Appendix A

Scope and Methodology

The Audit Committee directed the California State Auditor to conduct an audit of the San Diego Air District's financial transparency and its interaction with stakeholders and the public regarding decisions that affect regional air quality. The audit scope included eight objectives. The table below lists the objectives that the Audit Committee approved and the methods we used to address them.

Audit Objectives and the Methods Used to Address Them
AUDIT OBJECTIVE		METHOD
1	Review and evaluate the laws, rules, and regulations significant to the audit objectives.	Reviewed relevant laws, regulations, and other background materials.
2	Review and evaluate the procedures and processes that the San Diego Air District used in making key environmental and public health decisions during the four most recent fiscal years.	Interviewed district board members and district staff to determine the district board's process for making air quality-related environmental and public health decisions. Reviewed district board meeting minutes to identify the district board's process for voting on agenda items. Interviewed two district board members and a county environmental organization to obtain their perspective on the district's responsiveness to the public.
3	Review the county's budget, financial statements, and other documentation for the past four fiscal years and determine the following: The revenue and expenditures within the general categories used by the San Diego Air District. Significant revenue and expenditure items for each fiscal year. The rationale for significant changes in revenue and expenditures during the four years. The rationale for items included in the district's budget. The annual cost of facility inspections, enforcement, equipment fees, and related costs compared to permit fee revenue.	Reviewed the San Diego Air District's financial data from fiscal years 2016–17 through 2019–20. Reviewed county policy and interviewed district staff to understand the district's processes for categorizing its revenue and expenditures in general categories and among its divisions and how it provides budget data to the county. Grouped individual revenue and expenditures into related categories to identify significant revenue and expenditure items and any significant changes from fiscal years 2016–17 through 2019–20. Identified several categories of revenue and expenditures that changed significantly during the four-year period we reviewed. Specifically, using the district's financial data, we identified categories of revenue and expenditures greater than $500,000 that increased or decreased by more than 30 percent. These categories included five categories of expenditures and two categories of revenue. Our review of this activity by division for each category and interviews with district staff indicated that the significant changes were reasonable. Reviewed the district's permit fee schedules from fiscal years 2017–18 through 2019–20. Reviewed county and district policies and interviewed county and district staff to determine the district's process for calculating annual permit fees; reviewed the county's and district board's processes for approving the district's permit fees. Reviewed financial data and interviewed district staff to determine if revenue collected from permit fees was sufficient to cover the actual costs of its permitting program.
4	Review and evaluate a selection of timesheets and associated documentation for the San Diego Air District staff to determine the extent to which staff's time is being used for activities related to the district's responsibilities and mission. To the extent possible, determine whether staff provided support for activities in the land use and environment group outside of the scope of the responsibilities of the district. If staff provided such support, determine the funding source.	Reviewed district policies and interviewed district staff regarding county requirements for district staff to participate in county activities. Confirmed that the San Diego Air District will no longer function as a county department beginning March 2021 and will not be required to participate in various county activities. As a result, we did not perform additional work related to this objective.
5	Review the county's budgeting process as it relates to the San Diego Air District to determine the following: How the district prepared and documented its budget. For the past four fiscal years, whether there is an overlap in revenue and expenditures between the district's budget and other county departments.	Reviewed the district's financial data and its process for tracking revenue and expenditures as part of Objective 3. Reviewed county policy and interviewed district staff to determine how the district coordinated with the county to develop and present its annual budgets. Specifically, the district prepares its budgets by working through the county's General Management System. Reviewed fiscal year 2019–20 district financial data and determined that district funds transferred to the county were for services provided by the county to the district.
6	Determine whether the San Diego Air District has applied for any grants in the previous four fiscal years. For those grants awarded, determine amounts the district has received and review a selection to determine compliance with key terms of the grants.	Reviewed district policies and interviewed CARB and district staff to determine the district's process for identifying and applying for state grants. As part of Objective 3, reviewed the San Diego Air District's financial data from fiscal years 2016–17 through 2019–20 to determine the total amount of grant revenue the district received. Reviewed five grants to determine if the San Diego Air District complied with key terms of the grants.
7	Review the San Diego Air District's and county's outreach efforts to solicit public input related to its management of air quality programs. Compare those efforts to those of a selection of other large air pollution districts in California, and also determine the following: Whether staff conducting the outreach have appropriate qualifications. The methods used to inform communities about pending permits and enforcement actions in their area. Whether the San Diego Air District has staff or other resources to engage with the public in each of the most commonly spoken languages in the county. The capability of the San Diego Air District to accept and respond to public inquiries and complaints during business and nonbusiness hours. The average length of time it takes for the San Diego Air District to respond to an inquiry or complaint. The frequency with which the San Diego Air District held public meetings in the past four fiscal years and, for a selection of meetings, whether they comply with open meeting laws.	Interviewed staff to identify the district's process for obtaining public input and conducting outreach regarding regional air quality programs. Interviewed CARB and staff from two other local air districts and reviewed publicly available information to identify best practices for soliciting public input regarding air quality programs. Compared the résumé of the district's current outreach staff person to job descriptions for similar positions at two other local air districts and determined that the district's staff member had job experience and education similar to that required of outreach staff at those other local air districts. Reviewed relevant requirements and interviewed staff to determine the district's processes for communicating with the public regarding pending permits and enforcement actions. Interviewed district staff, reviewed district policies, and identified county resources for engaging the public in languages other than English. Reviewed the district's public complaint database for complaints received during fiscal years 2016–17 through 2018–19 and reviewed 10 complaints to determine whether the district complied with key district policies. Reviewed relevant district procedures and interviewed district staff regarding the district's process to investigate public complaints, including its process to track and respond to complaints received during nonbusiness hours and holidays. We found that it has procedures in place to accept complaints during nonbusiness hours and respond to them the following business day. Reviewed state public meeting requirements and judgmentally selected two district board and two advisory committee meetings to review for compliance with applicable public notice requirements and open meeting laws.
8	Review and assess any other issues that are significant to the audit.	Reviewed changes in state law that restructure the San Diego Air District's governing board and require the district to make some information publicly available on its website, including projected actual revenue and expenditures data. Interviewed county and district personnel to determine the status of their efforts to comply with these upcoming changes in state law. In particular, we identified how the district plans to operate independently of the county and assume administrative tasks the county currently provides. Interviewed district staff regarding the district's plans to ensure that financial data are publicly accessible and transparent. To identify potential best practices in this area, we reviewed the budgets of three other local air districts to identify the levels of detail in their public financial data. Evaluated the district's public complaint process as part of Objective 7 and interviewed its staff regarding its plans for making complaint information publicly available.

