In a Spring Finance Letter, the Governor proposes using remaining funds from a 2009 settlement agreement to provide the Secretary of State a three-year funding increase of $463,000 per year and three positions to support the agency's activities related to the implementation of SB 450. We recommend that the Legislature (1) use this proposal and the implementation of SB 450 to reconsider the state's role in paying for elections administration and (2) consider the appropriate level, duration, and source of funding to support the Secretary of State's SB 450 activities.
Recent LAO Report on Elections Administration. Counties administer most elections in California and bear the cost of administering state and federal elections. The Secretary of State is the state’s chief elections official and oversees the administration of elections across the state, including certifying voting equipment that may be used in California elections. In a report that our office released in March 2017, we (1) concluded that the state’s current level of financial support for the administration of elections does not reflect the benefit the state receives from counties administering elections and (2) recommended that the Legislature develop a new financial relationship between the counties and state to fund elections.
New Model of Voting in California. SB 450 (Chapter 832 of 2016) has the potential to dramatically change how most Californians vote. Under SB 450, counties may replace the current precinct model of voting with a new “vote center” model. However, there is no requirement that counties implement the vote center model. The law allows 14 counties—accounting for about one-fifth of California’s registered voters—to implement the new voting model in 2018 and the remaining counties to implement the model in 2020. As counties implement the vote center model of voting, the Secretary of State will be overseeing two very different voting models across the state. When the Legislature was considering SB 450, Secretary of State estimated the annual cost to its agency resulting from the legislation to be $280,000 for three positions.
Voting Equipment Across California Need to Be Updated. As we discuss in our report, most counties in the state use antiquated voting equipment that raise concerns over security and the potential for a catastrophic failure of a voting system in an election year. In the past, the state and federal governments have provided funding to counties to modernize voting equipment.
2009 Settlement Agreement. In 2007, the Secretary of State sued a vendor for selling to counties voting systems with modifications not yet authorized by the Secretary of State. In 2009, the state and a vendor reached a settlement agreement whereby the vendor provided the state $3.25 million. The settlement agreement imposed restrictions on how the Secretary of State could use the money. Pursuant to these restrictions, $2.9 million is available “for the purposes of voting systems review, approval, security measures and election administration.”
Appropriate Funds to Secretary of State Through June 30, 2020. The administration requests a three-year funding increase of $463,000 per year for the Secretary of State and three positions to support the agency’s activities related to the implementation of SB 450. The administration identifies the 2009 settlement agreement as the funding source for this request. Under the administration’s proposal, there would be about $1.5 million of the settlement money remaining when the funding authorization ends on June 30, 2020.
No Proposal to Alter State’s Financial Relationship With Counties. As we discuss in detail in our report, the state currently owes counties about $71 million for outstanding elections mandates incurred in prior years. Despite these mandates being suspended, counties continue the activities associated with the suspended laws—costing counties roughly $30 million in general election years. In addition, the Secretary of State estimates the total costs to replace counties’ voting equipment to be around $400 million. To date, the administration has made no proposal to provide state money for these costs or for any costs counties might incur to implement SB 450.
Broaden Discussion Beyond Proposal. We think the Legislature should establish a new financial relationship between the state and county elections officials that allows the state to (1) direct statewide elections policy and (2) provide to counties a reasonable and reliable level of financial support that reflects the benefits to the state of county elections administration. Specifically in our report, we recommend that the Legislature structure ongoing support for elections as a block grant to participating counties. The pending implementation of SB 450 and this budget proposal give the Legislature an opportunity to consider how to structure a new financial relationship to ensure consistency across counties as well as address other elections issues that we discuss in our report.
Consider Appropriate Level, Duration, and Source of Funding for Secretary of State. As we indicate in our report, it is reasonable to assume that the Secretary of State will need additional resources to oversee the implementation of SB 450. When considering the proposal now before the Legislature, we think the budget committees should consider four key questions: