The State Worker

We can never get everything we learn into a news story. "From the notebook" posts give you some of the extra details behind the news. (Editor's note, 9:45 a.m.: This post now includes a direct link to the Working 4 Utah audit.)

With Gov. Jerry Brown proposing a four-day workweek for California state workers, our A1 story in today's Bee looks at what happened when Utah became the first state in the nation to try it.

Of course, a significant difference is that Utah didn't cut employee hours. Brown's plan is a 2-hours-per-week furlough.

Two years ago, the Beehive State's legislative auditor general looked at the program's strengths and weaknesses. What follows is the report on the program former GOP Gov. Jon Huntsman launched in 2008. If you can't access the embedded document, click here to download the PDF.
A Performance Audit of the Working 4 Utah Initiative

The Legislative Analyst's Office said today that Gov. Jerry Brown's proposal to move state workers into a 4-day, 9.5-hour-per-day schedule would create some serious problems.

The criticisms conclude a lengthy analysis of Brown's state budget proposal to close what the administration estimates is a $15.7 billion budget deficit (the LAO says it's more than that). Among the issues raised with Brown's furlough plan:

• Employees won't use as much leave, which will increase the state's deferred costs.
• It will hinder interaction with government agencies that operate on regular schedules.
• It may not reduce energy costs.

Then the analyst makes this comment about cutting employee costs:

Employee compensation, including salaries and benefits, will cost the state's General Fund $10.5 billion in 2012-13. Given the severity of the state's budget shortfall, we think the Legislature will need to consider reductions in these costs. There are, however, no ideal ways to achieve such reductions.

Why? Bargaining, the analyst said, usually means some sort of trade-off that negates savings. Layoffs take a long time and can adversely affect services. Furloughs and leave programs carry deferred costs (see above). The Legislature could impose pay cuts, but that "could require the administration to negotiate with unions for new contracts under the terms of the Dills Act. Unilateral state actions of this type may produce significant state savings, but pose many concerns. Such concerns include negative effects on employee-management relations."

The report also discusses the state's job vacancies and changes that Brown is proposing to the way the state budgets for positions, including eliminating vacant positions.

Click here to open the LAO's report. Scroll down to the "Employee Compensation" section for more analysis about Brown's plan for the 4-day workweek and vacant positions.

State employees would work longer shifts but fewer of them under the revised budget plan proposed by Gov. Jerry Brown this morning, saving the government more than $800 million.

Brown's budget envisions putting a four-day, 38-hour workweek for "the majority of state employees." If broken into four equal shifts, that translates into four 9.5-hour workdays and a reduction of hours and pay of eight hours over four weeks.

Brown's plan doesn't spare prisons or state hospitals: "The Administration will pursue commensurate reductions in work hours and pay for employees of entities that operate 24 hour a day, 7 days a week when implementation of the four-day workweek is not feasible."

The plan also cuts the state's operating costs by cutting energy usage at state-occupied buildings.

In sum, the workweek reconfiguration plan would save an estimated $839.1 million in fiscal 2012-13. Of that, $401.7 million would be savings for the general fund, which Brown says is confronting a $16 billion deficit.

The budget plan also anticipates more savings through cutting outside contracts, particularly in information technology services, eliminating "non essential" hiring of retired annuitants and cutting 11,000 state positions on top of the 15,000 eliminated in the 2011-12 budget.

PHOTO: Gov. Jerry Brown / Sacramento Bee file

The City of Vernon failed to provide adequate documentation for its employees and improperly characterized some as working in safety classifications that receive more generous retirement benefits, according to a new report released by CalPERS this morning.

The incomes of about two dozen current, former and retired city workers could be affected, since the fund will make "adjustments to retirement benefits or reported compensation" as appropriate, CalPERS said in a press release issued this morning.

Vernon has been under scrutiny for quite some time. Assembly Speaker John A Pérez authored legislation last year to dissolve Vernon, saying it would address allegations of corruption in a city that is home to fewer than 100 residents but more than 1,000 businesses. Under his proposal, which failed, Vernon would become an unincorporated part of Los Angeles County.

The report caps CalPERS' year-long audit of Vernon's records covering July 1, 2002 through June 30, 2010.

Among the findings:

From Dan Walters at our sister blog, Capitol Alert:

California's state and local government pension funds saw a 12.4 percent increase in their assets during the 2010 fiscal year, according to a new Census Bureau report, markedly higher than the national pension fund increase.

Click here for the rest of Dan's post. A spreadsheet with some of the pension data is posted below:

Officials overseeing California's troubled financial computer system project say it will cost nearly $1 billion less than earlier estimated, according to a new Bureau of State Audits report.

