Report I2010-1 Summary - June 2010

Investigations of Improper Activities by State Employees:

Misuse of State Time and Resources, Improper Gifts, Inadequate Administrative Controls, and Other Violations of State Law January 2009 Through December 2009

HIGHLIGHTS

State employees and agencies engaged in improper activities, including the following:

RESULTS IN BRIEF

The California Whistleblower Protection Act (Whistleblower Act) empowers the Bureau of State Audits (bureau) to investigate and report on improper governmental activities by agencies and employees of the State. Under the Whistleblower Act, an improper governmental activity is any action by a state agency or employee during the performance of official duties that violates any state or federal law or regulation; that is economically wasteful; or that involves gross misconduct, incompetence, or inefficiency.

Between January 1, 2009, and December 31, 2009, the bureau received 4,990 allegations of improper governmental activities, which required it to determine whether the allegations involved improprieties by state agencies or employees. In response to the allegations, the bureau opened 882 cases, and it reviewed or continued to work on 122 cases it opened previously. For these cases, the bureau completed a preliminary review process and determined the cases that lacked sufficient information for an investigation. The bureau also referred cases to other state agencies for action and—either independently or with assistance from other state agencies—conducted investigations of cases.

This report details the results of 11 particularly significant investigations completed by the bureau or undertaken jointly by the bureau and other state agencies between January 1, 2009, and December 31, 2009. This report also outlines the actions taken by state agencies in response to the investigations into improper governmental activities described here and in previous reports. The following paragraphs briefly summarize these investigations and the state agencies' actions, which individual chapters discuss more fully. For more information about the bureau's investigations program, please refer to the Appendix.

DEPARTMENT OF INDUSTRIAL RELATIONS

An inspector with the Department of Industrial Relations, Division of Occupational Safety and Health (Cal/OSHA), misused state resources and improperly engaged in dual employment during her state work hours, during which she received a total of $70,105 in inappropriate payments. In addition, Cal/OSHA management failed to implement controls that would have prevented the improper acts.

DEPARTMENT OF CORRECTIONS AND REHABILITATION

A supervisor at Heman G. Stark Correctional Facility misused the time of two psychiatric technicians by assigning them to perform the tasks of a lower-paid classification. This misuse of the employees' time resulted in a loss to the State of $110,797.

CALIFORNIA STATE UNIVERSITY, NORTHRIDGE

For almost five years, an employee of California State University, Northridge (Northridge), improperly allowed a business owner and his three associates to use a university laboratory facility, equipment, and supplies without compensating Northridge. This inappropriate activity represented a loss of compensation to Northridge that totaled $20,790.

DEPARTMENT OF CONSUMER AFFAIRS, CALIFORNIA ARCHITECTS BOARD

In 2008 an employee with the California Architects Board fabricated receipts and claimed lodging and meal expenses she did not incur; thus, she received improper reimbursements totaling $392. In addition, she violated state law when she accepted gifts in the form of substantially discounted room rates from a hotel she frequently used for state business.

DEPARTMENT OF JUSTICE

A Department of Justice (Justice) employee failed to report 82 hours of leave taken from February 2007 through March 2008. Justice did not charge the employee's leave balances for her absences, and it paid her $2,605 for time she did not work. In addition, the employee's manager did not ensure that the employee reported her time accurately.

DEPARTMENT OF WATER RESOURCES

A supervisor in a Department of Water Resources field division office (division office) received at least $1,840 in gifts from a vendor with which he contracted during the course of his duties as a state employee. The circumstances indicated that the gifts were a reward for his doing business with the vendor; thus, the supervisor engaged in an activity incompatible with his duties or responsibilities as a state employee. Moreover, the division office lacked sufficient administrative controls to ensure that an appropriate separation of duties existed to ensure the integrity of its purchasing process. Consequently, the supervisor was able to enter into contracts with the vendor without complying with state contracting rules.

DEPARTMENT OF FOOD AND AGRICULTURE, 32ND DISTRICT AGRICULTURAL ASSOCIATION

An employee of the Department of Food and Agriculture's 32nd District Agricultural Association, also known as the OC Fair & Event Center, failed to account accurately for 53 hours of absences, for which he was paid $1,206. In addition, his supervisor and other staff failed to adequately review the employee's time sheets.

DEPARTMENT OF SOCIAL SERVICES

The Department of Social Services improperly exempted after-school education programs called heritage schools from child care licensing requirements. Consequently, an estimated 3,000 of these schools in the State may be putting children at risk by not following the same safety procedures as licensed child care facilities.

CALIFORNIA STATE UNIVERSITY, CHANNEL ISLANDS

An employee with the California State University, Channel Islands, engaged in incompatible activities and failed to disclose gifts he received from contractors. These gifts have an estimated value of $220 in 2007 and $300 in 2008.

