The City of Cupertino released an independent audit challenging Santa Clara County's proposed law enforcement services contract, which would increase the city's annual costs by approximately $6.4 million—from roughly $19 million to $25.4 million—with similar increases for Saratoga and Los Altos Hills.
The audit, conducted by Vasquez & Company LLP, classified $10.7 million of the $11.9 million in proposed overhead and departmental support costs as not allocable under California Government Code Section 51350, which prohibits counties from charging cities for general overhead costs that would be incurred regardless of whether city contracts exist.
The non-allocable costs identified include countrywide administrative functions, investigative headquarters and specialized units, records division baseline capacity, and personnel and training functions. The audit concluded that the county has failed to demonstrate that the majority of proposed overhead costs meet state law requirements.
The county changed its allocation methodology without sufficient justification, shifting from transparent hourly billing rates to an annual cost-per-position model that relies heavily on case counts, the audit found. This approach does not account for case complexity, staff time required, or actual resource consumption.
"The County's own budget documents suggest that many of these overhead functions would continue even if the city contracts were discontinued, this is the very definition of general County overhead that should not be charged to contract cities," the audit stated.
Cupertino Mayor Kitty Moore said the city has a fiduciary responsibility to residents to ensure compliance with state law. "We also recognize and appreciate the Sheriff's deputies who serve Cupertino and provide our community with excellent public services every day," Moore said.
The cities are prepared to engage in good-faith negotiations with the county to develop a revised proposal complying with state law. They are proposing a staffing-based allocation methodology for shared costs, consistent with practices used by other California counties.