She Noticed $200 Million Missing, Then She Was Fired
Earlier this year, the governing board of one of California’s most powerful regulatory agencies unleashed troubling accusations against its top employee.
Commissioners with the California Public Utilities Commission, or CPUC, accused Executive Director Alice Stebbins of violating state personnel rules by hiring former colleagues without proper qualifications. They said the agency chief misled the public by asserting that as much as $200 million was missing from accounts intended to fund programs for the state’s blind, deaf and poor. At a hearing in August, Commission President Marybel Batjer said that Stebbins had discredited the CPUC.
You took a series of actions over the course of several years that calls into question your integrity, [those actions] cause us to have to consider whether you can continue to serve as the leader of this agency.
-California Public Utilities Commission President Marybel Batjer
The five commissioners voted unanimously to terminate Stebbins, who had worked as an auditor and budget analyst for different state agencies for more than 30 years.
But an investigation by the Bay City News Foundation and ProPublica has found that Stebbins was right about the missing money.
Just days before Stebbins was fired, CPUC officials told California’s Department of Finance that the agency was owed more than $200 million, according to a memo obtained by the news organizations. The finance agency launched an investigation into the uncollected funds.
The news organizations’ investigation also found flaws in the State Personnel Board report that Batjer used to terminate Stebbins. Three former CPUC employees said in interviews that the report contained falsehoods. The report alleged that the auditor who discovered the missing money was unqualified. But hiring materials obtained by the news organizations show that state officials had determined that the auditor was the most qualified candidate, awarding him an “excellent” rating in every category.
Batjer, a former casino executive, was appointed by Gov. Gavin Newsom to lead the commission in July 2019, the same month Stebbins briefed the commissioners on problems with the agency’s accounting practices. Early on, Batjer scrutinized Stebbins’ personnel decisions, according to previously unreported text messages obtained by the news organizations. Shortly after she was sworn in as president in August, Batjer texted a former colleague in Newsom’s cabinet.
Batjer told Julie Lee, who was serving as California’s acting secretary of Government Operations, or GovOps, that she was “very concerned”: She believed the auditor was not qualified for the job and was upset that Stebbins had given him a raise after putting him in charge of additional employees. Batjer had previously served as head of GovOps, which oversees the State Personnel Board.
I find this outrageous! I’m terribly worried. Thanks much for any advice/help you can get before this gets much worse.
-Marybel Batjer to Julie Lee
The commissioners appear to have violated state transparency laws when they later exchanged text messages among themselves about whether to fire Stebbins. California law prohibits the majority of a public body from discussing matters under its jurisdiction outside of a regular meeting, particularly to build a consensus, legal experts said.
I can’t imagine her remaining
Stebbins filed a wrongful termination suit against the CPUC this month. In a series of interviews, the most extensive since her termination, she described an agency mired in disorganization and ineptitude. An experienced administrator, she was recruited by the previous president to clean up a dysfunctional agency. She found some of her employees did not know basic information about the utilities they were supposed to be regulating — in one case, lacking even current contact information for regulated water companies. Audits dating back to 2012 had found ineffective budget management and a need for improved fiscal monitoring.
“You’ve got just systemic issues,” Stebbins said in an interview. “The only way you can make those changes is to really tear it apart.”
Batjer did not respond to requests for an interview. The other commissioners did not return emails seeking comment. The CPUC has not yet responded to Stebbins’ lawsuit. Through a spokesperson, Lee denied that she triggered or influenced the investigation into Stebbins. The State Personnel Board declined to comment on their investigation.
In response to detailed questions, commission spokeswoman Terrie Prosper said that Stebbins’ allegation of $200 million in missing fines and fees was the result of a misunderstanding of the commission’s accounting practices.
Prosper did not address the apparent open meeting violations, citing pending litigation. But she said Stebbins’ manipulation of the hiring process warranted her dismissal. She acknowledged “some inaccuracies” in the state personnel report but dismissed them as “nonsubstantive details.”
“Her allegation that she was dismissed for finding alleged budget irregularities flies in the face of the clear public action taken by the CPUC,” Prosper said.
The article continues on ProPublica.