions from member hospitals about how districts that receive those taxes. They have no other hospitals are handling such issues. She recently access to tax-subsidized health benefits available coordinated, for example, conversations with healthcare to wealthier healthcare district residents. district hospitals on how to conduct transgender patient registrations. The general manager of Lake County-based Redbud Healthcare District also noted, for example, that Start with One Thing (and Share it) during the devastating wildfires that struck Lake County in 2016 he contacted the Feather River Healthcare District Commissioners also suggested during the advisory for advice about its actions in similar wildfire situations. committee roundtable discussion that healthcare districts The official said his district hospital (managed by Adventist look to their counterparts in other localities for best Health System) often consults with other hospitals and practices. Said one Commissioner: there appears to be belongs to a Northern California regional network set up little information-sharing among the state’s 79 healthcare for hospitals to share best practices. districts. It was suggested to start, take a first step, by simply asking all 79 districts to answer a question such as, “What is the best practice on one thing?” Then the district’s trade association or others could evaluate that “one thing” a year later to show what works and might be replicated on a larger scale. 48 | Little Hoover Commission What Should LAFCOs Decide about Healthcare RECOMMENDATIONS Districts? The Commission has had vigorous discussions about Experts and district officials convened by the Commission the relevance and future of healthcare districts without widely supported LAFCOs as the oversight entities best hospitals. Among possible legislative proposals suited to advise and recommend options to special discussed was giving districts without hospitals three districts, including healthcare districts. Healthcare years to disband and to redistribute their property tax district officials and Association of California Healthcare allocations elsewhere within their respective counties. Districts representatives stressed again the principle Also extensively discussed was maintaining the principle of local control and noted that across-the-board and of local control. If local residents continue to support statewide best practice recommendations may not their healthcare districts and their practices of allocating always work at the local level. The advisory committee property taxes as community grant funds, that is a matter consensus held that local communities and LAFCOs are of local choice. LAFCOs, too, are an instrument of local always better at determining what works and defining policy, reflecting the will of local elected officials whom appropriate outcomes, including those for healthcare voters can keep or remove from office. If it is taken as a districts without hospitals. matter of faith, however, that these are local issues what then should be the role of the state and the Legislature A representative of the California Association of regarding the institutional authority of special districts Local Agency Formation Commissions (CALAFCO) which it has created through various statutes over many acknowledged that LAFCOs’ Municipal Service Review decades and oversees? Recommendations supported by studies, give them an important role in advising their the Commission: local special districts. The executive said many LAFCOs can hire consultants and appropriate subject matter Recommendation 12: The Legislature should update experts for the process, particularly as it relates to the 1945 legislative “practice acts” that enabled voters healthcare districts. She repeated a common theme of to create local hospital districts, renamed healthcare the advisory committee discussion – the 1945 enabling districts in the early 1990s. acts which established the ability of voters to form healthcare districts are out-of-date, making it difficult to The Commission supports this recommendation, assess the districts. “They are very antiquated and have suggested by the Association of California Healthcare not evolved with healthcare changes,” the executive Districts and various others, to better define the mission said. She also defended local control at a time when the of healthcare districts and will work with the association Legislature is increasingly introducing bills to regulate and others to support this legislative reform effort. individual healthcare districts. She said county LAFCOs are the agencies best suited to continue the work they do Recommendation 13: The Legislature, which has been in advising and reviewing California’s healthcare districts. increasingly inclined to override local LAFCO processes to press changes on healthcare districts, should defer A California Special Districts Association official likewise these decisions to LAFCOs, which in statute already have contended that LAFCOs are ideal for initiating local that responsibility. processes regarding special districts, including gathering local input, providing local analysis and giving local voters LAFCOs have shown successes in shaping the healthcare a final say. He told the Commission it is key to remember district landscape and should be the primary driver of the local role that healthcare districts play in convening change. Given the controversies over healthcare districts, people and collaborating with local institutions to be the California Association of Local Agency Formation responsive to community needs. Decisions should Commissions and statewide LAFCOs should be at the remain local, he said, kept in the hands of healthcare forefront of studying the relevance of healthcare districts, districts, empowering locals to do what they do best. potential consolidations and dissolutions of districts. The Commission also supports the Association of California Healthcare District’s commitment to build stronger bridges to LAFCOs statewide and help develop new What Role for Healthcare Districts? | 49 assessment tools for LAFCOs to analyze the relevance of districts during municipal service reviews. To repeat a theme of Recommendation 1, the Legislature should retain its authority to dissolve healthcare districts or modify boundaries and administrative practices, but this authority should be limited to cases in which local political elites are so intransigent or negligent – or so beholden to local power structures – that some form of higher political authority is deemed necessary. Recommendation 14: The Association of California Healthcare Districts and its member districts should step up efforts to define and share best practices among themselves. A Commission advisory committee meeting discussion clearly showed that not enough thought or interest has been assigned to sharing what works best in rural, suburban and urban areas among members. The association should formally survey its members and collectively define their leading best practices and models for healthcare, as well as guidelines to improve the impacts of grant-making in communities. 50 | Little Hoover Commission Readying California for Climate Change The widespread institutional inability to think coherently “Looking over several emission scenarios and using about climate change impacts represented a key a suite of global climate models, the Assessment finding in the Commission’s July 2014 report, Governing California Through Climate Change. Special districts, like projects that annual average temperatures will other local governments, grapple with endless conflicting increase between 1.8 and 5.4 degrees Fahrenheit climate change assessments and scenarios – almost by the middle of this century, and between 3.6 none of them scaled down to their particular locations – and 9 degrees Fahrenheit by the end of the when trying to analyze what they might do. Most have century. These increases in temperature will be no access to a definitive, centralized source of climate accompanied by rising sea levels and declines in change impact information, though the Governor’s mountain snowpack, while the state will continue Office of Planning and Research (OPR) is building a one- to see similar temporal patterns in precipitation, stop clearinghouse of climate impact material for local with more falling as rain than as snow. California governments statewide. That information resource is a will also see an increase in the frequency and result of 2015 legislation, SB 246 (Wieckowski) enacted severity of extreme events.” by the Legislature and signed by Governor Brown in the wake of the Commission’s 2014 report. Louise Bedsworth, deputy director, Governor’s Office of Planning and Research. Testimony at the Some special districts are already at the forefront in Commission’s October 27, 2016, hearing. preparing and investing for anticipated climate instability. These districts do not always call it climate change. Some call it a change in weather patterns and plan for it under that umbrella. Many simply plan for drought, a climate California’s ability to maintain its famed economic change condition which has already manifested itself competitiveness and stature as a driving force of the across the Golden State. Their individual and collective global economy will soon hinge on much more than a efforts are encouraging – and should serve as models legendary stock of private sector brainpower and know- for other special districts that have yet to grapple with how. The best and brightest of California’s public sector what’s coming. also must confront the impact of climate change, doing their part to govern to minimize disorder amid inevitable Special districts are generally missing from the policy disruptions. When competitor nations and states discussions, major conferences and research gatherings stumble and develop reputations for instability due to sea regarding local government preparations for climate level rise and flooding, wildfire, extreme heat episodes change. These policy efforts tend to focus on cities and drought, California must remain reliable, dependable and counties which make land use decisions – that is, and able to keep getting things done. decide how and where they will develop infrastructure and grow their residential, commercial and industrial A surprising amount of these responsibilities will fall neighborhoods. Yet many special districts also are missing to California’s special districts. Their vigilance will be in action because they are small and consumed with day- necessary to keep vital sectors of California’s $2.6 trillion to-day operations. Like many local governments across annual economy viable as temperatures and ocean California, they have little time or financial resources to levels rise, the Sierra snowpack dwindles and irregular look beyond the immediate, let alone consider longer- precipitation patterns range between extended drought range climate scenarios that are at best uncertain. and superstorms.53 Readying California for Climate Change | 51 Ample opportunity exists, however, for special districts conducted within the state’s fourth formal Climate to “engage in and support adaptation efforts, both in Assessment. (The fourth assessment is a $4.5 million resource tool development, but also in contributing to research effort managed by the California Natural adaptation and resilience efforts on the ground,” said Resources Agency and the California Energy Commission Louise Bedsworth, deputy director of OPR, testifying to better understand climate risks and management at the Commission’s October 27, 2016, hearing. In options to help “the state to prioritize actions and testimony, Ms. Bedsworth also urged districts already investments to safeguard the people, economy and preparing for climate impacts to document and share natural resources of California”).54 Ms. Bedsworth also their experiences with the new Integrated Climate called on districts to step up information sharing within Adaptation and Resilience Program information their trade associations