Capitol Alert

California Coastal Commission handicapped by poor billing, audit finds

The dismissal of California Coastal Commission Executive Director Charles Lester in February led to a turbulent year for the department. On Friday, the state Finance Department published an audit that criticized the commission’s billing practices.
The dismissal of California Coastal Commission Executive Director Charles Lester in February led to a turbulent year for the department. On Friday, the state Finance Department published an audit that criticized the commission’s billing practices. The Tribune News of San Luis Obispo

A blip in the California Coastal Commission’s $22.8 million budget that forced it to ask for a state loan earlier this year could become a regular occurrence because its leadership does not believe it has enough staffing to collect its bills on time.

A new audit from the Department of Finance released Friday afternoon urges the powerful land-use agency to clean up its books, but the commission’s response suggests it is too shorthanded to carry out some of the report’s recommendations.

“It is likely that some cash flow problems will continue to be an issue every June (when the state fiscal year ends),” the commission wrote in response to the audit. “We recommend the Department of Finance consider an ongoing year-end cash flow loan” to give the agency time to collect bills it sends out after May.

The commission, which regulates development and public access on the state’s shoreline, received a $1.46 million loan from the state general fund in June that helped it cover payroll and rent. The loan prompted the audit, which aimed to identify the commission’s accounting shortfalls.

It found the California Coastal Commission has a disjointed billing system that results in half of its invoices staying open for more than 121 days.

The audit said that the commission’s accounting practices are so disorganized that one payment for $79,998 did not reach its accounting unit until four months after it was sent to the agency.

“Because of the varying processes and various staff performing them, no unit is fully accountable for coordinating and ensuring timely billing and collections,” the finance auditors wrote.

The audit also encouraged the commission to develop a new billing system for special projects that sometimes receive funding from private developers.

Auditors wrote that those payments could give outsiders an impression that the commission favors projects that net it money from private interests, such as Pacific Gas and Electric Co. or residential developers. The commission received $375,000 in those payments in the 2015-16 budget year.

The report caps a turbulent year at the commission. In February, the board fired its executive director, Charles Lester, in a split of 7-5. Critics claimed developers and special interests pushed for his ouster.

In its response to the audit, the commission pointed to Lester’s dismissal, other staff turnover and the adoption of a new accounting system in explaining its slow billing.

Last year “was an exceptionally tumultuous and challenging year for the Coastal Commission and its staff,” the commission response said.

Although the commission said its management “agrees with the majority of the recommendations” from the audit, it repeatedly pushed back against the findings.

For instance, it said that it bills private developers for complex projects in part because the Finance Department and the Legislative Analyst’s Office in 2009 encouraged it to diversify its revenue. The commission noted that it has rejected proposals from developers that paid it to consider their proposals.

“While the commission staff agrees that it would be optimal for the agency to have adequate funding to provide a level of service that is fully responsive to the needs of all applicants, the reality is that some projects ... cannot be analyzed in a timely way at existing staff levels in addition to ongoing workload requirements,” the commission staff wrote.

Adam Ashton: 916-321-1063, @Adam_Ashton

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