CALIFORNIA HIGHWAY PATROL

An office supervisor with the California Highway Patrol operated a personal business during state time and misused state equipment.

DEPARTMENT OF MOTOR VEHICLES

The Department of Motor Vehicles failed to follow personnel rules when it allowed an employee to perform duties outside his job classification. As a result, the employee did not perform responsibilities assigned to his position.

UPDATE ON PREVIOUSLY REPORTED ISSUES

In addition to conveying our findings about investigations completed during 2009, this report summarizes the status of issues described in our previous reports. Chapter 12 details the actions taken by the respective agencies for 16 previously reported issues. The following paragraphs briefly summarize a few of these prior issues and the status of corrective action taken by the agencies.

In September 2005 we reported that the Department of Corrections and Rehabilitation (Corrections) did not track the total number of hours available in a release time bank (time bank) composed of leave hours donated by members of the California Correctional Peace Officers Association (union) so that union representatives could cover union business. Our investigation revealed 10,980 hours that three union representatives used from May 2003 through April 2005 but that Corrections failed to charge against the time bank, costing the State $395,256. Following our report, Corrections still did not attempt to obtain reimbursements for the time that the three employees spent on union activities in May and June 2005, resulting in an additional cost to the State of $39,151. In fact, Corrections informed us later that it was unable to reconstruct an accurate leave history for any period before July 2005 for the three union representatives. Consequently, Corrections will not seek reimbursements that total $434,407. Instead, Corrections submitted to the union monthly invoices that total $1,037,698 for union work performed by the employees from July 2005 through December 2009.1 As of June 2010, Corrections had only received a payment of $16,530 on any of these invoices. Thus, the unrecovered reimbursements for the three employees' time for May 2003 through December 2009 cost the State a total of $1,455,575.2

In October 2008 we reported that Corrections improperly granted nine office technicians increased pay to supervise inmates at its R. J. Donovan Correctional Facility. The office technicians were not entitled to receive the increase because they did not supervise the required number of inmates or because they did not supervise inmates who worked the minimum number of hours required for the employees to receive the increased pay. Therefore, Corrections paid these technicians $16,530 more than they should have received. Unfortunately, Corrections informed us later that it was unable to recoup $1,900 of the overpayments we identified because the overpayments occurred more than three years before it initiated recovery. In addition, Corrections failed to collect $3,230 for some improper payments for which the State was entitled to receive repayment. Further, one of the nine technicians later provided information to show that she met the criteria for one month. Thus, the amount of recoverable overpayments has been reduced to $11,210. However, in May 2009 Corrections suspended its overpayment recovery efforts after employees filed grievances and while it awaited a ruling from the Department of Personnel Administration (Personnel Administration) about increased pay. Finally, Corrections reported in May 2010 that because it had not established a department-wide procedure when it made the improper payments, it would not seek to recover any further overpayments to the office technicians. Consequently, it collected only $2,090 of the $11,210 in improper payments made to the office technicians.

Concerned that a pattern of overpayments for inmate supervision existed at Corrections, we selected six correctional facilities for further investigation. In November 2009 we reported that, as in the case of R. J. Donovan Correctional Facility, Corrections had overpaid employees for inmate supervision. At five of the six other correctional facilities we investigated, Corrections overpaid 23 employees for their inmate supervision from March 2008 through February 2009. These improper payments totaled $34,512. Using the sample of inmate supervision payments with which we identified these improper payments, we estimated that Corrections may have improperly paid as much as $588,376 to its employees statewide during the 12-month period we reviewed. Following the release of our report, Corrections suspended its overpayment recovery efforts, and Personnel Administration issued its memorandum. In addition, the task force created by Corrections began to review these issues. As of May 2010, Corrections reported that it had decided not to pursue any collection efforts against the employees, asserting that it had not established a formal operating procedure and that it lacked documentation when it made the improper payments.

Further, we reported in April 2009 that a Justice employee failed to properly account for her overtime worked and leave taken from June through August 2007, and we also noted that she claimed travel expenses she did not incur during the same period. In addition, the employee's manager did not ensure that the employee accurately reported her time and travel expenses. Justice had paid the employee $648 in unearned compensation and $497 for travel costs she did not incur. After we publicly reported our findings, Justice informed us that it issued memoranda to the employee and her manager about their failure to follow time-reporting and travel claim policies and procedures. It also indicated that the employee revised her time sheets to properly account for all of her overtime worked and absences taken. Finally, as of November 2009, the employee reimbursed Justice $497 for the overpayment of travel expenses.