as they individually integrate clearinghouse within OPR. She, too, encouraged special climate change considerations into their infrastructure districts to provide input to research projects being investments. Finally, she urged more public engagement A Snapshot: The Commission’s 2014 Climate Change Adaptation Report Governing California Through Climate Change released by the Commission in July 2014 after a year-long study process, made a case that California state government should bring the same focus to climate change adaptation that it brings to reducing emissions. The report contended that the foundations of California’s role in the global economy must continue with a minimum of disruption through wilder weather and rising seas – and cited a lack of definitive information and preparation, especially within local governments and special districts most likely to be on the front lines of preventing and addressing climate change impacts. The Commission recommended: • The Governor create a new agency or empower an existing agency to establish the best state science on anticipated impacts and help state and local decision-makers assess their risks based on that science. • State government at all levels incorporate climate risk assessment into everyday planning and governing processes. • The Legislature expand the mission of the Strategic Growth Council beyond reducing greenhouse gas emissions to focus equally on climate change adaptation. The report also called for state government to aggressively enforce defensible space requirements to minimize wildfires and property damage, and the Governor to work with state agencies to clarify the impact of sea level rise on California’s Common Law Public Trust Doctrine before a rising ocean begins to condemn private property in coastal areas. In response, the Legislature passed three bills, all signed by Governor Brown, to carry out specific recommendations: • SB 246 (Wiecowski) designated the Governor’s Office of Planning and Research as the lead entity on climate adaptation and established both a central clearinghouse of information to help local governments plan for climate impacts and a science advisory council to provide scientific support. • AB 1482 (Gordon) required the Natural Resources Agency, in coordination with the Strategic Growth Council, to coordinate across state agencies to be sure state funding maximizes key adaptation objectives. • SB 379 (Jackson) required that the safety element of local general plans address local climate change adaptation and resiliency strategies. 52 | Little Hoover Commission with residents about what’s coming: severe drought that so recently gripped much of the state, or too much water, as in the type of wilder weather “In many cases, special districts have and big wet storms that overran California in 2017. direct relationships with local residents and businesses. These relationships The robust discussion on special district reserves at the provide the opportunity to support August 25, 2016, hearing prompted Chair Pedro Nava to ask individuals and businesses to undertake the districts how climate change adaptation strategies were actions that can increase their own being included in district reserve policies. As a result of this resilience and that of the broader question, the Commission scheduled a second hearing as community.” part of this review on October 27, 2016, focusing on how leading-edge special districts are planning and investing for The urgency of climate change demands that special climate change. In keeping with the theme of appropriately districts act as leaders on adapting to its impacts. Special investing special district reserve funds in long-term districts are the most common form of local government infrastructure, the Commission invited testimony from five in California and are frequently on the front lines of districts with the massive infrastructure backbones that will water delivery, wastewater treatment and flood control. be needed to dependably deliver water, treat wastewater Without leadership of this critical government sector, and prevent flooding in a volatile climate. disruptions will be unpleasant and expensive. Consider St. Petersburg, Florida, home to three big sewage spills Collectively, their stories make excellent case studies since 2015, as heavy rains leaked into and overwhelmed for how special districts are sizing up disruptive climate an aging wastewater treatment system. “Climate change scenarios, assessing their vulnerabilities and investing in has arrived and this is what it looks like,” Mayor Rick appropriate infrastructure to be flexible for too much or Kriseman told the media in 2016 as he presided over too little water. This chapter offers a wealth of examples millions of gallons of partially treated human waste and models for other districts to consider in their own flowing out of manhole covers onto city streets and into strategy planning. Especially interesting is how some Tampa Bay.55 districts are creating regional partnerships to prepare for the worst. Special districts and their trade associations, In California, scientists agree that climate change too, are thinking ahead to regulatory changes necessary promises either too little water, as in the sustained, to move government rulemaking beyond a status quo Also: A Brief Look at California Wildfires The Commission, at its August 25, 2016, hearing, similarly invited a rural fire protection district to discuss one of the most obvious, rising climate threats of all – wildfire. The Commission heard that many rural fire districts desperately want to step up to their climate change challenge, but are constrained by poor finances. North Tahoe Fire Protection District Chief Michael Schwartz testified that rising numbers of fire districts, especially in rural mountainous areas, face bankruptcy scenarios in the next few years – even as their regions face worsening firestorms due to a warming climate, drought and tree mortality crisis. “A lot of districts are on the verge of failure,” he testified. “They will run out of capital in the next year or two.” Chief Schwartz told the Commission that growing fire district stresses stem from the customary revenue challenges in the wake of Proposition 13 restrictions on property taxes, but also increasingly from inability of districts to reach the two-thirds majorities needed to approve special new property taxes. “I don’t think I would even try it now,” Chief Schwartz said. At its October 2017 business meeting, the Commission decided to delve deeper into forest management practices in light of the tree mortality crisis and launched a full study on this topic in 2017. The Commission anticipates adopting a report on forest management in late 2017 or early 2018. Readying California for Climate Change | 53 that may no longer be relevant for water delivery and As Imported Water Dwindles, a Climate- wastewater treatment as climate uncertainty deepens. Driven Rush to New Sources On a practical level, the Commission learned at its California’s storied history is filled with powerful cycles October 27, 2016, hearing that many of these districts of boom and bust development, during which boosters are reducing their dependence on imported water by of agriculture, cities and suburbs formed special districts diversifying supplies and producing vastly more recycled to find and deliver water from below ground or distant water. Many are steering more stormwater runoff in mountain reservoirs. Now, stung by historic drought in wet years into groundwater recharge basins for use in California and the Colorado River basin, special district dry years. In one case, a Southern California district water managers must contend with a world-class water pays farmers to replace water-intensive avocado crops delivery system clearly inadequate for the variability of with wine grapes, creating a win-win of reduced water a changing climate. The Association of California Water demand and the economic development of wine tourism. Agencies, a Sacramento-based association representing special districts and agencies that supply 90 percent of Clearly, some districts are already well along on the California’s water explained the climate problem that climate adaptation strategies and actions that many water managers face: special districts must eventually implement for a changing climate – with an added benefit of generating thousands “Less snow is falling in the Sierra Nevada of engineering and construction jobs. The leading-edge and melting faster, with peak runoff actions and infrastructure spending strategies detailed levels occurring earlier in the year. at the Commission’s hearing offer a window, as well as a The Department of Water Resources is road map, for special districts that have yet to engage or projecting that the California snowpack prepare for what Governor Brown in 2013 described as will decline by 25 to 40 percent by 2050, “the world’s greatest existential challenge – the stability of thereby significantly reducing the amount our climate on which we all depend.”56 of water that is stored at higher elevations for use during the summer and fall.”57 “Water and wastewater agencies, such as EMWD Brandon J. Goshi, manager of water policy and strategy (Eastern Municipal Water District, Riverside County), for the Metropolitan Water District of Southern have been looking at climate-change related actions California, offered a similar climate assessment in a for years. We might not have grouped it under the November 22, 2016, letter to Little Hoover Commission “climate change” umbrella or even used those words Chair Pedro Nava: to describe what we are doing, but we have long had an environmental stewardship and water use efficiency “The past ten years, and in particular, ethic. the unprecedented drought conditions of the past five years, have given us a “For adaptability, we have focused on the potential glimpse of the water supply and demand for and reality of longer, more intense droughts and challenges that climate change will pose. Local rainfall in Southern California has heat waves, less snowpack and early runoff. We have been sharply below normal for that made significant investments in developing climate- period, and our source waters have resilient water supplies and reducing per capita water already experienced the range of higher consumption. The combination of local supplies and temperatures and reduced snowpack conservation directly reduces our District’s dependence that is being foreseen by climate change on more greenhouse gas-intensive supplies.” scientists.” Paul D. Jones II, General Manager, and Deborah S. Cherney, Deputy General Manager. Eastern Municipal Water District. November 14, At the Commission’s hearing, executives of two special 2016, letter to Little Hoover Commission Chair Pedro Nava. districts in the business of water delivery – one in Southern California, another in Northern California – 54 | Little Hoover Commission testified about their responses to this “new normal” the district has reduced water demand by more than 20 within California’s climate. Each explained to the percent through conservation alone. Though mandatory Commission how they are identifying and creating new conservation targets have been lifted by the state, he water supplies to ease dependence on water imported said, “We still are asking our customers to conserve from faraway high-country reservoirs. and be efficient. A lot of the changes that took place in the last year, I think, are permanent changes. Where in Southern California you see grass and medians converted The Rancho California Water District (Riverside to California-friendly landscapes and those then put on County) drip systems, when we look at some of those accounts, their water use dropped by 70 percent. I don’t think The Temecula-based Rancho California Water District, anybody’s going to change those back to grass. So some created in 1965 with 5,000 customer accounts, serves of those savings really are long term and continue,” Mr. 45,000 customers now in a rapidly-suburbanized