Source: Audit Committee's audit request number 2019-127, planning documents, and information and documentation identified in the table column titled Method.

Assessment of Data Reliability

The U.S. Government Accountability Office, whose standards we are statutorily required to follow, requires us to assess the sufficiency and appropriateness of the computer‑processed information that we use to support our findings, conclusions, and recommendations. In performing this audit, we relied on the following data and systems:

Public Complaints

We relied on the San Diego Air District's Business Case Management System (case management system) to calculate various statistics related to the public complaints it received from fiscal years 2016–17 through 2018–19. To evaluate these data, we performed electronic testing of the key data elements. We assessed the accuracy of these data by randomly selecting claims from the case management system and tracing key data elements from each claim to supporting evidence maintained by the district, and we assessed the completeness of the data by determining whether there were gaps in the sequential numbering of the complaint records. We determined that these data were not sufficiently reliable for the purposes of supporting conclusions or recommendations, due to missing records and inaccuracies. Nonetheless, we present calculations from these data in the report because they are used primarily for contextual purposes and represent the best source available.

Financial Activity

We relied on data from the San Diego Air District's Performance Budgeting System to assess its revenue and expenditures for fiscal year 2018–19. We verified the accuracy of these data by randomly selecting revenue and expenditure categories from the data and tracing key data elements to supporting documentation, and we found no material errors. To verify completeness of the data, we compared it to the county's audited financial statements for fiscal year 2018–19 and determined that the data were materially complete. Consequently, we found the district's performance budgeting data to be sufficiently reliable for the purposes of analyzing the district's finances. We also used data from this system for fiscal years 2016–17, 2017–18, and 2019–20 for background or contextual information that does not materially affect findings, conclusions, or recommendations. Thus, we determined that a data reliability assessment of those data was not necessary.

Permits

We used data from the San Diego Air District's Business Case Management System, Permitting/Application System of Record to determine the number of permits issued or renewed by fiscal year. Because these data were purely informational and do not materially affect findings, conclusions, or recommendations, we determined that a data reliability assessment was not necessary.

Emissions

We used emissions data from CARB that the San Diego Air District incorporated in its state plan to show, for contextual purposes, the estimated historical and projected future amounts of ozone‑causing emissions in the district and the sources of those emissions. Because these data are the output of a modeling system, it was not feasible to evaluate their accuracy or completeness. Consequently, we found these data to be of undetermined reliability for the purposes of establishing the level of ozone-causing emissions in the district. Although this determination may affect the precision of the numbers we present, there is sufficient evidence in total to support our findings, conclusions, and recommendations.

Appendix B

The San Diego Air District's Budgeted Expenditures and Revenue for Fiscal Year 2019–20

Because it currently operates as a county department, the San Diego Air District participates in the county's annual budget process, and the county provides a high-level summary of the district's major expenditures and revenue in the operational plan presented on its website. However, this summary does not provide a clear description of the nature of those expenditures and revenue. Working with additional financial data supplied by the district, we identified more detailed expenditure and revenue categories within the general categories presented in the county budget for fiscal year 2019–20. To provide additional clarity, tables B.1 and B.2 present the district's published expenditures and revenue for fiscal year 2019–20 as well as more detailed information for key categories.

Table B.1
The San Diego Air District's Publicly Reported Budget for Fiscal Year 2019–20 Expenditures Compared to a More Detailed Presentation of Its Budget Information (In Thousands)

A figure that presents the San Diego Air District's fiscal year 2019-20 budgeted expenditures as presented by San Diego County in its fiscal year 2019-20 public budget document and a comparison version with more detail.

Source: San Diego County Operational Plan for Fiscal Years 2018–19 and 2019–20 and San Diego Air District financial data.

* Operating Transfers Out consists of transfers between divisions within the San Diego Air District.

Table B.2
The San Diego County Air District's Publicly Reported Budget for Fiscal Year 2019–20 Revenue Compared to a More Detailed Presentation of Its Budget Information (In Thousands)

A figure that presents the San Diego Air District's fiscal year 2019-20 budgeted revenues as presented by San Diego County in its FY 2019-20 budget document and a comparison version with more detail.