Report 2023-124 All Recommendation 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 for Legislative Action

To allow cities and counties that do not meet the maintenance-of-effort requirement enough time to plan and budget for additional local spending on streets and roads projects, the
Legislature should amend state law to allow cities and counties two fiscal years, instead of one, to make up their shortfalls.

Recommendation for Legislative Action

To ensure that cities and counties are appropriately held accountable to the maintenance-of-effort requirement, the Legislature should amend state law to clarify that the State Controller should only withhold an amount of program funds equivalent to the local underspending that its audits have found.

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

Recommendation #4 To: Controller's Office, State

To ensure that it holds cities and counties accountable to state law and that they are not continuing to supplant local spending with program funds, the State Controller should by October 2024 revise its practice to only allow cities or counties to violate the requirement for two fiscal years, rather than continually, as under its current practice. After two years' noncompliance, the State Controller should withhold program funds in accordance with state law.

60-Day Agency Response

The State Controller's Office has fully implemented the California State Auditor's recommendation to only allow cities or counties two fiscal years to meet their maintenance of effort requirements.

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

The State Controller updated its tracking mechanism to ensure that its calculations align with state law.

All Recommendations in 2023-124

Agency responses received are posted verbatim.