Summary

HIGHLIGHTS

Our follow‑up audit of the California Department of Motor Vehicles’ (Motor Vehicles) progress in addressing certain issues we raised in our April 2013 report highlighted the following:

Motor Vehicles has not fully implemented two recommendations we reviewed related to the fees it charges and advertises for special interest license plates (special plates).

It did not charge the correct fees for two of 25 special plate transactions we reviewed.
It has not ensured that some special plate fees it advertises accurately reflect the amounts authorized by state law.

Motor Vehicles fully implemented a third recommendation when it assessed the cost and benefits of updating its automated systems to reflect current administrative service costs. It plans to conduct this assessment once every two years.

Results in Brief

The California Department of Motor Vehicles (Motor Vehicles) has not fully implemented two of three recommendations we followed up from our April 2013 report. These two recommendations related to ensuring that the fees it charges and advertises for special interest license plates (special plates) are consistent with state law.¹ State law establishes several special plate programs. Motor Vehicles is responsible for registering vehicles in California and for collecting fees related to license plates, including special plates. Motor Vehicles also collects fees related to license plates that carry personalized combinations of letters, numbers, or both, which are known as Environmental License Plates (personalized plates). Motor Vehicles assesses license plate fees in addition to other fees, such as vehicle registration fees, smog abatement fees, commercial vehicle weight fees, and county fees. To obtain a special plate, a vehicle owner must pay the prescribed fee to Motor Vehicles as well as an additional fee to personalize a regular or special plate. According to Motor Vehicles, it processed 1.2 million fee transactions—including original issuance, renewal, substitute, duplicate, reassignment, conversion, and retention—related to special plates between July 1, 2013, and June 30, 2014.

As we described in our previous report, Motor Vehicles had potentially collected fees from some plate owners that are inconsistent with those that applicable statutes prescribe. Specifically, for the fees Motor Vehicles collected during fiscal years 2010–11 and 2011–12, it potentially undercharged some special plate owners by a total of nearly $10.2 million. Motor Vehicles had also not accurately charged special plate programs for its administrative costs. Further, during fiscal years 2009–10 through 2011–12, it overcharged the California Environmental License Plate Fund more than $6.3 million and undercharged other special plate funds a net total of $1.1 million during the same period.

This follow‑up audit focused on certain recommendations we made to Motor Vehicles related to ensuring that it charges and advertises fees consistent with state law and periodically updates its automated systems to reflect up‑to‑date administrative costs. We found that Motor Vehicles has not fully implemented our recommendation that it assess the extent to which it had charged fees for special plates that were not consistent with those prescribed by statutes and take appropriate action. Specifically, Motor Vehicles did not charge the correct fees for two of 25 special plate transactions we reviewed. During this follow‑up audit, Motor Vehicles initially did not believe that the fees we identified were the correct fees for these two transactions. Subsequently, however, it reexamined its position and now agrees that the fees we identified are the correct fees and indicated it will begin charging the correct fees by March 31, 2016.

In addition to not charging correct fees, Motor Vehicles also has not ensured that fees for some special plates it advertises accurately reflect the amounts authorized by state law. We identified 12 instances of 129 published fees we reviewed as of June 2015 that did not agree with the fees prescribed by state law. For example, Motor Vehicles made nine errors in August 2014 when it updated its advertised fees based on incorrect information it believed to be accurate. To maximize limited resources when implementing what it considered to be minor publication changes—those not affecting substantive language or policy content—Motor Vehicles did not follow its regular procedures, which require approvals of managers affected by the requested changes. Instead, it followed an alternate publication revision procedure, which required it to notify those affected managers, but did not require approval. Motor Vehicles has since discontinued this alternate procedure and, as of February 2015, requires staff to follow the regular procedures for all revisions to external publications.

Motor Vehicles has fully implemented the remaining recommendation we reviewed—that it should periodically assess the cost and benefits of updating its automated systems to reflect current administrative service costs. Motor Vehicles updated its automated systems in December 2014 and told us that it will assess the cost and benefits of updating the systems once every two years.

Recommendation

To ensure it charges fees for special plates that are consistent with state law, Motor Vehicles should begin charging the correct fees for two special plates by March 31, 2016.

Agency Comment

Motor Vehicles agreed with our recommendation and discussed its plans to implement it.

Footnotes

¹ Special Interest License Plate Funds: The State Has Foregone Certain Revenues Related to Special Interest License Plates and Some Expenditures Were Unallowable or Unsupported, Report 2012-110 (April 2013). Go back to text