They're easily spotted on highways, intersections and parking lots throughout the state: special California license plates touting one of a variety of causes.
The money generated by sales of customized license plates - including decorative backgrounds and specific numbering and lettering - is supposed to support specific programs approved by lawmakers.
But that's not always the case, according to a report released Thursday by State Auditor Elaine Howle. The audit, launched after an Associated Press investigation, identified issues with management of the money raised through specialty license plate programs intended to fight terrorism and protect the environment, including more than $2 million in expenditures that were "unallowable or unsupported" under the law.
The audit also found that the special-plate fund program as a whole missed out on an estimated $22 million in revenues over two years because the Department of Motor Vehicles failed to collect fees on special plates that owners have taken off their vehicles but haven't canceled. Vehicle owners were undercharged in other cases.
The DMV plans to conduct an analysis to determine whether it "makes financial sense" to change its current policy of not collecting fees for specialty plates that are not in use. A letter from the DMV in response to the audit raises concerns about the cost of updating the agency's computer database capabilities to track those plates.
"The costs associated with such an effort could be substantial and likely would result in severely reducing any net proceeds to the special-plate funds or even eliminating the programs' viability altogether," Chief Deputy Director Jean Shiomoto wrote. "As a result, further study is warranted to identify alternatives and determine the true cost to implement necessary changes before a final decision can be made as to what is the most appropriate course of action for the State, taxpayers and special fund stakeholders."
Californians have had the option of purchasing a special plate since 1970, when former GOP Gov. Ronald Reagan signed legislation authorizing the state to issue environmental license plates.
That program, which captures revenue from personalized plates, expanded over the years to include 11 background options supporting causes and groups ranging from the arts, to firefighters to need-based scholarships at the state's universities. Additional options, including vintage-inspired plates, have been approved by state lawmakers in recent years and will be available once requests have been received for at least 7,500 vehicles.
The audit reviewed only two of the 11 types of plates offered. The review included eight state agencies tasked with managing all or part of the California memorial license plate fund, which is intended to support anti-terrorism efforts in the state and fund scholarships for children of victims of the Sept. 11 attacks; and the environmental license plate fund, which gets its revenues both from special plates and regular plates with custom lettering and numbering.
Auditors found the state Department of Agriculture, for example, spent nearly $900,000 from the memorial fund on expenses such as employee compensation and building leases that it could not justify.
The California Emergency Management Agency was unable to show that employees paid from funds generated by a special plate were working on the intended goal of preventing terrorism and did not do enough to oversee contracts, the audit found.
Entities managing the scholarship aspect of that fund failed to inform families in the state that they were eligible for the assistance.
The audit also criticized the Department of Parks and Recreation for failing to explain how $200,000 in environmental fund expenditures achieved the programs' aims and for using the money to pay the salary of an employee who also worked on other areas.
It also raised questions about allocation of funding by the Department of Natural Resources, noting that the department did not submit reports detailing the fund use that are required by law.
The agencies objected to some claims of misuse by the auditor, arguing that their expenditures furthered the programs' goals, but agreed to implement recommendations to better document spending and staff work and submit reports to state lawmakers.
Call Torey Van Oot, Bee Capitol Bureau, (916) 326-5544. Follow her on Twitter @capitolalert.