The latest projections by the the Financial Information System for California, or FI$CAL, figure that the massive hardware and software makeover will cost $616.8 million, down from a 2007 estimate of $1.6 billion over 12 years.

The Legislative Analyst's Office figures that four union contracts that Gov. Jerry Brown has agreed to extend for one year will "maintain or modestly increase the state's costs for employee compensation."

The nonpartisan LAO looked at so-called "rollover agreements" with the Union of American Physicians and Dentists (Bargaining Unit 16) and the American Federation of State, County and Municipal Employees (Unit 19) and concluded that they don't cost the state more than the deals that expire in July.

The state's cost for employees covered by the International Union of Operating Engineers (Unit 12) and the California Association of Psychiatric Technicians (Unit 18), however, will grow by an estimated 9.5 percent due to increased health benefit costs. Those contracts have clauses requiring the state to cover increases in health coverage.

The contracts together cover roughly 24,000 state workers, including equipment operators, social service professionals, psychiatric technicians and doctors.

MOU Fiscal Analysis: Bargaining Units 12, 16, 18, and 19

One question that we're sometimes asked is, how many state workers are represented by a union?

The figure fluctuates daily. According to the latest State Controller's Office report to the Department of Personnel Administration, as of the end of last year, 181,822 state employees were represented in the 21 bargaining units that negotiate with the governor.

That count doesn't include the state's two university systems, the Legislature or the judicial branch, which all handle their own personnel matters.

Here's the tally by bargaining unit, denoted on the list as R01, R02, etc.:

With just 400 to 450 words for our weekly State Worker column, most of what we learn each week never sees print. Column Extras give you some of the notes, the quotes and the observations that inform what's published.

Our column in today's fiber/cyber Bee examines the notion that government has "customers." Click here to view the section of the 2004 California Performance Review we referenced today, titled "Putting Californians First -- Creating a Customer Service Framework."

Read the column, check out the report and then take our poll:

Lawmakers lit into a California state prisons official Wednesday afternoon for his department's failure to account for its spending -- twice.

Assemblyman Gil Cedillo, D-Los Angeles, called his budget subcommittee to order and then quickly skipped down to the second issue on the agenda, an update on why the Department of Corrections and Rehabilitation hasn't produced spending reports that the Legislature demanded when it gave CDCR an extra $380 million last year.

As Cedillo and other angry assemblymembers at the hearing noted, the extra money went to Corrections while programs for the elderly, the sick and children all suffered cuts.

But after years of what amounted to fictional cost estimates and perpetually blown budgets for the state's most expensive agency, Gov. Jerry Brown and lawmakers agreed to a 2011-12 budget that gave the $9 billion-plus department the extra money. According to figures provided to The Bee by Assembly Budget Committee Chairman Bob Blumenfield's office, it was the fourth year in the past five that the Legislature kicked up extra money to cover CDCR's overspending. The augmenting funds totaled nearly $3 billion.

Last year, hoping to get costs under control, the Legislature added reporting strings to the money. The first report was due within 75 days of the budget's enactment last June. A second report is due today. Corrections hasn't produced any information yet.

Controller John Chiang today urged the state to scrape up at least a little extra cash to pay down state retiree health and dental benefit costs, which his latest commissioned report pegs at $62.1 billion over 30 years.

The figure, a snapshot of the unfunded health obligations on June 30,2011, represents a 5 percent increase over $59.9 billion identified a year earlier. Actuaries with Gabriel Roeder Smith & Co. had expected an even higher number, but CalPERS' push to trim health costs through a variety of programs, fewer and less expensive claims and lower-than-anticipated use of services have trimmed expenses.

For the most part, the state is covering those costs year to year, paying retiree health bills as they come up. A more prudent course, Chiang said, is to treat the long-term benefit expenses like the state treats pensions: set aside money now, invest it and then use the returns on investments to defray future retiree medical and dental costs.

"Even slight amounts set aside will help lessen the impact on future generations, and ensure that we fulfill our responsibilities to the state workforce and our taxpayers," Chiang said in a press release.

The 24 largest independent pension systems in California, including Sacramento County's, are facing a combined $135.7 billion in long-term obligations that they won't have the assets to cover, a new Stanford University report says.

Sacramento County is carrying $4.75 billion in unfunded liabilities, according to the report, with a funded ratio of 57.5 percent. Those numbers are based on an assumed rate of investment return of 5 percent used by the university's Institute for Economic Policy Research.