part of Armstrong told the Commission. eastern Riverside County. Residential and commercial users dominate the customer base. Yet the region’s traditional agricultural sector of citrus, avocados and “We are one of the agencies where every one of wine grapes, while fewer than 5 percent of customer our customers does have a meter, including our accounts, still accounts for 40 percent of water use, the agricultural customers. We know for every one of district stated in written testimony. our agricultural accounts what type of crop they have planted on their grove or farm, and we know Presently, the district’s groundwater basin supplies 43 the amount of acreage that they have there. So percent of demand. Treated imported water from the we know the amount of water that should be used Metropolitan Water District (MWD) – 500 percent more there to be efficient and we build water budgets costly than local well water, according to the district’s for our agricultural customers and tell them what testimony – supplies an additional 32 percent of local demand. Another 18 percent comes from district efficient water use is, and if they go over that they purchases of untreated water from MWD to recharge its pay a higher penalty. We take those penalties groundwater aquifer. The remaining 7 percent comes and we hold those in reserves and we use those from recycled water, a rising source locally and for to roll back into efficiency programs to help our water districts statewide.58 Ultimately, at buildout of agricultural customers become more efficient. its still-developing service area, the district expects to And one of those we’re doing right now is, we’re supply double its current demand for water – a daunting calling it a crop swap, where we have primarily challenge in an era of climate uncertainty.59 Key to avocados, wine grapes and citrus. Avocados use meeting that challenge, the district reported, is a 50- twice as much water as wine grapes. But some year Long Range Financial Plan that envisions $2.4 billion of those areas where avocados are planted are for new and replacement infrastructure and facilities, very suitable for wine grapes and we’re going to according to the district’s written testimony. help fund the conversion from avocadoes to wine grapes. It reduces the water use in half and still At the October 2016 hearing, Jeffrey D. Armstrong, maintains the economic benefits of agriculture in district general manager, detailed for the Commission our community, the viability of the farming as well three significant initiatives to broaden supply options. All as tourism that comes from that.” showcase the ingenuity with which Southern California water districts are meeting the needs of growing populations with less water: Jeffrey D. Armstrong, General Manager, Rancho California Water District, addressing the Commission Permanent Conservation. “On the climate change side October 27, 2016. there’s really two things,” he told the Commission. “There’s the supply side. And then there is the demand management side that we’re doing.” Mr. Armstrong said Readying California for Climate Change | 55 Crop Swap. In late 2016 the Rancho California Water acres of land surrounding the reservoir. The purchase District unveiled a program to pay farmers up to $15,000 allowed the district to remove legal restrictions that per acre to replace thirsty avocado crops with less water- previously maintained a fixed lake level for boating and intensive wine grapes, thanks to a $2 million grant from recreation. Mr. Armstrong told the Commission, “When the Department of Water Resources and $1 million from we acquired the land, that removed the recreational the U.S. Bureau of Reclamation. The district estimates rights. It allows us to use the full capacity of that lake it will save nearly 4,000 acre-feet of water in the next and reservoir for water supply purposes, and we’ve done decade, enough to meet demands of nearly 8,000 that during the drought. We really reduced the amount households.60 of water in that lake.… In terms of climate change, where we’re hearing about longer periods without rain followed Additional water storage options. In 2010, the district by periods of greater rainfall, it really gives us opportunity built a $10 million pipeline to buy untreated water in to take advantage of that climate change because we can wet years and channel it into its Lake Vail reservoir for draw the capacity down and then when the bigger events additional supply in dry years. Four years later, the happen we can fill the reservoir back up.” district spent $55 million in reserve funds to buy 7,500 How Other Districts are Preparing for Significant Climate Impacts • The Los Angeles-based Metropolitan Water District invested $450 million to pay customers to remove lawns and replace them with drought-resilient landscaping. • The Eastern Municipal Water District in Perris, Riverside County, reuses 100 percent of its wastewater through investments in recycled water. Recycled wastewater represents more than a third of the district’s water supplies and supports agriculture, commercial and industrial uses, as well as irrigation for public parks and outdoor spaces. The district also incentivized customers to remove four million square feet of turf and replace it with drought-proof landscaping. • The San Diego Water Authority is raising the San Vincente Dam to create 100,000 acre- feet (32 billion gallons) of new storage capacity and reduce dependence on imported water. It also is constructing the Carlsbad Desalinization Project to provide an extra 56,000 acre-feet (18 billion gallons) of usable water annually. • The Santa Rosa-based Sonoma County Water Agency invested $843,000 in a comprehensive climate vulnerability assessment to identify climate change risks and develop adaptation options for its water supply, flood control and sanitation facilities. • The Soquel Creek Water District in Capitola, Santa Cruz County, is developing a groundwater model to simulate climate change scenarios in preparation to spend up to $70 million on an advanced water purification project for groundwater recharge. Sources: Wendy Ridderbusch. Director of State Relations. Association of California Water Agencies. Sacramento, CA. September 13, 2016. Personal communication. Also, Paul D. Jones II, General Manager, and Deborah S. Cherney, Deputy General Manager. November 14, 2016, letter to Little Hoover Commission Chair Pedro Nava. 56 | Little Hoover Commission its mountain water westward from the Pardee and “Water agencies engaging in climate change Camanche reservoirs via three above-ground aqueducts planning must think carefully and thoughtfully across the Central Valley into the East Bay. But EBMUD, about the right combination of funding to achieve too, is diversifying its water sources as high-country a stable and reliable financing portfolio. Just as winter snowpack dwindles and climate uncertainty looms. Alexander R. Coate, district general manager, a family household puts money away in a savings testified to the Commission about several major account to purchase a new automatic dishwasher initiatives to broaden supplies. The district, which in when the old one breaks down, a water agency written testimony, called itself “a water industry leader in will set aside funds in a designated reserve fund addressing climate change,” has, indeed, set a lesson for for a specific project. For instance, a water storage special districts statewide by preparing a formal climate project, which could cost hundreds of millions of change vulnerability assessment of risks to its system and dollars to complete, from the initial feasibility customers. Among initiatives described in testimony: studies all the way to completion. The funding is responsibly and separately saved for future Diversifying. In 2010, the East Bay Municipal Utility use. In addition to utilizing reserves to help District opened – with its partnering agency, the build water infrastructure the ability to maintain Sacramento County Water Agency – the $1 billion reasonable reserves is a critical factor in providing Freeport Regional Water Project south of downtown reliable service, mitigating rate increases and Sacramento to divert supplies from the American and supporting an agency’s overall financial strength. Sacramento rivers during dry years. The project is Reserve levels directly affect an agency’s bond the culmination of a 40-year district legal strategy to rating, and ultimately, its ability to access debt gain rights to additional Central Valley Project water to supplement its Sierra Nevada supplies. Mr. Coate markets at favorable interest rates, ensuring the told Commissioners the river water supplied up to ability to finance and construct the infrastructure approximately one-half the drinking water in its East Bay necessary to renew existing systems and expand region in 2015. service levels to meet future needs. And while our member agencies rely upon several different Conservation. “Conservation is a way of life. We’ve been sources of state and federal income to augment conserving for decades,” Mr. Coate told the Commission. these infrastructure funds, the reality is that the “California’s known for its droughts and we’ve embraced majority of funding of water in California is derived that approach. In 2005, 2006 and 2007, we were selling from the water districts themselves.” 200 million gallons of water per day. That’s the same amount of water we were selling in the early 1970s, except Wendy Ridderbusch, Director of State Relations. we had 30 percent more people that we’re providing it Association of California Water Agencies. Testimony to. And since 2005, 2006 and 2007, our customers have at October 27, 2016, hearing. conserved and conserved again. We’re the only business that is out there trying to get people to use less of their product. It’s a very unique business model. The last year of the drought, just a year ago, our customers were using 128 The East Bay Municipal Utility District (Alameda millions of gallons per day,” he said. County) Regional partnerships: Mr. Coate also described to Unlike the Rancho California Water District with its the Commission the Bay Area Regional Water Supply rich natural underground reservoir, the Oakland-based Reliability partnership, which aims for collective readiness East Bay Municipal Utility District (EBMUD) serves 1.4 for climate impacts. “We’re also very focused on million customers in Alameda and Contra Costa counties partnerships, on leveraging those,” he said. “They work with almost no groundwater basins. The water district well, and in the Bay Area right now we’re are partnering instead taps the Mokelumne River in the central Sierra with a total of eight water agencies that represent six Nevada for 90 percent of its supply. The district leads million customers on a regional reliability study and using Readying California for Climate Change | 57 funding from the U.S. Bureau of Reclamation focused not necessarily on building a lot of new facilities, but looking How East Bay Municipal Utilities District at how we can interconnect and network our facilities and (EBMUD) is Vulnerable to Climate Change make improvements within our facilities so that we can share resources, both infrastructure resources and water • “Changes in the timing, intensity, location resources to improve the reliability for our customers.” and amount of precipitation could have Mr. Coate testified: “That’s particularly helpful for impacts on the reliability of EBMUD’s water supply. Droughts may become more emergencies when somebody might be in need and frequent. In addition, storm tracks are another agency would be able to provide resources.” predicted to move northwards, which could decrease average precipitation for EBMUD.” Mr. Coate urged the state to provide districts the flexibility to meet climate impacts, not with “one-size-fits- • An increase in temperature can lead to an all mandates,” but with their own individual and regional increase in customer demand for water. approaches. “Flexibility allows us to come up