Report 2023-124 Recommendation 3 Responses

Report 2023-124: Local Streets and Roads Program: State Agencies and Cities Are Generally Following Requirements as They Attempt to Improve Conditions (Release Date: April 2024)

Recommendation #3 To: Controller's Office, State

To ensure that it holds cities and counties accountable to state law and that they are not supplanting local spending with program funds, by October 2024, the State Controller should begin auditing cities and counties that it identifies as at risk of not meeting the maintenance-of-effort requirement. It should withhold program funds in the amount prescribed by law from cities and counties that it concludes have not complied with the requirement.

6-Month Agency Response

The State Controller's Office's (SCO) Division of Audits began conducting audits of cities and counties identified as at risk for not meeting the maintenance-of-effort requirements. The SCO began two-audits in August 2024 and plans to complete an additional two audits during fiscal year 2024-25. The audits are being conducted in accordance with generally accepted government auditing standards. If audit results conclude that a city or county has not complied with Street and Highway Code Section 2036(a), the SCO will withhold program funds in the amount prescribed by Streets and Highway Code Section 2036(3). Due to ongoing significant resource limitations, the SCO continues to seek the critical resources essential for conducting these audits.

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

60-Day Agency Response

The State Controller's Office is committed to ensuring that cities and counties are held accountable to state law and are not supplanting local spending with program funds. The State Controller's Office will continue to pursue resources to perform the Maintenance of Effort audits and is optimistic that the California State Auditor's Report will assist the State Controller's Office in supporting our continued requests for resources.

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

All Recommendations in 2023-124

Agency responses received are posted verbatim.