Generally, experts consider an 80 percent funding ratio for public pensions' financial health, but that figure is greatly affected by what the funds -- or in this case, Stanford researchers -- assume its investments will return. Many pension systems assume they'll earn 7.5 percent or more.

The average funded ratio of all 24 systems outside of CalPERS is 53.6 percent, using the lower Stanford investment return assumption. The research covers Alameda, Contra Costa, Fresno, Kern, Los Angeles, Orange, Sacramento, San Diego, San Francisco, San Joaquin, San Mateo, Santa Barbara, Sonoma, Stanislaus and Ventura counties. The cities whose pensions were examined include Fresno, Los Angeles, San Jose, and San Diego. The 24 systems account for more than 99 percent of independent system assets, Stanford says.

Between 1999 and 2010, the local municipalities' pension spending grew at 11.4 percent per year, more than the rate of growth for any other expenditure category, according to the report.

California Common Sense also sponsored the research by Stanford professor Joe Nation and student researcher Evan Storms. In December, Nation published a report that concluded California's three big statewide public pension systems have a combined $500 billion in unfunded liabilities. Public employee unions and CalPERS rejected Nation's conclusions.

MORE PENSION MATH: Funded Status, Benefits, and Spending Trends for California's Largest Independent Public...

After years of profitability, the California Prison Industry Authority suffered a $15.3 million loss last year, according to its latest annual report to the state Legislature.

The losses in fiscal 2010-11 came from a $17.4 million drop in operating revenues and $8.6 million the self-funded PIA set aside in anticipation of settling union furlough lawsuits. The authority also paid $6.3 million to cover Other Post-Employment Benefits such as retiree health care and a $2.8 million expense from factory closures.

"If not for the furlough expense, the annual OPEB charge, and the onetime costs associated with factory closures, CALPIA would have continued its profitability in FY 2010-11," the report says.

The PIA oversees four inmate training programs that operate manufacturing, service, and agriculture industries at 22 correctional facilities. They produce everything from modular buildings and fire protection gear to furniture and pre-packaged meals. Most of what PIA makes is purchased by the state or other government entities.

More than 7,000 inmates participate, saving the state "more than $11 million annually in General Fund costs for rehabilitation positions that CDCR does not have to fund," the annual report says. Those inmates make between 30 and 95 cents per hour before deductions.

Participants without a high school diploma must earn a GED within two years to continue in the program. Joint Venture Program participants earn a comparable wage less deductions for things like taxes, room and board, crime victim compensation, government-ordered restitution such as child support. Inmates in the program also have to put money into a savings account.

Graduates from the PIA's Career Technical Education program, which gives inmates "hands-on experience in real world training," were 89 percent less likely to return to prison when compared with the prison system's general population, according to the report. Overall, PIA participants across the board had a 24 percent to 30 percent lower recidivism rate than the general prison population.

With just 400 to 450 words for our weekly State Worker column, most of what we learn each week never sees print. Column Extras give you some of the notes, the quotes and the observations that inform what's published.

Our column in today's Bee outlines State Auditor Elaine Howle's update on the Financial Information System for California, the biggest information technology project in state government.

Click here to read Howle's latest FI$Cal report, which has more details about the project than we could cram into our column.

This is the last installment in a series of posts looking back at the most-read State Worker blog items in 2011.

The debate over public employee pensions took an unexpected turn last February when the state's Little Hoover Commission suggested what had been the unthinkable: Change pension benefits promised to current state and local government employees.

A locally based research group, Californians for Fiscal Responsibility, had called for changing the guaranteed benefits promised to current employees. But now a government entity was suggesting the legally precarious and politically explosive idea.

The commission said that the public pension crisis is so severe that changing benefits for future workers won't fix it quickly enough. So the bipartisan panel said that state and local governments should freeze their defined-benefit pension promised to current employees and then prospectively place them into cheaper "hybrid" plans that blend smaller traditional pensions with more volatile 401(k)-type savings programs.

Both sides of the pension debate said that such a move would undoubtedly spark litigation. Conventional wisdom holds that pension promises are protected by both state and federal law, but the commission's report said that the principle should be directly tested in the courts.

Here's the link to the most-viewed State Worker blog post of 2011: "Commission's plan rolls back pensions for current workers," which ran on Feb. 24.

Postscript: The idea to alter pensions promised to current employees is dead for now. Two proposed ballot measures to alter pensions offered by another local group, California Pension Reform, and a plan promoted by Gov. Jerry Brown focus on lowering benefits for workers hired in the future.

This is the latest installment in a series of posts looking back at the most-read State Worker blog items in 2011.

