Report 2012-110 Recommendation 9 Responses

Report 2012-110: Special Interest License Plate Funds: The State Has Foregone Certain Revenues Related to Special Interest License Plates and Some Expenditures Were Unallowable or Unsupported (Release Date: April 2013)

Recommendation #9 To: Emergency Management Agency

To make certain that money from the special plate funds pay only for allowable and supportable activities, Cal EMA should monitor the administrative expenses it charges to the antiterrorism fund and work with Finance to ensure that these expenses, coupled with additional administrative costs Finance charges, do not exceed 5 percent of the money from the antiterrorism fund appropriated to it during each fiscal year.

6-Month Agency Response

The California Vehicle Code Section 5066 (c) (1) (A), has changed since the California State Auditor Report 2012-110, was published. The law was revised on June 27, 2013, and now states, "The office (Office of Emergency Services) shall not use more than 5 percent of the money appropriated for local antiterrorism efforts for administrative purposes." Based on this new law, there is no limit for administrative costs for the funds appropriated to Cal OES except for funds appropriated for local antiterrorism efforts.

Funds appropriated for local antiterrorism efforts will be monitored to ensure the administrative expenses charged to the antiterrorism fund do not exceed 5 percent of the funds appropriated. The remaining funds appropriated to Cal OES for antiterrorism efforts will be used for the purposes the Legislature appropriated the funds.

California State Auditor's Assessment of 6-Month Status: Resolved

60-Day Agency Response

The Legislature initially appropriated funds (Budget Act of 2005 and Budget Act of 2006) for administrative purposes on an on-going basis. Applying the Legislature's appropriations in subsequent years for administrative purposes was in compliance with the law, as articulated by the Bureau of State Audits in Report 2012-105 (authorizing the Department of Social Services to spend funds appropriated by the Legislature, in excess of an administrative cap.) In so spending the funds, Cal EMA proceeded in good faith.

The Cal EMA has also shared this audit report with the Department of Finance for their review and determination of any changes needed to comply with special fund statutes while also complying with the requirements of Government Code Section 11274 (e.g. pro rata charges).

California State Auditor's Assessment of 60-Day Status: Will Not Implement

Cal EMA reiterates the response it made in our report. As we stated in the rebuttal in our report, Cal EMA was unable to demonstrate that the Legislature made appropriations from the antiterrorism fund, specifically for administration, in excess of the 5 percent cap. While it provided information for a single appropriation for administration of a grant in a fiscal year outside the scope of this audit, it could not provide support that, outside of the 5 percent cap, the Legislature made appropriations specifically for administration during the years of our review.

All Recommendations in 2012-110

Agency responses received after June 2013 are posted verbatim.