with • Forested areas within the district could approaches where we can figure it out. We have been lead to increased water demand for fire for decades. We were very prepared for this drought,” he suppression. said, “and able to have no impact to the economy and • Higher average water temperatures in still keep our customers with water.” district reservoirs in the Sierra Nevada could require more water to maintain a cool pool Mr. Coate, asked for recommendations the Commission for fish. might make to the state, also noted, “We really can use additional information, research information. We have • More intense storms and wildfires near an understanding that climate change is happening, but district reservoirs could increase sediment the error bars on the models are pretty big. So we’re and nutrient levels in water storage areas, requiring more treatment. working in, kind of using a sensitivity analysis approach. It’s like putting brackets around things. But research • Water shortages and drought may lead to could narrow that and help us understand what’s going to more frequent and severe water rationing. happen in our region, more specifically so. • Costs may increase to bring in supplemental supplies or develop still more projects to diversify supplies. “We’re the only business that is out there trying to get customers to use less of their product.” What the District is Doing About it • Planning to adjust its water supply portfolio Alexander R. Coate. General Manager, East Bay as impacts of climate change manifest. Municipal District, addressing the Commission October 27, 2016. • Identifying a wide range of supplemental supply, recycled water and conservation projects. • Incorporating climate change considerations The Wastewater World Already is into all master plans. Complicated; Now Comes Climate Change • Collaborating with other agencies to assess vulnerabilities and adaptation strategies. Nonstop, behind the scenes of California’s daily living, 66 independent special districts and 37 dependent county Source: East Bay Municipal Utility District. Urban Water districts collect billions of gallons of wastewater and Management Plan 2015. “Appendix J: Climate Change Vulnerability treat it for re-use or disposal into rivers, bays and the Assessment.” Pages J1-J5. Oakland, CA. file:///C:/Users/wasserjd/ Pacific Ocean. Sanitation district managers, overseeing Downloads/UWMP-2015-_BOOK-FINALweb_secure%20(1).pdf. vast expanses of costly infrastructure – miles of small Accessed September 28, 2016. 58 | Little Hoover Commission lateral pipelines leading to bigger trunk lines leading Commission’s October 27, 2016, hearing, stated: to regional pumping stations and treatment plants – widely expect their agencies to “experience the first “During and after heavy storms, rain significant infrastructure impacts of climate change” with and groundwater enter underground all the attendant costs and regulatory challenges – as sewer pipes through cracks, increasing one district manager testified in 2013 to the Assembly the volume of water in the system, and Select Committee on Sea Level Rise and the California eventually causing overflows. This is Economy.61 One national estimate suggests “the total called “infiltration and inflow” and is a estimated cost of wastewater agencies to adapt to climate common occurrence in cities across the change in the U.S. is between $123 billion and $252 country with older infrastructure. Climate billion above existing wastewater system infrastructure change is expected to impact the level of upgrade, renewal and replacement programs.”62 infiltration and inflow via the frequency and magnitude of more extreme wet At the October 27, 2016, hearing, the Commission weather storm events and rising learned about the formidable wastewater treatment groundwater levels due to sea level rise.” complexities inherent within a central expectation of climate change – long periods of too little water mixed The concern is reasonable. After a 2013 superstorm in with short explosive bursts of too much water. Detroit, 110 million gallons of raw sewage flowed into the Detroit River, overwhelming the city’s aging sanitation system.63 St. Petersburg’s similar issues were noted The East Bay Municipal Utilities District earlier in this chapter. California has its own problems: (Wastewater Division) 250,000 gallons of untreated wastewater entered the Los Angeles River and polluted the Pacific Ocean when a Mr. Coate, who also oversees collection and treatment of spring 2011 storm dumped up to 10 inches of rain over wastewater for 680,000 customers, said his chief climate parts of Los Angeles region.64 adaptation concerns are the forecasts for powerful Pacific storms and precipitation deluges that get into wastewater Mr. Coate also testified about a unique adaptive response systems, overwhelm them and cause untreated discharges to these concerns in his district’s service area, which may into the ocean. Mr. Coate, in written testimony for the be worth considering in some form in other regions with pre-1950s development patterns: Wastewater Facilities Will Be Hardest Hit by Climate Change “Wastewater treatment facilities will be among the hardest hit by climate change, in part because treatment plants are generally located at the low point in each watershed to make efficient use of gravity for conveyance purposes. This means that in coastal areas, wastewater facilities are often located along the coast or within an estuary and have ocean or bay outfalls with a direct hydraulic connection to their facility. Inland facilities also typically have geographically low-lying plants and outfalls within river valleys and floodplains. As the sea level rises – an expected 0.6 to 1.4 meters for the California coast – and storm surges increase in coastal areas, facility outfall elevations may need to be increased or may require pumping in order to discharge. Inundation of facilities, including higher coastal groundwater levels causes more inflow of brackish or salty water that, in turn, requires higher volumes or treatment levels and makes water recycling more energy intensive. Increased inland flooding events will put critical infrastructure and service at risk of failure.” Jessica Gauger, Manager of Legislative Affairs. California Association of Sanitation Agencies. October 11, 2016, letter to Commission Chair Pedro Nava. Readying California for Climate Change | 59 Mandatory sewer lateral repairs at point of sale. On Organizationally, each of the 24 districts in this regional November 28, 2014, a regional private sewer lateral collaboration is an independent special district with ordinance went into effect within EBMUD’s wastewater their own ability to issue debt and set customer rates service area, requiring inspections when a property is sold for their individual infrastructure needs. Collectively, as or undergoing a remodel of more than $100,000, of private a regional super-district, they also finance, maintain and lateral sewer lines that connect the property to the district operate a regional wastewater collection and treatment system. When a sewer line needs repair, the buyer or system run by a single Whittier-based headquarters seller – or both – must pay to have it fixed. Many of these staff. Individual districts each collect property taxes, aging and broken pipes act as conduits for stormwater charge fees for wastewater services, keep a share of to enter and overwhelm the district’s treatment plant reserve funds – equal to six months of operations and and spill partially-treated sewage into San Francisco Bay. maintenance expenses, plus one year of debt service – The ordinance, in effect in Alameda, Albany, Emeryville, and are overseen by individual boards made up of mayors Oakland, Piedmont, Kensington, El Cerrito and Richmond of cities included in the district. Annex, results from a 2009 order by the U.S. Environmental Protection Agency and San Francisco Bay Regional Water Quality Control Board to fix the district’s older, cracked When Faraway Imported Water Runs Short sewer lines.65 The City of Berkeley, since October 2006, has implemented similar requirements for inspections and Mr. Friess told the Commission, “With regard to recycled repairs as part of real estate transactions.66 water, the Sanitation Districts recycled water program is of great importance to Southern California’s efforts at climate change adaptation. Recycled water is considered Sanitation Districts of Los Angeles County a drought-proof local water supply because it is available consistently, whether it rains or not, and helps make local In Southern California, extended drought and water communities in Southern California more resilient to the shortages have created the opposite problem for impacts of climate change on water supply.” He further sanitation district managers: too little water creates an testified, “Recycled water currently comprises 7.5 percent additional, costly range of complexities for wastewater of Los Angeles County’s overall water supply. And area treatment. Nonetheless, years of drought also water managers are seeking to implement new water has triggered a surge in recycled water production recycling projects to increase the amount of recycled throughout Southern California, and is creating an water in the water supply, and I’ll highlight two of those.” entirely new water supply to supplement imported water. In testimony, Philip L. Friess, head of the technical Both highlighted projects involve forward-looking services department of the Sanitation Districts of Los regional partnerships of special districts, the kind that Angeles County, a unique collaboration of 24 individual increasingly will be necessary to alleviate the impacts of sanitation districts serving 78 cities and 5.5 million climate change in years and decades ahead: people, described a wastewater agency and region leading the nation in addressing key anticipated water- An end to imported water recharging groundwater supply impacts of climate change. basins. The Sanitation Districts of Los Angeles County, with more than a half century of recycling treated wastewater for groundwater recharge, is partnering “Today, the Sanitation Districts are one of the top on its newest recycled water project with the Water producers of beneficially reused recycled water in Replenishment District of Southern California (WRD) and California and the United States.” the Los Angeles County Flood Control District. A $110 million Groundwater Reliability Improvement Project Philip L. Friess, head of technical services facility, designed to produce an additional 19 million department, Sanitation Districts of Los Angeles gallons of treated wastewater daily for groundwater County, in written October 27, 2016, testimony to the recharge, marks an historic shift in ending the use of Commission. imported water for that purpose. Mr. Friess, in written testimony to the Commission, cited remarks by the 60 | Little Hoover Commission replenishment district’s board chair, Willard H. Murray, Jr., Treated wastewater to inland groundwater basins, at its 2016 groundbreaking. Mr. Murray, highlighting the not discharged to the ocean. Likewise, the Sanitation momentous break with a distant water supply becoming Districts of Los Angeles County also is partnering with increasingly unreliable as the climate changes, said: “The the Metropolitan Water District (MWD) on a proposed Los Angeles region has a long and sometimes colorful water purification facility at the districts’ Joint Water history of importing water to quench our thirst. With this Pollution Control plant in Carson. The aim: to divert project WRD will be turning a corner in our water history. up to 150 million gallons daily of wastewater currently WRD’s future will be built on water recycling, drought- discharged into the Pacific Ocean via 60 miles of pipeline proofing our water supplies and ending our reliance on to groundwater recharge basins in Los Angeles and imported water.” Orange counties. “That’s a $2.7 billion capital cost plant,” Mr. Friess told the Commission at the