Each year the Bureau of State Audits publishes the results of investigations sparked by tips sent to its whistleblower hotline. Last August's compilation of investigations included stories of misused state vehicles, excessive break times and the mishandling of sensitive documents.

Some of the 300 or so comments on, "Audit chronicles state employee abuse and bad management," the third-most viewed State Worker blog item of 2011, accused The State Worker's report as a thinly veiled attempt to cast all state workers as dishonest and lazy. Others thought the item proved that all state workers are dishonest and lazy.

Our take: One definition of news is that which is out of the ordinary. That's why the sun's rise each morning isn't news. We expect it to happen.

The auditor's report was news because it chronicled bad behavior -- actions by state employees that were outside of the ordinary. We hope that the day never arrives that inefficiency and ineptitude are considered so routine that they're not worth covering.

Posts about government employee misdeeds draw plenty of attention and provoke debate over workplace fairness, public-sector standards vs. private-sector standards and the media's news reporting role.

Consider these comments from the fourth most-read State Worker blog item of 2011, "Audit reveals California state employee misdeeds and miscues," posted Jan. 18:

Two public pension reform plans aimed for the November 2012 ballot wouldn't make much of a dent in government costs for decades, and the savings to employers' retirement expenses would be "offset to some extent by increases in other employee compensation costs," according to the nonpartisan Legislative Analyst's Office.

The LAO's take on both plans -- one a so-called "hybrid" system for new workers and the other a 401(k)-style retirement account for new workers -- concludes that they are fraught with legal peril and could wind up costing state and local government more or less depending on how they're "interpreted and administered."

The analyses share much of the same language and conclusions. Click here for the LAO's review of the defined contribution plan backed by California Pension Reform. This link opens the review of CPR's alternative hybrid pension proposal that mirrors a plan backed by Gov. Jerry Brown.

The LAO called Brown's plan "a bold, excellent starting point" for changing public pensions, but that it also "leaves many questions unanswered."

Stanford's Institute for Economic Policy Research has issued it's new report, "Pension Math: How California's Retirement Spending is Squeezing the State Budget." Click here for our previous post on the study.
Pension Math: How California's Retirement Spending is Squeezing the State Budget

We never get all of what we learn into a news story, but this blog can give users the data, the notes and the quotes from the notebook that informed what was published.

Our story today reports on CalPERS' problems with its new computer system, dubbed my/CalPERS, and its implementation, the Pension System Resumption Project. Since the system's startup in September, the fund has been slower to process death benefits claims for some members. The delayed payments have prompted some health insurance providers to take some members off their rolls for failing to pay their premiums -- which must be deducted from the death benefit payments).

CalPERS says it's giving the matter top priority and that no one is in danger of losing their medical coverage because of the computer problems.

Want to dig deeper? Here are some of the documents that informed the story:

The transcript of the CalPERS Board of Administration meeting on Oct. 19. The my/CalPERS discussion starts on page 48.

The transcript of the Nov. 16 CalPERS Board of Administration meeting. Scroll down to page 53 for my/CalPERS talk.

An Oct. 31 performance report on the transition from CalPERS' old patchwork computer system to the new one. We thought one of the metrics on page 2 was particularly interesting: "CalPERS reputation may be damaged if Judges and Legislators functionality is not properly implemented."

IMAGE: www.freeclipart.com

Washington state's auditor says that nearly 6,700 state-issued cellphones that cost the government $1.8 million -- nearly a third of those reviewed -- were used infrequently or not at all during a study that ran from March 2010 through February of this year. Of those, a third weren't used one time during the audit period, reported Washington State Auditor Brian Sonntag, but the state still paid more than $533,000 for them.

The Washington audit, which you can read here, echoes a similar study of California's state cellphones that found about 25 percent of the 54,000 wireless lines tracked in December 2010 weren't used -- but still cost the government more than $300,000.

Those finding supported Gov. Jerry Brown's February order to cut the government's cellphone inventory in half by June 1 of this year.

Departments turned in about 29,000 of 67,000 cellphones covered by Brown's order, with thousands more still under review as of the deadline, the administration said at the time.

Prompted by the Washington audit, we're curious about the impact to California state workers of the state's cellphone slim-down nearly six months later:

State pensions will cost government employers about $200 million more in fiscal 2016-17 than expected next year, according to a new report from the Legislative Analyst's Office. About half of those rising costs will hit the general fund.

The chart above comes from page 40 of the LAO report released this morning. It depicts California's general fund employee retirement expenses past, present and future.

