Introduction
Background
In 1992 the California Legislature established a process for the Department of Motor Vehicles (DMV) to issue specialized license plates (specialized plates). Specialized plates have a distinctive design or message that publicizes or promotes a state agency or its official policy, mission, or work. A state agency may apply to the DMV to sponsor a specialized license plate program, and the DMV will issue specialized plates for the program if the agency complies with all of the requirements state law outlines. A person applying for a specialized plate must pay fees for the original issuance, renewal, transfer, or replacement of the plate in addition to the regular fees for a new registration or a renewal.
State law generally requires that a state agency submit at least an initial 7,500 applications, along with the necessary fees, to establish a specialized license plate program. In addition, state law generally requires that the number of outstanding and valid specialized plates remain above 7,500. If the number of outstanding and valid specialized plates in a particular program drops to fewer than 7,500, the DMV must inform the sponsoring agency of that fact and must inform the agency that if that number is less than 7,500 after one year from the date of that notification the DMV will no longer issue or replace plates for that program. Specialized plates that were already issued may continue to be used. As Table 1 shows, the DMV currently offers 15 specialized plates. These plates are available for passenger vehicles, commercial vehicles, trailers, and motorcycles.
| LICENSE PLATE TYPE / INITIAL ISSUE DATE |
SAMPLE PLATE | PURPOSE OF PLATE | PLATE TOTALS AS OF OCTOBER 1, 2019 |
|---|---|---|---|
| Pet Lover's* 2013 |
 |
To provide funding for free or low-cost spay and neuter programs throughout the State. | 7,814 |
| California 1960s Legacy 2015 |
 |
To benefit environmental projects in California. | 787,236 |
| Environmental 1970 |
 |
To support environmental programs. | 685,189 (as of December 31, 2019) |
| Have a Heart, Be a Star, Help Our Kids 1994 |
 |
To support programs that keep California’s kids safe, which includes child care safety, child abuse prevention, and efforts to prevent childhood injuries. | 105,454 |
| California Coastal Commission 1997 |
 |
To protect and restore California coasts and oceans. | 80,883 |
| Lake Tahoe Conservancy 1996 |
 |
To fund preservation, restoration, and nonmotorized trail projects in the Lake Tahoe area. | 64,437 |
| Arts Council 1994 |
 |
To support the California Arts Council for arts education and local arts programming. | 48,901 |
| Yosemite Conservancy 1993 |
 |
To manage wildlife, restore habitat, and repair trails in Yosemite National Park. | 38,434 |
| Veterans' Organizations 2001 |
 |
To benefit the participating counties’ veteran service offices and to commemorate veterans’ organizations. | 31,637 |
| Firefighters 1995 |
 |
To maintain the California Firefighters’ Memorial at the State Capitol. | 19,650 |
| California Memorial 2002 |
 |
To help California’s law enforcement fight threats of terrorism in the State. | 16,946 |
| California Museums 2016 |
 |
To fund museums in California. | 10,117 |
| California Agriculture 2013 |
 |
To support agricultural leadership development, career awareness, and training activities. | 6,882† |
| Breast Cancer Awareness 2017 |
 |
To raise awareness about breast cancer and the importance of screening in addition to providing breast cancer screening and diagnostic services for underinsured and uninsured women in California. | 5,516† |
| Collegiate 1993 |
 |
To fund need-based scholarships and grants for participating colleges and universities in California. | 1,573† |
Source: DMV website and other information provided by DMV.
Note: All license plates can be personalized.
* Our audit focused on the Pet Lover’s plate.
† We discuss plates that have fewer than 7,500 plates in circulation later in the report.
History and Purpose of the Pet Lover’s Program
In 2010 a nonprofit organization—in conjunction with the Veterinary Medical Board (Veterinary Board)—began promoting the sale of Pet Lover’s specialized license plates (Pet Lover’s plates) in an effort to raise money for free or low-cost animal sterilization services and to help reduce the overpopulation of cats and dogs in the State. The money raised funds grants to eligible veterinary facilities throughout the State. Figure 1 shows the history of the program.
Figure 1
History of the Pet Lover’s Program
Source: State law, legislative history, and documentation from the California Department of Justice, Franchise Tax Board, Secretary of State’s Office, Office of Administrative Law, Veterinary Board, DMV, and Food and Agriculture.
The Veterinary Board faced a number of challenges in establishing and implementing the Pet Lover’s specialized license plate program (Pet Lover’s program). For example, it was not able to procure 7,500 preorder applications within 12 months, as state law requires. Subsequently, the Legislature approved an extension so that the Veterinary Board could continue gathering applications. By late 2013, the Veterinary Board had collected the requisite number of applications, and the DMV began issuing Pet Lover’s plates. In an effort to minimize the cost of managing the Pet Lover’s program, the Veterinary Board proposed regulations that would have allowed it to delegate the authority for administering the program to a nonprofit organization. The Veterinary Board then submitted those proposed regulations to the Office of Administrative Law for approval in October 2014. However, in December 2014, the Office of Administrative Law rejected that proposal, in part because it determined that the Veterinary Board did not have the authority to delegate its responsibility for establishing grant application procedures and criteria to a nonprofit. In 2016 the Legislature authorized the Veterinary Board to contract with a nonprofit organization to provide advice, consultation, and administrative services for implementing and administering the program.
