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Proponents of a 12-year extension of a temporary tax used to bolster education funding may ask voters to consider the measure prior to a full vetting, with critics demanding accountability.

By law, the state Controller’s office is supposed to audit Proposition 30’s Education Protection fund, which doles out the funds according to a strict formula. Although the law gave no time requirement, the audit has not yet happened and isn’t projected to be complete until around a month before the November election, which one critic says shows a lack of transparency.

“Voters were told that Prop. 30 funds would be audited, and there is a presumption among the voters that that audit would be conducted in a timely manner,” said Jon Coupal, president of the Howard Jarvis Taxpayers Association. “And to be told that the audit … isn’t going to be completed until the month before the election is not exactly full transparency.”

History

Prop. 30, which passed in 2012, implemented a tax on incomes exceeding $250,000 and a quarter-cent sales tax, which were both used to stave off severe budget cuts to education and the general fund.

To quell concerns that the tax revenue would actually go to funding education and not some unrelated expense, the measure called for two levels of oversight: annual audits of spending by local agencies, like school districts, charter schools and community college districts, and a periodic audit of the state’s Education Protection Account.

The local audits are being completed, but no audit of the EPA has been performed to date, which the law says the Controller “shall” perform. To clarify, the local audits verify how schools are spending the money, while the EPA audit would verify how the state is spending the money.

When will the audit happen and is it necessary?

The controller’s office told CalWatchdog the audit would likely be completed by October. Assuming the initiative qualifies for the ballot, which it hasn’t yet, that is only a month before voters go to the polls.

Also, only the income tax provision, which expires in 2018, is part of the extension; the sales tax provision expires at the end of 2016 either way.

Proponents — primarily teacher unions and health care advocates — are asking for the extension two years early, making the timing of the audit more immediate. But they argue the audit is not necessary because two other Controller-prepared reports, both which look at the state’s finances in a general way, satisfy the requirement.

“We know how the money has been spent and the new measure has the same accountability requirements,” said Jennifer Wonnacott, spokeswoman for the measure’s committee, Californians for Protecting Public Education and Budget Stability, Sponsored by Teachers, Health Care Providers and Labor Organizations. “The law as written under Prop. 30 has been fulfilled by these two reports, so if the Controller goes above and beyond that that’s for their office to decide.”

The Controller’s office still believes an audit is required to ensure the state is adhering to the required 89/11 percent split between K-12 and community colleges, and is satisfying other funding requirements.

“While it’s reasonable to conclude that (the other reports) meets the Proposition 30 audit requirement, the State Controller’s Office still has a duty to monitor compliance and conduct whatever field audit we believe is necessary,” said John Hill, spokesman for the Controller’s office. “That’s why we plan to audit the EPA within the next six months.”

Is there even a problem?

Despite the dispute over whether another audit is required, everyone agrees that oversight of the program was warranted. After all, the extension has also included the auditing requirements. However, no one has suggested the money is being used improperly. In fact, an independent analyst suggests there’s little cause for concern.

“These rules are relatively straightforward and we don’t have any technical concerns at this point about the way the state is distributing the funds,” said Kenneth Kapphahn, an analyst with the independent Legislative Analyst’s Office.

Timing

The measure has not yet qualified for the November ballot, but it’s well-funded, making its chances good. Assuming it does qualify, voters may be forced to make a hasty decision. Coupal called on the Controller’s office to speed up the timeline, pointing to the fact that the measure passed four years ago, which gave ample time to perform the audit.

“We would urge the controller to expeditiously move on an audit and complete the audit at least three months prior to the election,” Coupal said.

Routinely critical of state regulators for failing to protect consumers, the consumer advocacy group has been criticized by an independent oversight panel for presenting “incorrect” and “misleading” information to the public.

A 2013 Consumer Watchdog expose was titled, “Golden Wasteland: Regulating Toxics, or Toxic Regulations?” It slammed the state Department of Toxic Substances Control for jeopardizing public safety by “allowing serial polluters to cut deals with the department” and “levying wrist-slap penalties instead of applying maximum fines.”

“We have some of the toughest environmental laws in the nation, and some of the weakest enforcement,” Consumer Watchdog concluded, based on its 2013 Golden Wasteland report.

A new report by the California State Senate’s Office of Oversight and Outcomes, “Fact Check: Despite Failures By State’s Toxics Regulator, Many Recent Criticisms are Unfounded,” analyzed claims made by Consumer Watchdog.

State Senate report: Golden Wasteland claims “incorrect, misleading or lacking in context”

Consumer Watchdog’s claims, which generated headlines across the state, concerned state Sens. Kevin de León, Ellen Corbett and Ricardo Lara. De Leon is the Senate’s president pro tem. In July 2013, the Democratic lawmakers tasked the state Senate’s independent research arm with investigating Consumer Watchdog’s allegations.

Led by former Sacramento Bee reporter John Hill, the Senate investigative unit conducted a line-by-line review of Golden Wasteland. They “found that the report was incorrect, misleading or lacking in context.”

“Golden Wasteland includes opinions and proposals in addition to factual assertions,” the Senate’s investigative unit found. “In some cases, we were able to confirm its assertions. In many others, we found that the report was incorrect, misleading or lacking in context.”

One example of a misleading claim cited by Senate investigators involved whether the Department of Toxic Substances Control had jeopardized the public by failing to shut down an oil-recycling facility in Newark, California.

“One private environmental attorney says that the California Legislature never intended for the DTSC to allow serial violators like Evergreen Oil to stay in business,” Consumer Watchdog argued in its report. “In fact, the law does not require a specific level of harm to be determined before revoking or denying permits. … Thus, DTSC has every right – indeed a duty – to shut down this serial environmental polluter.”

Senate investigators found that Consumer Watchdog’s account of the Evergreen Oil case omitted key information.

“It’s true that DTSC had the legal authority to become more involved in the Evergreen case,” the Senate report states. “But Golden Wasteland fails to mention that California’s regulatory scheme calls for a local entity, a Consolidated Unified Program Agency, to take the lead in the section of the Evergreen plant where accidents occurred. … And the report misleads by omitting any mention of the Alameda CUPA’s lead role in overseeing the re-refining part of the facility, making it seem to an uninitiated reader that DTSC was the obvious candidate to respond to problems at the facility.”

Consumer Watchdog defends report

Consumer Watchdog responded with a rebuttal to the state Senate’s investigation: Criticizing the Legislature’s past performance in oversight, while defending the report for verifying some of its claims.

“The Legislature has historically done a terrible job of overseeing an agency that has gotten so much wrong, ending up hurting the very people that it is supposed to protect,” said Consumer Watchdog’s Liza Tucker, the author of the original Golden Wasteland report. “The report by this Senate office underlines that lack of oversight.”

She added, “Its report verified a dozen allegations in Golden Wasteland, which made the case the agency is dominated by the companies it regulates.”

Coming to Consumer Watchdog’s defense is a group of housing advocates organized by a project of the Center on Race, Poverty & the Environment.

“For residents of Autumnwood, who reached out to DTSC for relief and received none, this report is a disappointment,” Xonia Villanueva, a member of the People’s Senate, said in a recent press release. “It’s as if the Senate investigator was tasked with discrediting communities in California that are crying out for help.”

Senate report adds to past criticism

Steve Maviglio, a Democratic strategist and frequent critic of Consumer Watchdog, pointed to the state Senate’s findings as validation of his extensive research into the nonprofit.

“The critique isn’t coming from an ideological foe of Consumer Watchdog,” said Maviglio, who has published his research at the cleverly named, ConsumerWatchdogWatch.com. “It’s coming from the research arm of perhaps the most progressive state Senate in the nation.”

In Maviglio’s view, Consumer Watchdog’s research has been biased by funding sources, most of which it refuses to disclose.

One funding source that has been well-documented is revenue that the group receives from policing the government regulations it helps write. Founded by consumer advocate Harvey Rosenfield, the author of Proposition 103, which increased state insurance regulation, Consumer Watchdog has benefited from provisions in state law that allow it to act as an “intervenor.”

“‘Intervenors’ can get paid hundreds of dollars an hour (paid by insurance companies) in fees to monitor the rate process, supposedly on behalf of the public,” wrote UT San Diego columnist Steven Greenhut. “No surprise, Consumer Watchdog is the most proficient intervenor and has received millions of dollars in its challenges under Proposition 103.”

That leaves some critics deeply suspicious of any claims made by the organization.

“Consumer Watchdog’s name should be Trial Lawyers’ Helper,” CalWatchdog.com contributor Chris Reed wrote in a blog, late last year. “The organization aggressively works on many fronts to increase the ease with which trial lawyers can take money from people.”

Don’t expect Consumer Watchdog to be slowed down by the recent criticism. Last month, it published a new report, “Inside Job,” which, in the group’s words, looks into how “Boeing and its influential fixers derailed the cleanup of a partial nuclear meltdown site in greater Los Angeles.”

(You can read the report by the state Senate Office of Oversight and Outcomes here: “Fact Check: Despite Failures by State’s Toxics Regulator, Many Recent Criticisms are Unfounded”.)