Report 2014-108 Recommendation 2 Responses

Report 2014-108: State Board of Equalization Building: Despite Ongoing Health and Safety Concerns, the State Has Not Thoroughly Analyzed the Costs and Benefits of Relocating Employees (Release Date: September 2014)

Recommendation #2 To: Equalization, Board of

To more clearly demonstrate its case for a new facility, BOE should continue its plans to conduct a study to identify inefficiencies in its current spatial configuration and how its operations could improve with a new consolidated facility.

Agency Response*

Prior to July 1, 2017, the State Board of Equalization (BOE) administered various tax and fee programs including the Sales and Use tax, adopted rules and regulations to clarify tax laws, acted as an appellate body for the review of property, business and income tax assessments, assessed and allocated the property values of railroads and specified utilities and businesses, and oversaw the property tax assessment practices of all 58 county assessors.

Effective July 1, 2017, legislation enacted as part of the 2017 Budget Act recast the BOE as the California Department of Tax and Fee Administration (CDTFA). The CDTFA will perform those statutory duties formerly assigned to the BOE, except for tax appeals. The BOE will continue in existence, but will handle only those duties assigned to it by the California Constitution, namely the assessment and allocation of the property values of railroads and specified utilities and businesses, and the oversight of the property tax assessment practices of all 58 county assessors.

As provided in previous responses, a Process Improvement Study (Study) was performed and concluded that a supportable rationale existed for the BOE to not have its operations in a high-rise building. The CDTFA is now responsible for the majority of these operations and is located in the same building. The 450 N Street building has configuration limitations that prevent the implementation of all improvements identified in the Study to support current operations and future growth.

CDTFA is working with the Department of General Services to identify office space that will meet its organizational needs and allow for future growth. The estimated timeframe to relocate CDTFA operations is approximately four to five years.

  • Response Type†: Annual Follow Up
  • Estimated Completion Date: TBD
  • Response Date: September 2017

California State Auditor's Assessment of Status: Fully Implemented

Because of the reorganization that will result from the July 2017 legislation described in BOE's response, and the need to work with the Department of General Services to identify new office space, BOE indicated that this recommendation was not fully implemented. However, our stated recommendation was that BOE complete a study of how a move to a new facility would improve operations. BOE provided us with this completed study, and we believe it fully implements our recommendation.


Agency Response*

Contracts with HGA Architects and Engineers and Sixth Dimension to conduct an Efficiency and Process Improvement Study (study) were executed on May 15, 2015, and June 18, 2015, respectively. The Preliminary Final Report study was completed on December 18, 2015 and presented to the BOE Board on January 26, 2016.

The Process Improvement Study shows that there is a supportable rationale for the BOE to not have its operations in a high-rise building. Many of the Process Improvements identified in this study cannot be implemented effectively in the 450 N Street building due to its configuration and limited opportunities for expansion. The 450 N Street facility does not support the BOE's current and future operations, as well as a consolidated campus due to inefficiencies in Return Processing functionality, and the fragmentation of staff within departments and across multiple locations. Ongoing growth will force the BOE to lease additional annex facilities over the next ten years, in the event a new campus is not constructed, further exacerbating the inefficiencies created by fragmented operations. With the goal of achieving the most optimal physical design, the consultants determined that consolidation and centralization of the BOE's headquarters revenue generating processes is cost effective and evaluated the benefit of a low-rise campus versus a high-rise building.

The BOE has been identified in the Department of General Services (DGS) 10-year plan and will continue to work closely with them as they determine the short-term and long-term solutions for the 450 N Street Building.

  • Response Type†: Annual Follow Up
  • Completion Date: December 2015
  • Response Date: October 2016

California State Auditor's Assessment of Status: Fully Implemented

We performed a limited review of the December 2015 study and found that it adequately addresses our recommendations.


Agency Response*

Contracts with HGA Architects and Engineers and Sixth Dimension to conduct an Efficiency and Process Improvement Study (study) were executed on May 15, 2015, and June 18, 2015, respectively. This study will examine the BOE's revenue generating processes to identify process improvements within the current headquarters building, once renovated, and in alternative facilities. With this data, process options will be developed and evaluated according to costs, improved quality and speed of delivery, reduced risks, and increased satisfaction.

With the goal of achieving the most optimal physical design, the consultants will determine whether consolidation and centralization of the BOE's headquarters revenue generating processes is cost effective and evaluate the benefit of a low-rise campus versus a high-rise building. HGA's Architects and Engineers and Sixth Dimension will present their findings and recommendations to the BOE and Department of General Services (DGS) in December 2015. The consultant's findings and recommendations will identify potential business process improvements that will assist in the preparation of a cost-benefit analysis regarding the desired consolidation of the BOE's headquarters operations at 450 N Street.

  • Response Type†: 1-Year
  • Estimated Completion Date: TBD
  • Response Date: September 2015

California State Auditor's Assessment of Status: Pending


Agency Response*

The BOE is producing a comprehensive, cohesive analysis of its headquarters' relocation costs and benefits to determinine whether business process consolidation and centralization proves cost-effective.

  • Response Type†: 60-Day
  • Estimated Completion Date: TBD
  • Response Date: December 2014

California State Auditor's Assessment of Status: Pending


All Recommendations in 2014-108

†Response Type refers to the interval in which the auditee is providing the State Auditor with their status in implementing recommendations made in an audit report. Auditees must submit a response regarding their progress in implementing recommendations from our reports at three intervals from the release of the report: 60 days, six months, and one year or subsequent to one year.

*Agency responses received after June 2013 are posted verbatim.


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