ASSOCIATED PRESS: Lawmakers aim to prevent unspent California charitable gifts

December 10, 2015
By Don Thompson
SACRAMENTO, Calif. — Lawmakers and state agencies on Wednesday began exploring ways to make sure millions of charitable dollars donated annually by California taxpayers aren't stalled for years and don't wind up in state coffers.
 
Among the ideas raised at a legislative hearing were requiring speedier notices to state agencies that funds are available for distribution and requiring that agencies publicly report how they spend — or fail to spend — the money. Others suggested giving back unspent funds that have since been dumped into the state's general fund.
 
Sen. Bob Hertzberg, chairman of the Senate Governance and Finance Committee, called the hearing in response to an Associated Press report in August that found California agencies failed to spend nearly $10 million in taxpayers' charitable donations over 10 years.

Hertzberg, D-Van Nuys, also cited delays that in one case stalled a donation for three years before it finally went to the charity.

The money is part of the $35 million collected since 2005 for 29 funds through the nation's largest voluntary tax contribution program. The tax check-offs typically bring in more than $4 million each year.

"Sometimes the money has fallen through the cracks," Hertzberg said at the hearing in Los Angeles. "Does the money get there and how long does it take?"

The Franchise Tax Board currently notifies the state controller once a year that money designated for charities by taxpayers is available for distribution. Hertzberg said that notice should be sent monthly.

The controller then notifies state agencies that the money is available for distribution to the charities themselves. If the funds are untouched for four years they can be returned to the state's general fund.

Among the unspent money the AP found, $237,000 was raised to fund colorectal cancer screenings, enough to pay for more than 200 colonoscopies. But officials with the Department of Public Health testified that they never were authorized to spend the money.

Sen. John Moorlach, R-Costa Mesa, blamed the office run by Democratic Controller Betty Yee for not doing more to make sure the money is actually spent.

Lawmakers last year stalled SB1207 by Sen. Lois Wolk, D-Davis, that would have tapped one agency to oversee distribution of the money and required more reporting by charities. Moorlach said the bill should have sounded "an alarm bell" for the controller that something was wrong.

"Or do we wait for a reporter to figure it out?" Moorlach added.

Hertzberg said the controller may not have that authority over state agencies, but should require agencies to post brief summaries on their public websites on how much charitable money is available and why any balance hasn't been distributed. He noted that some of the delay is because in most cases the Legislature must allocate the money in the annual budget, which delays the distribution by a year.

Moorlach said if taxpayers' gifts were funneled directly to charities, "we can give checks to these nonprofits within minutes of receiving these funds."

The AP found that nearly $280,000 that was supposed to be spent on asthma and lung disease research was never allocated by legislators or public health officials. At Wednesday's hearing, an education official disputed that nearly $90,000 intended to aid disadvantaged youth went back to the state's general fund and said the department still hopes to distribute the money.

Lawmakers should consider giving money to similar programs in next year's budget to make up for the lost funds, Hertzberg said: "Let's be fair to the taxpayers who wrote the checks."

Moorlach said the state may need to give the unspent money back to taxpayers.

"The state is sort of guilty of taking funds from taxpayers and misapplying them," he said.

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