October 2016 hearing. “The water it produces will be about $1,600 per acre foot. And if that’s approved (by the MWD board How Climate Change Investments of directors) that would be about eight to 10 years in Stimulate Job Creation the future.” Mr. Friess added, “They have finished the feasibility study. They are in design for a demonstration Climate change investments on the scale of $2.7 facility to kind of fine tune the design parameters. I think billion and $110 million to reduce dependence on the approval to move forward with the full-scale project imported water and increase use of recycled water hopefully would occur next year (2017).” have more than conservation and environmental ramifications; they are job and income generators. These economic benefits largely stay in the region The Commission has learned that similar water reuse and ripple outward to support businesses involved efforts are well underway in neighboring Orange County, in construction, architecture, engineering, scientific where the Orange County Sanitation District and Orange research and development services, reported a County Water District have jointly partnered since 2008 2011 study of Los Angeles-area projects by the Los on the Groundwater Replenishment System. The joint Angeles-based Economic Roundtable. groundwater system produces enough new water for nearly 850,000 residents in north and central Orange The study, mindful of the region’s “increasing County and recharges 130 million gallons of water per pressure to reduce reliance on imported water by day. It is described by the water district as “the world’s using what we have more efficiently,” sampled the multiplier impacts of $1.2 billion in recent area largest project of its kind.”67 water efficiency projects involving recycled water, stormwater and groundwater management. The study estimated that every $1 million invested Humans vs. Wildlife: The Regulatory generated 12.6 to 16.6 year-long jobs depending Conflicts of Too Little Water on the type of project. That compared with new housing construction (11.3 jobs per $1 million invested) and motion picture production (8.3 jobs As the use of recycled water grows exponentially in per $1 million). years ahead, this trend, too, will be on a collision course with climate change and extended periods of drought. Study author and senior researcher Patrick Burns Producing recycled water means districts discharge less stated, “Los Angeles needs to use the water it has treated wastewater into streams and rivers – which more efficiently, and a dividend from doing this is has an unintended consequence of altering the watery that we will open doors for job seekers, including habitats of sensitive species. For wastewater districts, young adults eager to gain skills in the emerging field extended drought sets up conflicting regulatory demands of water-use efficiency.” from federal, state and regional government agencies Source: The Economic Roundtable. December 6, 2011. “Water over human needs for recycled water versus habitat’s Use Efficiency and Jobs.” Los Angeles, CA. https://economicrt.org/ need for instream flow. Explained Mr. Friess to the publication/water-use-efficiency-and-jobs. Accessed December 28, Commission, “As aquatic species experience greater 2016. stress, the need to maintain minimum flows to the Readying California for Climate Change | 61 streams to sustain them is garnering increased interest approximately 15 million people in all – are similarly from the resource agencies. And these trends may exposed within 500-year floodplains. The department also reduce the availability of recycled water that we can use reports that $575 billion worth of structures are exposed for water supply purposes at the same time the drought within 500-year floodplains statewide – 40 percent of conditions are sharply increasing the demand for the them in Los Angeles, Orange and Santa Clara counties.70 recycled water.” Protecting them – and millions more people and A new regulatory framework for adaptive management. buildings statewide – are flood control districts. Each “One aspect we’d like to highlight is the need for the state has an immense responsibility to think ahead and limit to explore how the regulatory framework for water quality flooding scenarios that could cripple the state’s $2.6 and water quantity should adapt to climate change, as trillion economy and damage its global standing as a well,” Mr. Friess testified to the Commission. “The issue is reliable trade partner. Typically, throughout California, that the regulations to protect water quality and plants, flood control districts are dependent county districts fish and wildlife are all based on preserving what is, or or divisions housed within departments of public what was, at some point in time. However, it can be works overseen by county boards of supervisors. But expected that even with reductions in greenhouse gas independent special districts also perform flood control emissions, many of the impacts of climate change are operations. Representatives of two of these independent going to occur anyway. Therefore the question that has to districts testified at the Commission’s October 27, 2016, be addressed,” said Mr. Friess, “is whether the status quo hearing about infrastructure investments to defend can be preserved, whether an adaptive approach has to be their populations and regional economies from climate- taken to resetting the baseline for what it is we’re trying to induced superstorms and rising seas. protect. This would require a new approach by regulatory agencies, one that is very difficult,” he said. “But if we don’t move in this direction the danger is we’re going to Fresno Metropolitan Flood Control District spend a lot of resources trying to maintain the old normal, even when that baseline is no longer tenable.” In April 1956, following a series of destructive 1950s floods, voters by a margin of 5-1 in the cities of Fresno and Clovis, and the County of Fresno, established an independent regional flood control district to hold back A Rising Ocean and 1,000-Year Storms: What waters from the nearby Sierra foothills that frequently Awaits Flood District Managers? inundated their flat, lowland geography. Two decades later the 400-square-mile district added groundwater As a coastal state, California faces the impacts of sea level recharge to its portfolio – a far-seeing move that gives it rise and, according to widespread scientific consensus, unique advantage for the irregular precipitation trends increasingly severe storms with potential to overwhelm which scientists consider a likely impact of climate flood defenses. Prolonged historic rainstorms of the type change. that poured more than 50 inches in and around Houston as a result of Hurricane Harvey in August 201768 – and 15 inches in 10 hours onto South Carolina in October “Among the major floods our region has endured 2015 (described as a 1,000-year storm)69 – point to what are the floods of 1872, 1884, 1925, 1937, 1938, California might face in years ahead. 1950, 1955 and 1969. It is remarkable to consider how much of our history has been shaped by the A November 2013 Department of Water Resources (DWR) benefits and also the destructive power of water.” report, “California’s Flood Future,” states that Orange, San Mateo and Santa Clara counties have the largest Alan Hofmann, general manager, the Fresno populations exposed within 100-year floodplains, those Metropolitan Flood Control District, in written areas that have a 1-in-100 (or 1 percent) probability testimony for the Commission’s October 27, 2016, of flooding in any given year. In Los Angeles, Orange hearing. and Santa Clara counties, 60 percent of residents – 62 | Little Hoover Commission The district, governed by six appointed representatives a changing climate may bring to California. “Fresno of the cities and one representative from the county, gets its share of thunderstorms, high-magnitude short- has used its property taxes (which account for 41 duration storms,” Mr. Hofmann told the Commission. He percent of revenue),71 bonding authority, developer stated in written testimony that the district, which still fees, 2006 Proposition 1E grants and other resources, sees localized flooding during those storms, has begun including reserves, to build a system particularly resilient discussions “on the implementation of a higher capacity to fluctuating rainfall and snowmelt. The district has standard for basins that could accommodate such a constructed one of the few systems statewide that can standard to capture and store more stormwater.” simultaneously control flood water in wet years and steer it to facilities to recharge its underground aquifer for One identified possible way to help finance an expansion, drinking water supplies in dry years. in addition to district revenue, is the Proposition 1 water bond passed by California voters in 2014, Mr. Hofmann “I would note that our system recharges over 70 percent told the Commission. of the rainfall that is captured within it,” district general manager Alan Hofmann told the Commission. “Most of the times you would say, ‘there’s too much rain,’ and the first thing you’re looking at is ‘how can we get rid of “So what are we doing to deal with climate it?” We take a different approach to stormwater, to say, change or different stormwater patterns? We take ‘there’s too much, where else can we put it?’” a different approach because we’ve been doing this for years. This is our purpose (as a special In written testimony, the district reported that “on district). We regularly look at rainfall patterns. a yearly average, approximately 17,000 acre-feet of We recognize that when we look at the historical locally-generated stormwater runoff generated with 30-year averages, the average annual rainfall has the urban drainage areas can be retained.” At 325,851 actually increased from nine inches back in the gallons per acre-foot, that is approximately 5.5 billion 1960s to today about 11 or 11 and a half inches. gallons annually for an underground aquifer classified as “high priority critical overdraft” by the 2014 Sustainable So we’ve continued to modify our design standards Groundwater Management Act. The cities of Fresno in our ponding basins and in our collection systems and Clovis also have rights to imported surface water for because that’s our sole purpose. It’s pretty easy groundwater recharge. to do that and not be held back by bureaucracy or political impediments. We can, what we say, get Dual-purpose infrastructure for flood control and things done.” groundwater recharge. Mr. Hofmann said the district collects Sierra Nevada snowmelt and rainwater in four Alan Hofmann, general manager, the Fresno large detention basins in higher elevations of the foothills Metropolitan Flood Control District, testifying at the and leads water to nearly 80 detention or “ponding” Commission’s October 27, 2016, hearing. basins for groundwater recharge beneath the Fresno- Clovis metropolitan area. Storm drains in the two cities similarly steer water to neighborhood detention Santa Clara Valley Water District basins, which are planted in grass and often also serve as recreational facilities and soccer fields during the dry The Commission’s 2014 Governing California Through season. The groundwater recharge system, he said, was Climate Change report paid particular attention to largely conceived and built in the pre-Propositions 13 and climate vulnerabilities in Santa Clara County, stating that 218 era, and would be difficult to replicate today with the many of “Silicon Valley’s storied technology campuses need for two-thirds votes for special taxes. risk inundation as water levels rise in San Francisco Bay.” The Commission report cited a December 20, 2012, The flood control district, though engineered to protect Scientific American article about the endangered county’s residents against a 200-year storm event, still doesn’t sea level rise challenges that stated bluntly: “Facebook is consider itself entirely safe from the historic storms that just one of