Capitol Alert: State auditor rips public health contracts, oversight

The California Department of Public Health mismanaged public funds for child abuse and injury prevention programs, violating state contracting laws and improperly spending millions of dollars on administrative costs, the state auditor said today.

State Auditor Elaine Howle said in a report that the Departments of Public Health and Social Services "exhibited weaknesses in their administration" of two relatively small funds established by the Legislature to support programs designed to prevent childhood injuries and abuse.

Howle said the Department of Public Health violated state contracting law when it contracted with the San Diego State University Research Foundation to administer the state's Kids' Plates Program, a prevention program for unintentional childhood injuries funded in part by the sale of special license plates. The department contracted with the research foundation from 2004 to 2010 without complying with provisions of state law prohibiting state agencies from contracting with private entities for work state employees could perform, the audit said.

After determining two years ago that it could no longer continue its contract with the research foundation, the state continued to allow the research foundation to perform services for 10 months without a contract, the auditor said. The research foundation was paid more than $300,000 for its work during that time, the audit said.

Howle said the Department of Public Health and its predecessor agency, the Department of Health Services, also violated state law when they paid the research foundation for administrative expenses using funds the Legislature intended only for direct program costs.

"Health Services and Public Health spent roughly 40 percent of their total appropriations received between fiscal years 2006-07 and 2009-10, or nearly $2.1 million, on the research foundation's administrative costs for the Kids' Plates Program, the audit said.

The state's Child Health and Safety Fund, which includes the Kids' Plates Program, was one of two funds audited by Howle. The fund, established by the Legislature in 1992, receives about $4.3 million to $5 million in revenue each year, according to the audit. The second fund audited, a trust fund established in 1982 for projects including child abuse awareness, received annual revenue ranging from just more than $800,000 to $1.5 million over the past six budget years, according to the audit.

In a written response, the Department of Public Health said it agreed with the auditor's recommendation that it should have adequate justification for hiring a private contractor. The department said it is distributing an email reminder about that requirement, among other measures.

The Department of Social Services said in a written response to Howle's criticism of its management practices that it has begun reviewing and updating grant and contract manuals to strengthen contract oversight.