Scandals make case for tax board overhaul, Phil Ting says
The elected leader of a California tax agency urged its executives to speed hiring for a project in late 2012 so new employees would benefit from more generous pension plans, according to documents obtained by The Bee.
Emails show that Board of Equalization member Jerome Horton wanted the agency to quickly fill positions for a new customer service call center in Culver City during the fall of 2012 before less lucrative pension rules kicked in Jan. 1, 2013.
The documents show that the agency did not have office space for new employees. Horton, who was chairman of the board at the time, nonetheless wanted to bring on new employees for the call center and train them at other sites around Southern California. The agency ultimately hired 25 workers the last week of the year, with some of them assigned to the call center.
During the week of September 2012 that Gov. Jerry Brown signed a pension reform law, Horton wrote an email that read, “I would recommend that we do everything possible to excellerate (sic) our hiring process and assist our team members with retirement plans.”
That email and others were uncovered by auditors at the Department of Finance, who released a report earlier this year describing how elected leaders at the Board Of Equalization intervened in daily decision-making at the tax agency. The audit prompted lawmakers in June to strip the agency of most of its power and almost all of its 4,200 employees.
Until the Legislature gutted it this year, the Board of Equalization managed dozens of tax programs, collected about $60 billion a year in revenue and settled disputes between taxpayers and tax collectors.
The call center in Horton’s district stood out to auditors because they found that the five-member board that managed the agency never voted to open the site. Auditors wrote that Horton was “involved” in its creation and cited the call center as an example of an elected board member overstepping boundaries.
“The practice of individual board members intervening in the daily BOE operating activities creates inconsistencies in operations, breakdowns in centralized processes, and in certain instances result in activities contrary to state law,” the audit said.
Next week, the call center is scheduled to close. The department that the Legislature created to replace the Board of Equalization chose to consolidate the call center’s responsibilities with a larger customer service center in Sacramento.
The last two employees who worked at the Culver City call center will be reassigned to other offices by Monday, Department of Tax and Fee Administration spokesman Paul Cambra said. At some point, the new department plans to add staff at its primary Sacramento call center.
The documents that describe the Culver City call center’s creation shed light on a late 2012 hiring spree at the Board of Equalization, when 25 new employees started their jobs in between Christmas Eve and New Year’s Eve.
Ten of the hires reported for their first day of work on Dec. 31, 2012, securing the more generous pension plans that were phased out for new state employees a day later. A Board of Equalization spokesman previously told The Bee that several of the New Year’s Eve hires went to work at the Culver City call center.
Hiring spiked throughout California government in the holiday week of 2012, with people beginning public-sector jobs at triple the normal rate for the last week of the year, according to a Bee analysis of records from the California Public Employees’ Retirement System. The trend was especially pronounced at the Board of Equalization and at CalPERS.
Brown’s pension reform law rolled back some of the generous incentives lawmakers granted to public workers during the dot-com boom. As a result, public employees who started their jobs after Jan. 1, 2013 have to work seven years longer to retire with a pension that gives them 2 percent of their salary for each year service. Previously, most public employees could get that rate at age 55.
Although the Board of Equalization did not cast a vote on opening the Culver City center, documents show that Horton and the agency advanced it publicly. In November 2012, the agency published a press release announcing a job fair for the customer service center.
“What better gift to receive than a job for the holidays?” his 2012 press release read.
Horton’s messages to Board of Equalization executives in late 2012 show that he knew the agency did not have real estate for the new office. He pitched a proposal to place new workers in other offices for temporary assignments where they could learn from the agency staff members who worked for elected members.
A 2014 Board of Equalization report on the Culver City center said it opened and began taking calls on April 2, 2013.
Horton, who worked for the Board of Equalization for more than 20 years before going into politics, said the agency’s executive team approved the project and discussed its development with board members at different times in 2012.
“Although I have no authority over the hiring, training, or construction process, according to the administration, the agency followed proper protocol and obtained approval from (the state human resources department) to commence the hiring process and authorization to actually hire the employees in question,” he wrote in an email to The Bee.