the well-known companies in Silicon Valley’s Readying California for Climate Change | 63 technology mecca that will face the effects of climate take approximately three years to finish, Ms. Richardson change in years ahead. Others located near the water told the Commission. That phase will bring protection to here include Google, Yahoo!, Dell, LinkedIn, Intuit, Intel, the north San Jose shoreline between Alviso Slough and Cisco, Citrix and Oracle.” Coyote Creek, an area of homes, tech companies and the county’s largest wastewater treatment plant, all about The Santa Clara Valley Water District, which has 11 feet below sea level and considered most at risk to responsibilities for flood control alongside its traditional sea level rise. The first-phase cost is $174 million, said role of providing water to nearly two million of the Ms. Richardson, with the federal government paying 40 region’s residents, stands on the front lines of keeping percent ($71 million). The remaining 60 percent ($103 San Francisco Bay from spilling into the below-sea- million) is funded jointly by the Santa Clara Valley Water level offices of these companies, as well as the Bay District and the California Coastal Conservancy. Their Area’s largest wastewater treatment plant.72 At the 60 percent share includes $42 million for the levee and Commission’s hearing, Melanie Richardson, the water related structures, $58 million for wetlands restoration district’s interim chief operating officer – watersheds – and $3 million for recreation. described an ambitious $850 million plan to get ahead of climate-induced sea level rise well before it is too Santa Clara County property owners, as well as property late. The district’s plan, a first of its kind in the Bay owners throughout the nine-county Bay Area, also are Area, provides an important example for special districts helping finance this massive sea level rise project, said statewide in the power of partnerships to prepare and Ms. Richardson. A 2012 Santa Clara Valley Water District build now for coming climate change impacts. parcel tax approved by more than two-thirds of county taxpayers – the Safe Clean Water and Natural Flood Multi-government partnerships for mega-projects. Protection Program, or Measure B – provided $15 million The district, in partnership with the U.S. Army Corps for design and construction of the first phase, as well of Engineers and California State Coastal Conservancy, as $5 million for studies of the remaining 14 miles. In has begun a major levee-construction and wetlands addition, Measure AA, the $500 million, 20-year Clean restoration program to protect populations and and Healthy Bay parcel tax passed by more than two companies that represent a thriving key sector of the thirds of Bay Area voters in June 2016, will contribute $60 California and national economy. Collectively, the three million over time toward the entire 18-mile flood and sea agencies aim to fortify 18 miles of the county’s San level rise protection project, Ms. Richardson testified. Francisco Bay shoreline against up to three feet of sea Ms. Richardson told the Commission that conversations level rise for the next 50 years. are underway with the U.S. Army Corps of Engineers regarding the next phases. “Prior to starting the next phase “Right now the entire Santa Clara County shoreline of the shoreline study in other economically impacted is protected by salt pond levees that are not really areas, our district is out in front analyzing conditions in engineered for flood protection, and therefore the entire the Palo Alto, Mountain View and Sunnyvale shorelines coastline is vulnerable to not only the 100-year coastal to determine where the next piece that makes the most flooding event, but to sea level rise,” Ms. Richardson told economic sense should be worked on,” she testified. the Commission. “The shoreline study (formally known as the South San Francisco Bay Shoreline Study) is the When discussing the entire $850 million price tag to first study of its kind in the Bay area to develop a specific protect the Silicon Valley region against an uncertain plan to provide flood risk management in light of sea future, Ms. Richardson pointed to the financial power of level rise in the bay.” partnerships. “That’s why it’s so important for us to have participation by our federal partners,” she said. “It’s a very Added Ms. Richardson, “The study is proceeding in phases expensive project for local entities to undertake alone.” because 18 miles of coastline is a lot to do all at once.” A first four-mile phase of levee construction and restoration of 2,900 acres of tidal marsh habitat is scheduled to begin construction as early as 2018 and 64 | Little Hoover Commission RECOMMENDATIONS The OPR clearinghouse promises to be the definitive source of climate adaptation planning information for local Locally and regionally, special districts are clearly thinking governments throughout California. An OPR representative about an uncertain future, whether they call it changing at the Commission’s October 2017 hearing invited more weather patterns or climate change. The dozen approaches district participation in state climate adaptation processes. outlined show a handful of special districts getting ready for It is critical that special districts and their associations what’s coming and no doubt, their executives occasionally assume a larger participatory role – both within state lie awake at night thinking about the many what if’s that government and among their memberships – to expand the accompany their responsibilities. These forward motions knowledge base for local governments statewide. by California districts might, in some or even most cases, be among the most advanced nationally for climate change Recommendation 17: The state should conduct a adaptation. Yet, there is clearly more that trade associations study – by either a university or an appropriate state for these districts – and also state government – can do department – to assess the effect of requiring real estate to help and also to stay out of their way with regulatory transactions to trigger an inspection of sewer lines on overreach. Among options considered by the Commission the property and require repairs if broken. and recommended here: Every California property owner has the responsibility Recommendation 15: The Legislature should place a to adapt to climate change. This begins at home with requirement that special districts with infrastructure maintenance and upgrading of aging sewer laterals. subject to the effects of climate change should formally Requiring inspections and repairs during individual consider long-term needs for adaptation in capital property transactions is an optimum way to slowly infrastructure plans, master plans and other relevant rebuild a region’s collective wastewater infrastructure documents. in the face of climate change. At the community level, repairs will help prevent excess stormwater during major Most special districts, especially the legions of small climate events from overwhelming wastewater systems districts throughout California, have their hands full and triggering sewage spills into public waterways. meeting their daily responsibilities. Many have few resources and little staff time to consider long-range The Oakland-based East Bay Municipal Utility District has issues, particularly those with the heavy uncertainty of instituted an ordinance that requires property owners climate change adaptation. Making climate change a key to have their private sewer laterals inspected if they buy planning and operational consideration would formally or sell a property, build or remodel, or increase the size and legally elevate issues of adaptation and mitigation, of their water meter. If the lateral is found to be leaking especially for districts where immediate concerns make it or damaged, it must be repaired or replaced. The state too easy to disregard the future. should consider implementing this policy statewide. Recommendation 16: The California Special Districts Recommendation 18: State regulatory agencies should Association (CSDA), in conjunction with its member explore the beginnings of a new regulatory framework districts, should document and share climate adaptation that incorporates adaptable baselines when defining a experiences with the Integrated Climate Adaptation status quo as climate impacts mount. and Resilience Program’s adaptation information clearinghouse being established within the Governor’s With climate change what has happened historically will Office of Planning and Research (OPR). Similarly, CSDA often be of little help in guiding regulatory actions. State and member districts should step up engagement regulations designed to preserve geographical or natural in the state’s current Fourth Assessment of climate conditions that are no longer possible or no longer threats, a state research project designed to support the exist already are creating problems for special districts. implementation of local adaptation activities. The CSDA Wastewater agencies, for example, face conflicting also should promote climate adaptation information regulations as they divert more wastewater flows to sharing among its members to help districts with fewer water recycling for human needs and less to streams resources plan for climate impacts and take actions. historically home to wildlife that may or may not continue Readying California for Climate Change | 65 to live there as the climate changes. While it is not easy for regulators to work with moving targets or baselines, climate change is an entirely new kind of status quo that requires an entirely new approach to regulation. Recommendation 19: The California Special Districts Association, and special districts, as some of the closest- to-the-ground local governments in California, should step up public engagement on climate adaptation, and inform and support people and businesses to take actions that increase their individual and community- wide defenses. Special districts are uniquely suited to communicate with and help prepare millions of Californians for the impacts of climate change. Nearly all have public affairs representatives increasingly skilled at reaching residents through newsletters, social media and public forums. District staffs grapple constantly with new ways to increase their visibility. Many will find they can build powerful new levels of public trust by helping to prepare their communities for the uncertainty ahead. Recommendation 20: The California Special Districts Association and special districts should lead efforts to seek and form regional partnerships to maximize climate adaptation resources and benefits. Water, wastewater and flood control districts are already bringing numerous agencies to the table to pool money, brainpower and resources for big regional projects. The East Bay Municipal Utility District has arrangements with many Bay Area and Central Valley water agencies to identify and steer water to where it is most needed for routine demands and emergencies alike. The Metropolitan Water District and Sanitation Districts of Los Angeles County also increasingly pool their joint resources to steer more recycled water to groundwater recharge basins for dry years. Likewise, the Santa Clara Valley Water district and other state and federal agencies are collectively planning and funding 18 miles of levees to protect the region from sea level rise. These partnerships among special districts and other government agencies clearly hint at what will be increasingly necessary as climate impacts begin to mount. 