In a December 2009 report, we disclosed that a former official at California State University (university), Office of the Chancellor (Chancellor's Office), received $152,441 in improper expense reimbursements—including $1,834 in duplicate payments and overpayments—over the 37 months from July 2005 through July 2008. Since we issued the report, the university collected $1,903 in duplicate payments and overpayments from the former official, which represented $1,834 that we had identified and $69 that the university had identified later. In response to our recommendation that it establish limits on lodging expenses, the Chancellor's Office notified us that it took one action. It informed its vice chancellors that the chancellor must approve all international travel. However, the Chancellor's Office has disputed our other recommendations—and indicated to us that no further action is necessary—concerning the termination of any of its informal agreements that allow employees to work at locations other than their headquarters, clarifying the applicability and defining the expense limits for business meals, and actually establishing limits on lodging costs. Thus, other than the $1,903 the Chancellor's Office recovered, it has made no effort to recoup from the former official the remaining improper expense reimbursements.

1 One of the three employees returned to full-time work at a correctional facility in January 2008.

2 In January 2010 the State formally demanded that the union reimburse it for the compensation paid to these and other employees who performed full-time union work. In June 2010 Corrections stated that it had initiated litigation against the union.

Table 1 displays the issues and financial impact of the cases in this report, the month in which we initially reported on the cases, and the status of any corrective actions taken.

Table 1:
The Issues, Financial Impact, and Status of Corrective Action of Cases Described in This Report
Status of Corrective Actions
Chapter Department Date of Our Initial Report Issue Cost to the State as of December 31, 2009 Fully Corrected Partially Corrected Pending No Action Taken
New Cases
1 Department of Industrial Relations June 2010 Misuse of state time and resources, incompatible activities, inadequate administrative controls $70,105 X
2 Department of Corrections and Rehabilitation June 2010 Misuse of state employees' time, waste of state funds 110,797 X
3 California State University, Northridge June 2010 Misuse of state property, incompatible activities 20,790 X
4 Department of Consumer Affairs, California Architects Board June 2010 Fictitious claim, improper gifts, incompatible activities 392 X
5 Department of Justice June 2010 Failure to report absences accurately, inadequate administrative controls 2,605 X
6 Department of Water Resources June 2010 Improper gifts 1,840 X
7 Department of Food and Agriculture, 32nd District Agricultural Association June 2010 Failure to account accurately for absences, inadequate administrative controls 1,206 X
8 Department of Social Services June 2010 Improper child care licensing exemptions NA X
9 California State University, Channel Islands June 2010 Failure to disclose gifts, incompatible activities 520 X
10 California Highway Patrol June 2010 Misuse of state resources, incompatible activities NA X
11 Department of Motor Vehicles June 2010 Failure to follow personnel rules NA X
Previously Reported Cases
12 Department of Corrections and Rehabilitation September 2005 Failure to account for employees' use of union leave $1,455,575 X
12 Multiple state departments* March 2006 Inappropriate gifts of state resources, mismanagement 8,313,600 X
12 Department of Parks and Recreation March 2007 Misuse of state resources, failure to perform duties adequately NA X
12 California State Polytechnic University, Pomona September 2007 Viewing of inappropriate Internet sites, misuse of state equipment NA X
12 Department of Consumer Affairs, Contractors State License Board October 2008 Misuse of state resources, dishonesty 1,804 X
12 Department of Corrections and Rehabilitation October 2008 Improper payments for inmate supervision 16,530 X
12 California Prison Health Care Services January 2009 Improper contracting decisions, poor internal controls 26,700,000 X
12 Department of Corrections and Rehabilitation and Department of General Services April 2009 Waste of state funds 580,000 X
12 Department of Fish and Game, Office of Spill Prevention and Response April 2009 Improper travel expenses 71,747 X
12 State Compensation Insurance Fund April 2009 Time and attendance abuse, lax supervision 8,314 X
12 Department of Social Services April 2009 Improper hiring 6,444 X
12 Department of Parks and Recreation April 2009 Failure to solicit competitive price quotes 1,253 X
12 Department of Justice April 2009 Failure to report time worked, absences, and travel expenses accurately; management's failure to ensure proper time and travel expense reporting 1,145 X
12 Department of Finance April 2009 Improper saving of a vacant position NA X
12 Department of Corrections and Rehabilitation November 2009 Improper payments for inmate supervision 34,512 X
12 California State University, Office of the Chancellor December 2009 Improper and wasteful expenditures 152,441 X

Source: Bureau of State Audits.

NA = Not applicable because the situation did not involve a dollar amount or because the findings did not allow us to quantify the financial impact.

* This case focused on the Department of Fish and Game but also involved the California Highway Patrol, the California Conservation Corps, the Department of Corrections and Rehabilitation, the Department of Developmental Services, the Department of Food and Agriculture, the Department of Forestry and Fire Protection, the Department of Mental Health, the Department of Parks and Recreation, the Department of Personnel Administration, the Department of Transportation, the Department of Veterans Affairs, and the Santa Monica Mountains Conservancy.