However, the Veterinary Board never exercised this option. According to its meeting minutes from early 2016, as the Veterinary Board began to develop guidelines for distributing grant funds and selecting the nonprofit organization, it determined that there were insurmountable concerns involving conflicts of interest. Specifically, some of the Veterinary Board’s members were providers of spay and neuter services who could benefit from the grants. Therefore, the Veterinary Board directed its executive officer to identify a further legislative remedy that would transfer the Pet Lover’s program to the California Department of Food and Agriculture (Food and Agriculture). Subsequently, the Legislature approved this transfer through an amendment to state law, which granted Food and Agriculture authority to administer the Pet Lover’s program beginning on January 1, 2018.
Funding for the Pet Lover's Program
Revenue for the Pet Lover’s program comes from original issuance or renewed registrations of Pet Lover’s plates and from fees related to transferring a Pet Lover’s plate to another vehicle or for obtaining a replacement plate. Table 2 shows that from fiscal years 2013–14 through 2018–19, the program generated nearly $2.2 million in revenue, and in fiscal year 2018–19, Food and Agriculture entered into grant award agreements worth a total of $330,000.
| VETERINARY BOARD | FOOD AND AGRICULTURE | |||||
|---|---|---|---|---|---|---|
| 2013–14 | 2014–15 | 2015–16 | 2016–17 | 2017–18 | 2018–19 | |
| Revenue* | $560,500 | $326,500 | $344,000 | $340,000 | $326,500 | $298,500 |
| Expenditures | ||||||
| DMV Fees | $415,500† | $32,000 | $34,000 | $26,500 | $22,000 | $14,500 |
| Administrative Costs | — | 43,500 | 47,000 | 49,500 | 49,500 | 42,000 |
| Grant Awards | — | — | — | — | — | 330,000 |
| Total Expenditures | $415,000 | $75,500 | $81,000 | $76,000 | $71,500 | $386,500 |
| Balance | $145,500 | $396,500 | $659,500 | $923,500 | $1,178,000 | $1,090,000 |
Source: Analysis of documents from the Veterinary Board, DMV, and Food and Agriculture.
* Revenue for the Pet Lover’s program comes primarily from new plate fees of $50 and renewal fees of $40.
† The $415,000 consists of $251,000 in start-up costs and $164,000 in administrative costs for DMV.
State law establishes fees for issuing, renewing, transferring, or replacing specialized plates, such as the Pet Lover’s plate, and it requires the DMV to deposit the revenue derived from those fees into the Specialized License Plate Fund after deducting its administrative costs (net revenue). These administrative costs include the costs of issuing new specialized plates, replacement plates, and duplicate plates. The DMV also takes out a one-time fee when starting a new specialized license plate program; the DMV received $251,000 for start-up costs from the Pet Lover’s program in fiscal year 2013–14, which covered the costs of setting up DMV’s systems for issuing the Pet Lover’s plate. In addition to the start-up costs, the DMV deducted $164,000 in administrative costs—which covered the costs of issuing new plates—in the program’s first year. However, from fiscal years 2014–15 through 2018–19, DMV administrative costs were significantly less, averaging about $26,000 annually.
After the DMV deposits the net revenue into the Specialized License Plate Fund, state law requires that upon appropriation by the Legislature the funds be allocated to each sponsoring agency in proportion to the amount that is attributable to that agency’s specialized license plate program. State law limits the amount of administrative costs that the sponsoring agency for the Pet Lover’s program may charge for overseeing the program to 25 percent of funds collected. Neither the Veterinary Board nor Food and Agriculture exceeded that threshold. The Veterinary Board spent $47,400 on average between fiscal years 2014–15 and 2017–18 on administrative costs—all of which was for marketing the program. In fiscal year 2018–19, Food and Agriculture spent $42,000 on administrative costs, mostly for salaries and wages.
California’s Animal Policy Goal
Since 1999 California has had an animal policy goal that no adoptable or treatable animal be euthanized if it can be adopted into a suitable home. However, according to animal advocacy groups, more than 100,000 animals are euthanized each year in California, and there remain far more animals in need of adoption than people who are able or willing to adopt. Thus, many of those animals in need of adoption are ultimately euthanized. The Governor’s budget for fiscal year 2020–21 includes a $50 million, one-time allocation intended to develop a grant program—which will be managed by the University of California, Davis Koret Shelter Medicine Program—to provide expertise, support, and local assistance to communities to reach the State’s animal policy goal in five years. Spay and neuter programs, such as those funded by the Pet Lover’s program, help to reduce animal overpopulation and therefore reduce the number of animals who are euthanized, underscoring the importance of the Pet Lover’s program and the benefit it can provide to California. According to estimates in the accepted grant proposals for the Pet Lover’s program, the fiscal year 2019–20 grants could result in the spay or neuter of about 6,000 animals for $330,000 in grants.