66 | Little Hoover Commission Appendices Appendix A Public Hearing Witnesses The list below reflects the titles and positions of witnesses at the time of the hearing. Public Hearing on Special Districts August 25, 2016 Sacramento, California Michael Coleman, Principal, CaliforniaCityFinance.com Stephen Lucas, Executive Officer, California Association of Local Agency Formation Commissions Jon Coupal, President, Howard Jarvis Taxpayers and Butte County Local Agency Formation Commission Association Pamela Miller, Executive Director, California Amber King, Senior Legislative Advocate, Association Association of Local Agency Formation Commissions of California Health Care Districts Kyle Packham, Advocacy and Public Affairs Director, John Leopold, Chair, California Association of Local California Special Districts Association Agency Formation Commissions, Santa Cruz County District 1 Supervisor and Santa Cruz County Local Michael Schwartz, Fire Chief, North Tahoe Fire Agency Formation Commission member Protection District Public Hearing on Special Districts October 27, 2016 Sacramento, California Jeffrey D. Armstrong, General Manager, Rancho Alan Hofmann, General Manager, Fresno California Water District Metropolitan Flood Control District Louise Bedsworth, Deputy Director, Governor’s Office Melanie Richardson, Interim Chief Operating Officer – of Planning and Research Watersheds, Santa Clara Valley Water District Alexander R. Coate, General Manager, East Bay Wendy Ridderbusch, Director of State Relations, Municipal Utility District Association of California Water Agencies Philip L. Friess, Department Head, Technical Services, Sanitation Districts of Los Angeles County Appendices | 67 Appendix B Meeting Participants The list below reflects the titles and positions of participants at the time of the meeting. Advisory Committee Meeting on Special Districts November 16, 2016 Sacramento, California Peggy Broussard Wheeler, Vice President, Rural Sheretta Lane, Vice President of Finance and Policy, Healthcare and Governance, California Hospital District Hospital Leadership Forum Association Misa Lennox, Associate Consultant, Assembly Local Ken Cohen, Executive Director, Association of Government Committee California Healthcare Districts Lee Michelson, Chief Executive Officer, Sequoia Arthur J. Faro, Board President, Sequoia Healthcare Healthcare District, San Mateo County District, San Mateo County Pamela Miller, Executive Director, California Barbara Glaser, Senior Legislative Advocate, California Association of Local Agency Formation Commissions Hospital Association Kyle Packham, Advocacy and Public Affairs Director, Colin Grinnell, Chief Consultant, Senate Government California Special Districts Association and Finance Committee Bobbi Palmer, Executive Director, Fallbrook Jack Hickey, Board Member, Sequoia Healthcare Healthcare District, San Diego County District, San Mateo County Mona Palacios, Executive Officer, Alameda County Barry Jantz, Chief Executive Officer, Grossmont Local Agency Formation Commission Healthcare District, San Diego County Lou Ann Texeira, Executive Officer, Contra Costa Amber King, Senior Legislative Advocate, Association County Local Agency Formation Commission of California Healthcare Districts 68 | Little Hoover Commission Roundtable Discussion on Special Districts June 22, 2017 Sacramento, California Debby Cherney, Deputy General Manager, Eastern Jimmy MacDonald, Consultant, Senate Government Municipal Water District and Finance Committee Steve Heide, Finance Manager, Chino Valley Scott Morgan, Deputy Director of Administration and Independent Fire District State Clearinghouse Director, Governor’s Office of Planning and Research José Henríquez, Executive Officer, El Dorado Local Agency Formation Commission Pamela Miller, Executive Director, California Association of Local Agency Formation Commissions Gay Jones, Board Member, California Association of Local Agency Formation Commissions, Sacramento Kyle Packham, Advocacy and Public Affairs Director, Metro Fire District, Board Member and Sacramento California Special Districts Association LAFCO Commissioner Sarah Rubin, Program Manager, Public Engagement, Jill Kanemasu, Acting Division Chief, Local Institute for Local Government Government Programs & Services Division, Office of State Controller Betty T. Yee Wendy Ridderbusch, Director of State Relations, Association of California Water Agencies George Lolas, Chief Operating Officer, Office of State Controller Betty T. Yee Herb Schultz, CEO, Desert Healthcare District Amber King, Senior Legislative Advocate, Association Gareth Smythe, Executive Fellow, Governor’s Office of of California Health Care Districts Planning and Research Steve Lucas, Executive Officer, Butte Local Agency Christina Valencia, Chief Financial Officer, Inland Formation Commission Empire Utilities Agency Appendices | 69 Appendix C Cover Photo Credits Photos: Courtesy of John Chacon and the California Department of Water Resources. http://pixel-ca-dwr.photoshelter.com/index. Accessed on August 30, 2017. Also, courtesy of iStock photos. http://www.istockphoto.com/. Accessed on August 30, 2017. 70 | Little Hoover Commission Notes Conservation Improvement District. May 17, 2017. “Letter to Governor Brown Requesting Assistance for Voluntary Consolidation of Water Districts in the Ukiah Valley.” 1 Jill Kanemasu, Acting Division Chief, Local Government Programs & Services Division, Office of the State Controller 14 Kyle Packham. Advocacy and Public Affairs Director. Betty T. Yee. May 24, 2017. Written communication. California Special Districts Association. Sacramento, CA. December 22, 2016. Written Communication. 2 Kyle Packham. Advocacy and Public Affairs Director. California Special Districts Association. Sacramento, CA. July 15 Jill Kanemasu. Refer to endnote 1. 20, 2017. Written communication. 16 Kathleen Cole. Executive Legislative Representative. 3 Kyle Packham. Advocacy and Public Affairs Director. The Metropolitan Water District of Southern California. California Special Districts Association. Sacramento, CA. August Sacramento, CA. July 15, 2016. Personal Communication. 25, 2016. Written testimony to the Commission. 17 California State Controller. “Special Districts Annual 4 Wendy Ridderbusch. Director of State Relations. Report GC 12463.1 – Top 250 Special Districts.” Sacramento, Association of California Water Agencies. Sacramento, CA. CA. http://lgrs.sco.ca.gov/sb282/index.asp. Accessed July 18, December 12, 2016. Written Communication. 2016. 5 Peter Detweiler. Former Chief Consultant. Senate Local 18 Kyle Packham. Advocacy and Public Affairs Director. Government Committee. Sacramento, CA. July 5, 2016. California Special Districts Association. Sacramento, CA. July 7, Personal Communication. 2016. Personal communication. 6 Kyle Packham. Refer to endnote 3. 19 Wendy Ridderbusch. Director of State Relations. Association of California Water Agencies. Sacramento, CA. July 7 Kyle Packham. Advocacy and Public Affairs Director. 15, 2016. Personal communication. California Special Districts Association. Sacramento, CA. August 25, 2016. Oral testimony to the Commission. 20 Legislative Information Service. Senate Governance and 8 Chris Swann. Ranger supervisor. Mokelumne River Finance Committee. Bill analysis for June 22, 2016, hearing Watershed and Recreation District, East Bay Municipal Utility date. April 18, 2016. “AB 2414 – Desert Healthcare District.” District. November 18, 2016. Personal communication. Page 4. Sacramento, CA. 9 U.S. Census Bureau. American FactFinder. Local 21 Little Hoover Commission. May 3, 2000. “Special Governments by Type and State: 2012: United States – States. Districts: Relics of the Past or Resources for the Future?” Page 2012 Census of Government. Washington, D.C. On file. 53. Sacramento, CA. http://www.lhc.ca.gov/studies/155/ report155.pdf. Accessed July 27, 2016. 10 Jurg Heuberger, Executive Officer. Imperial County Local Agency Formation Commission. May 1, 2017. “Executive 22 Kyle Packham. Refer to endnote 3. Officer’s Report to the Local Agency Formation Commission. 23 Kyle Packham. Refer to endnote 3. 11 Kyle Packham. Advocacy and Public Affairs Director. California Special Districts Association. Sacramento, CA. 24 Kyle Packham. Advocacy and Public Affairs Director. December 13, 2016. Written communication. On file. California Special Districts Association. Sacramento, CA. July 13, 2017. Written communication to the Commission. 12 Alex MacLean. January 19, 2017. “Special Districts discuss consolidation.” The Sonora Union Democrat. Sonora, 25 Jill Kanemasu. Refer to endnote 1. CA. http://www.uniondemocrat.com/localnews/4998806-151/ special-districts-discuss-consolidation. Accessed January 24, 26 SB 448 Bill Analysis. Senate Committee on Appropriations. 2016. May 15, 2017. 13 Calpella County Water District, Millview County Water 27 Kyle Packham, Advocacy and Public Affairs Director. District, Redwood Valley County Water District, Willow County California Special Districts Association. Sacramento, CA. June Water District, and Russian River Flood Control & Water 21, 2007. Written communication. Citing State Controller’s Notes | 71 Office Financial Transaction Report Data obtained through 39 Paul Sisson. October 9, 2014. The San Diego Union- www.bythenumbers.sco.ca.gov. Tribune. “Fallbrook Hospital to go outpatient only.” http:// www.sandiegouniontribune.com/news/health/sdut-fallbrook- 28 Kyle Packham, Advocacy and Public Affairs Director. palomar-tri-city-close-2014oct09-story.html. Accessed January California Special Districts Association. Sacramento, CA. June 12, 2017. 21, 2017. Written communication. Citing State Controller’s Office Financial Transaction Report Data obtained through 40 Tom Lochner. October 24, 2016. “San Pablo: West County www.bythenumbers.sco.ca.gov. Healthcare District files bankruptcy.” East Bay Times. http:// www.eastbaytimes.com/2016/10/22/west-county-healthcare- 29 Jon Oliver. Home Box Office. Last Week Tonight with Jon district-files-bankruptcy. Accessed October 24, 2016. Oliver. March 6, 2016. New York. N.Y. https://www.youtube. com/watch?v=3saU5racsGE. Accessed December 12, 2016. 41 Margaret Taylor. April 2006. “California’s Health Care Districts.” Prepared for the California HealthCare 30 Legislative Analyst’s Office. October 21, 2011. Letter Foundation. Pages 7-8. Oakland, CA. http://www.chcf.org/~/ to the Hon. Roger Dickinson. Ninth Assembly District. media/MEDIA%20LIBRARY%20Files/PDF/PDF%20C/PDF%20 Sacramento, CA. Page 14. http://www.lao.ca.gov/ CaliforniasHealthCareDistricts.pdf. Accessed October 11, 2016. reports/2012/stadm/letters/dickinson_102111.pdf. Accessed January 17, 2017. 42 Amber King. Refer to endnote 36. 31 Gail L. Pellerin, County Clerk. County of Santa Cruz. June 43 Legislative Information Service. Senate Governance 2, 2017. Written communication to the Commission. and Finance Committee. May 10, 2016, bill analysis for June 22, 2016 committee hearing. “AB 2471 Healthcare Districts: 32 Neal Kelley. Registrar of Voters. County of Orange. June Dissolution.” Page 3. Sacramento, CA. http://lis.calegis.net/ 1, 2017. Written communication to the Commission. Votes as LISWeb/faces/bills/billdetail.xhtml. Accessed July 21, 2016. a percentage of registered voters, calculated as the number of total votes cast divided by the number of choices. 44 Rebecca Parr. July 9, 2015. “Mayor lashes out at healthcare district.” The Marin Independent Journal. 33 Neal Kelley. Refer to endnote 32. Average of votes as http://www.marinij.com/article/ZZ/20150709/ a percentage of registered voters for special district and city NEWS/150705515. Accessed July 21, 2016. special elections. Does not include voter participation rates for statewide propositions or local measures. 45 Jack Hickey. Director. Sequoia Healthcare District. Redwood City, CA. July 29, 2016. Personal communication. 34 Kyle Packham. Refer to endnote 3. Also, Sarah Rubin. Program manager for public engagement. Institute for 46 Bonnie Eslinger. June 5, 2013. The San Mateo County Local Government. September 13, 2016 and April 25, 2017. Times. “New grand jury report questions rationale of Sacramento, CA. Personal communication. some Sequoia Healthcare District expenses.” http://www. mercurynews.com/2013/06/05/new-grand-jury-report- 35 Bobbi Palmer. Executive Director. Fallbrook Regional questions-rationale-of-some-sequoia-healthcare-district- Health District. Fallbrook, CA. January 9, 2017. Personal expenses. Accessed January 12, 2017. communication. 