Report 2014-108 Recommendation 1 Responses

Report 2014-108: State Board of Equalization Building: Despite Ongoing Health and Safety Concerns, the State Has Not Thoroughly Analyzed the Costs and Benefits of Relocating Employees (Release Date: September 2014)

Recommendation #1 To: Equalization, Board of

To more clearly demonstrate its case for a new facility, BOE should ensure that it has a supportable rationale for the assumptions underlying its analysis of the costs and benefits of moving to a new consolidated facility.

Annual Follow-Up Agency Response From October 2016

Contracts with HGA Architects and Engineers and Sixth Dimension to conduct an Efficiency and Process Improvement Study (study) were executed on May 15, 2015, and June 18, 2015, respectively. The Preliminary Final Report study was completed on December 18, 2015 and presented to the BOE Board on January 26, 2016.

The Process Improvement Study shows that there is a supportable rationale for the BOE to not have its operations in a high-rise building. Many of the Process Improvements identified in this study cannot be implemented effectively in the 450 N Street building due to its configuration and limited opportunities for expansion. The 450 N Street facility does not support the BOE's current and future operations, as well as a consolidated campus due to inefficiencies in Return Processing functionality, and the fragmentation of staff within departments and across multiple locations. Ongoing growth will force the BOE to lease additional annex facilities over the next ten years, in the event a new campus is not constructed, further exacerbating the inefficiencies created by fragmented operations. With the goal of achieving the most optimal physical design, the consultants determined that consolidation and centralization of the BOE's headquarters revenue generating processes is cost effective and evaluated the benefit of a low-rise campus versus a high-rise building.

The BOE has been identified in the Department of General Services (DGS) 10-year plan and will continue to work closely with them as they determine the short-term and long-term solutions for the 450 N Street Building.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

We performed a limited review of the December 2015 study and found that it adequately addresses our recommendations.

1-Year Agency Response

Contracts with HGA Architects and Engineers and Sixth Dimension to conduct an Efficiency and Process Improvement Study (study) were executed on May 15, 2015, and June 18, 2015, respectively. This study will examine the BOE's revenue generating processes to identify process improvements within the current headquarters building, once renovated, and in alternative facilities. With this data, process options will be developed and evaluated according to costs, improved quality and speed of delivery, reduced risks, and increased satisfaction.

With the goal of achieving the most optimal physical design, the consultants will determine whether consolidation and centralization of the BOE's headquarters revenue generating processes is cost effective and evaluate the benefit of a low-rise campus versus a high-rise building. HGA's Architects and Engineers and Sixth Dimension will present their findings and recommendations to the BOE and Department of General Services (DGS) in December 2015. The consultant's findings and recommendations will identify potential business process improvements that will assist in the preparation of a cost-benefit analysis regarding the desired consolidation of the BOE's headquarters operations at 450 N Street.

California State Auditor's Assessment of 1-Year Status: Pending

6-Month Agency Response

The BOE recognizes the importance of preparing a thorough analysis and, accordingly, is taking steps to evaluate the work processes of the BOE's headquarters operations. The BOE, in concert with the Department of General Services (DGS), is executing a contract with an independent contractor to conduct a Time-In-Motion study to examine the work processes of the BOE's headquarters operations and to collect the data required to determine whether consolidation and centralization of business processes is cost effective. Additionally, the Time-In-Motion study will recommend the optimal physical design for efficient work space and process flow of tax collection activities. This analysis will provide the basis for a cost-benefit analysis regarding the desired consolidation of the BOE's headquarters operations.

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

60-Day Agency Response

The BOE is producing a comprehensive, cohensive analysis of its headquarters' relocation costs and benefits to determine whether business process consolidation and centralization proves cost-effective.

California State Auditor's Assessment of 60-Day Status: Pending

All Recommendations in 2014-108

Agency responses received are posted verbatim.