47 Kevin Forestieri. June 28, 2016. “Healthcare district pours 36 Amber King. Senior Legislative Analyst. The Association millions into local wellness initiatives.” The Mountain View of California Healthcare Districts. Sacramento, CA. August 25, Voice. http://mv-voice.com/news/2016/06/28/health-care- 2016. Written testimony to the Commission. Also Personal district-pours-millions-into-local-wellness-initiatives. Accessed communication. August 1, 2017. July 21, 2016. 37 California Hospital Association. Fact sheet. Sacramento, 48 Lisa Vorderbrueggen. March 15, 2012. “Mt. Diablo Health CA. On file. Care District Stripped of Power; Concord Assumes Oversight.” The Contra Costa Times. http://www.mercurynews. 38 California Department of Finance. “Historical Census com/2012/03/14/mt-diablo-health-care-district-stripped-of- Populations of California, Counties, and Incorporated Cities. power-concord-assumes-oversight. Accessed July 21, 2016. 1850-2010).” Sacramento, CA. http://www.dof.ca.gov/Reports/ Demographic_Reports. Accessed August 17, 2017. 49 Jennifer Gollan and Katharine Mieszkowski. March 10, 2012. “As the Uninsured Go Without Care, Health Districts 72 | Little Hoover Commission Hold Reserves of Money.” The New York Times/The Bay Citizen. change/2010/04/climate-change_policy.pdf. Accessed http://www.nytimes.com/2012/03/11/us/as-uninsured-go- December 23, 2016. without-california-health-districts-hold-reserves.html?_r=0. Accessed July 21, 2016. 58 Jeffrey D. Armstrong. General Manager. Rancho California Water District. Temecula, CA. October 27, 2016. 50 San Mateo County Superior Court. 2012-2013 San Mateo Written testimony to the Commission. County Grand Jury. July 29, 2013. “Peninsula Healthcare District: Landlord, Real Estate Developer or Health Care 59 Rancho California Water District. September 8, 2016. Leader?” Page 1,10. Redwood City, CA. https://www. “Comprehensive Annual Financial Report for the Fiscal Year sanmateocourt.org/documents/grand_jury/2012/peninsula_ Ended June 30, 2016. Page IV. Temecula, CA. http://www. healthcare.pdf. Accessed January 12, 2017. ranchowater.com/ArchiveCenter/ViewFile/Item/71. Accessed December 27, 2016. 51 Peninsula Health Care District. “The Trousdale. A new standard in senior living is coming to the Peninsula.” 60 Chloe Morales. November 10, 2016. The Murietta Patch. Burlingame, CA. “RCWD launches new crop conversion program.” http://patch. http://www.peninsulahealthcaredistrict.org/the-trousdale. com/california/murrieta/rancho-california-water-district- Accessed January 12, 2017. launches-crop-conversion-program. Accessed December 27, 2016. 52 Barry Jantz. Chief Executive Officer. Grossmont Healthcare District. La Mesa, CA. November 16, 2016. Little 61 Kevin M. Hardy. General Manager. Encina Wastewater Hoover Commission. Advisory committee meeting. Authority. Second Vice President, California Association of Sanitation Agencies. October 25, 2013. Testimony to Joint 53 State of California. Department of Finance. “Gross State Hearing of the Assembly Select Committee on Sea Level Product in California.” Sacramento, CA. http://www.dof.ca.gov/ Rise and the California Economy and the Assembly Select Forecasting/Economics/Indicators/Gross_State_Product. Committee on Ports. Page 3. Long Beach, CA. (On file). Accessed July 30, 2017. 62 Kevin M. Hardy. Refer to endnote 61. Page 6. Long Beach, 54 California Natural Resources Agency. “California’s Fourth CA. (On file). Climate Change Assessment.” Sacramento, CA. http://resources.ca.gov/safeguarding/research. Accessed July 63 Brian Bienkowski. The Daily Climate. August 27, 2013. 30, 2017. “Sewage adds to Detroit’s headache.” http://www.dailyclimate. org/tdc-newsroom/2013/08/climate-doorstep-detroit-sewage- 55 Charlie Frago. The St. Petersburg Times. September 14, woes. Accessed August 17, 2017. 2016. “St. Petersburg’s ‘black cloud’ of sewage woes grows by 58 million gallons.” http://www.tampabay.com/news/ 64 Robert Jablon. The Associated Press. March 22, 2011. environment/water/st-petersburgs-black-cloud-of-sewage- “Yuck: Sewage spill closes California beaches.” http://www. woes-grows-by-58-million-gallons/2293625. Also: David nbcnews.com/id/42218651/ns/weather/t/yuck-sewage-spill- Helvarg. The Los Angeles Times. December 2, 2016. “Op Ed: closes-california-beaches/#.V-1YdfkrJmM. Accessed August 17, Is Florida’ climate change model – denial at the Capitol, frantic 2017. action at the beach – in store for the U.S. under Trump?” http://www.latimes.com/opinion/op-ed/la-oe-helvarg-florida- 65 East Bay Municipal Utilities District. “East Bay Regional climate-change-denial-and-action-20161202-story.html. Private Sewer Lateral Program.” Oakland, CA. http://www. Accessed December 22, 2016. eastbaypsl.com/eastbaypsl. Accessed August 17, 2017. Also: Consent Decree. United States District Court. Northern District 56 Paul Rogers. October 29, 2013. “Climate change of California. June 25, 2014. “UNITED STATES OF AMERICA pact signed by California, Oregon, Washington and and PEOPLE OF THE STATE OF CALIFORNIA ex rel. CALIFORNIA British Columbia.” The San Jose Mercury News. http:// STATE WATER RESOURCES CONTROL BOARD and CALIFORNIA www.mercurynews.com/science/ci_24406734/ REGIONAL WATER QUALITY CONTROL BOARD, SAN FRANCISCO california-oregonwashington-and-british-columbia-sign- BAY REGION, Plaintiffs, SAN FRANCISCO BAYKEEPER and OUR climate?source=email. Accessed December 23, 2016. CHILDREN’S EARTH FOUNDATION, Intervenor-Plaintiffs, v. EAST BAY MUNICIPAL UTILITY DISTRICT. Consent Decree - Case Nos. 57 Association of California Water Agencies. “ACWA Policy C09-00186 and 09-05684.” San Francisco, CA. https://www. Principles on Climate Change.” epa.gov/sites/production/files/2014-08/documents/ebmud- http://www.acwa.com/sites/default/files/post/climate- cd14.pdf. Accessed August 17, 2017. Notes | 73 66 City of Berkeley. Department of Public Works. “Private Sewer Lateral Program.” Berkeley, CA. http://www.ci.berkeley.ca.us/psl/ Accessed August 17, 2017. 67 James D. Herber, General Manager, Orange County Sanitation District and Eric O’Donnell, Associate, Townsend Public Affairs. June 27, 2017. Meeting with Commission staff. Also, Orange County Facts and Key Statistics. Also, The Orange County Water District. September 19, 2016. “Groundwater Replenishment Produces 200 Billion Gallons of Water as California Endures Fifth Year of Drought.” Fountain Valley, CA. http://www.ocwd.com/media/4628/gwrs-200-billion-gallons- final-9-19-16.pdf. Accessed August 17, 2017. 68 National Oceanic and Atmospheric Administration. National Weather Service. www.forecast.weather.gov. Accessed August 30, 2017. 69 Nick Wiltgen. The Weather Channel. October 8, 2015. “South Carolina’s Catastrophic Floods Caused by One of the Most Prolific Rainfall Events in U.S. History.” https://weather. com/news/news/south-carolina-historic-flood-rainfall-record- extreme. Accessed August 17, 2017. 70 Department of Water Resources. November 2013. “California’s Flood Future. Recommendations for Managing the State’s Flood Risk.” Pages 3-4 to 3-7. Sacramento, CA. http:// www.water.ca.gov/sfmp/resources/California_Flood_Future. pdf. Accessed August 17, 2017. 71 Fresno Metropolitan Flood Control District. January 20, 2016. “Financial Statements, Combining Fund Financial Statements, and Supplemental Schedules for the Fiscal Year Ended June 30, 2015. Page 17. Fresno, CA. http://www.fresnofloodcontrol.org/wp-content/ uploads/2016/01/2015-16-Audited-Financial-Statements.pdf Accessed August 17, 2017. 72 Santa Clara Valley Water District. “South San Francisco Bay Shoreline Study. Frequently Asked Questions.” San Jose, CA. http://www.southbayshoreline.org/faq.html. Accessed August 17, 2017. 73 Kyle Packham. Refer to endnote 3. Pages 3-4. Also, Kyle Packham. Refer to endnote 1. (Independent Special District and list of districts by type – Data from 2016 and 2017.) Also, California State Controller’s Office. July 30, 2017. Special Districts Annual Report Fiscal Year 2011-12. Page V. Sacramento, CA. http://www.sco.ca.gov/Files-ARD- Local/LocRep/1112_special_districts.pdf. (JPAs & Nonprofit Corporations, County-run Dependent Districts and City-run Dependent Districts – Data from 2011-12). 74 | Little Hoover Commission Little Hoover Commission Members Chairman Pedro Nava (D-Santa Barbara) Appointed to the Commission by former Speaker of the Assembly John Pérez in April 2013 and reappointed by Speaker of the Assembly Anthony Rendon in 2017. Government relations advisor. Former state Assemblymember from 2004 to 2010. Former civil litigator, deputy district attorney and member of the state Coastal Commission. Elected chair of the Commission in March 2014. Vice Chairman Sean Varner (R-Riverside) Appointed to the Commission by Governor Edmund Brown Jr. in April 2016. Managing partner at Varner & Brandt LLP where he practices as a transactional attorney focusing on mergers and acquisitions, finance, real estate and general counsel work. David Beier (D-San Francisco) Appointed to the Commission by Governor Edmund G. Brown Jr. in June 2014. Managing director of Bay City Capital. Former senior officer of Genentech and Amgen. Former counsel to the U.S. House of Representatives Committee on the Judiciary. Serves on the board of directors for the Constitution Project. Iveta Brigis (D-Los Gatos) Appointed to the Commission by Governor Edmund G. Brown Jr. in April 2017. Open Sourcing People Operations Program lead at Google Inc. since 2014, and looks after re:Work, Google’s initiative to open source data-driven HR practices. Senator Anthony Cannella (R-Ceres) Appointed to the Commission by the Senate Rules Committee in January 2014. Elected in November 2010 and re-elected in 2014 to represent the 12th Senate District. Represents Merced and San Benito counties and a portion of Fresno, Madera, Monterey and Stanislaus counties. Joshua LaFarga (NPP-Wilmington) Appointed to the Commission by Speaker of the Assembly Anthony Rendon in June 2017. Director of public and government affairs and as recording secretary and executive board member at LiUNA! Local 1309. Assemblymember Chad Mayes (R-Yucca Valley) Appointed to the Commission by former Speaker of the Assembly Toni Atkins in September 2015. Elected in November 2014 to represent the 42nd Assembly District. Represents Beaumont, Hemet, La Quinta, Palm Desert, Palm Springs, San Jacinto, Twentynine Palms, Yucaipa, Yucca Valley and surrounding areas. Don Perata (D-Orinda) Appointed to the Commission in February 2014 and reappointed in January 2015 by the Senate Rules Committee. Political consultant. Former president pro tempore of the state Senate, from 2004 to 2008. Former Assemblymember, Alameda County supervisor and high school teacher. Assemblymember Bill Quirk (D-Hayward) Appointed to the Commission by Speaker of the Assembly Anthony Rendon in 2017. Elected in November 2012 to represent the 20th Assembly District. Represents Hayward, Union City, Castro Valley, San Lorenzo, Ashland, Cherryland, Fairview, Sunol and North Fremont. Senator Richard Roth (D-Riverside) Appointed to the Commission by the Senate Rules Committee in February 2013. Elected in November 2012 to represent the 31st Senate District. Represents Corona, Coronita, Eastvale, El Cerrito, Highgrove, Home Gardens, Jurupa Valley, March Air Reserve Base, Mead Valley, Moreno Valley, Norco, Perris and Riverside. Janna Sidley (D-Los Angeles) Appointed to the Commission by Governor Edmund Brown Jr. in April 2016. General counsel at the Port of Los Angeles since 2013. Former deputy city attorney at the Los Angeles City Attorney’s Office from 2003 to 2013. Helen Torres (NPP-San Bernardino) Appointed to the Commission by Governor Edmund Brown Jr. in April 2016. Executive director of Hispanas Organized for Political Equality (HOPE), a women’s leadership and advocacy organization. Full biographies available on the Commission’s website at www.lhc.ca.gov. “Democracy itself is a process of change, and satisfaction and complacency are enemies of good government.” Governor Edmund G. “Pat” Brown, addressing the inaugural meeting of the Little Hoover Commission, April 24, 1962, Sacramento, California