Here's a slice of what the report says:

California Pension Reform's Mike Genest has issued this statement about the LAO's review of Gov. Jerry Brown's pension proposals:

It is disappointing that the LAO omits the most critical flaw of the Governor's proposal: By his own admission his plan only solves $4-$11 billion of what is at least a $240 billion unfunded liability. While the Governor's plan has merits, it solves less than 5% of our problem. We need bold, comprehensive reform now and cannot continue to wait as politicians debate the issue and tinker around the edges.

California Pension Reform recently filed two ballot proposals with the attorney general's office for official title and summary. It hopes to start gathering signatures in January in hopes of qualifying one of the two measures for the November 2012 ballot.

The Legislative Analyst's Office has released an eight-minute video, embedded below, that sums up its review of Gov. Jerry Brown's pension reform proposal.

"We view Gov. Brown's (pension) proposal as a bold one, and one that should very carefully considered by the Legislature," says the LAO's Jason Sisney.

Still, he says, "we don't understand some key aspects" of Brown's proposals, particularly how putting new employees into a hybrid plan or pushing back new hires' qualifying retirement age would work.

The LAO also has questions about how pensions could be capped and notes that the unfunded liabilities of the CalSTRS and UC pension systems aren't addressed.

"In our view ... it doesn't really make a whole lot of sense to change all of these (UC and CalSTRS) benefits substantially and not think about how they're going to be funded into the future," Sisney says.

And, Sisney notes, the governor's plan is silent on retiree health benefits for local government workers.

Californians for Retirement Security, a labor coalition representing 1.5 million state and local public employees, has issued a statement in response to this morning's LAO review of Gov. Jerry Brown's pension reform package.

Here's the statement emailed to media a few minutes ago quoting Dave Low, the coalition's chairman:

The LAO's mixed assessment of the Governor's pension proposals hits the nail on the head when it says that the Legislature should move forward in a deliberate and reasoned fashion to craft solutions to California's complex pension systems. There are far too many unanswered questions and lack of details to fairly and accurately evaluate the impact of these proposals. Those proposals that impair the negotiated benefits of current employees are a legal dead end. As the report points out, these are matters that should be settled at the bargaining table, not in courtrooms. We will continue to work in the upcoming Legislative session, just as we have for the past several years, to achieve the spirit of the Governor's reforms without taking a wrecking ball to the retirement security of California's teachers, firefighters, police officers, and other public workers.

PHOTO: Dave Low / Courtesy California School Employees Association

The Legislative Analyst's Office has published its review of Gov. Jerry Brown's pension plan, concluding that it is "a bold, excellent starting point" for changing public pensions, but that it also "leaves many questions unanswered."

In particular, we do not understand key details of how his hybrid benefit and retirement age proposals would work. Moreover, the Governor's plan leaves unaddressed many important pension and retiree health issues, including how to address the huge funding problems facing the state's teachers' retirement fund, the University of California's (UC's) significant pension funding problem, retiree health benefit liabilities, and other issues. In making significant changes to pension and retiree health benefits, we would urge the Legislature also to tackle these very difficult issues concerning the funding of benefits.

The report also cautions that Brown's plan to mandate current employees pay more toward their retirement accounts is a "legal and collective bargaining minefield." Ditto for suggestions by The Little Hoover Commission and others (not Brown) that current employees' accrued benefits could be frozen and then reduced going forward:

A recently-released study by the nonpartisan watchdog Project On Government Oversight says the federal government signs off on service contract billing rates that, "on average, pay contractors 1.83 times more than the government pays federal employees in total compensation, and more than 2 times the full compensation paid in the private sector for comparable services."

The report, which was issued last month, concludes, "Given that one-quarter of all discretionary spending now goes to service contractors, a reassessment of the total federal work force, with a focus on contractor billing rates, could save taxpayers billions of dollars annually."

Thanks to Blog User G for flagging this for The State Worker.

A new report from the University of California, Berkeley's Center for Labor Research and Education and Center for Wage and Employment Dynamics finds that state budget woes around the country have come from imploding housing markets and the Great Recession -- not public employee costs.

The report takes a look at the relationship between public sector workers, their unions, and state budget deficits.

"The Wrong Target: Public Sector Unions and State Budget Deficits" by researchers Sylvia Allegretto, Ken Jacobs and Laurel Lucia concludes that:

The California's state and local public employee retirement systems had $470 billion in cash and investment holdings in 2009, down 27 percent from $643 billion in 2008, according to new statistics released by the U.S. Census Bureau.

Nationwide, state and local government retirement systems saw their cash and investments lose a collective $726 billion, falling to $2.5 trillion in 2009. The 23 percent drop in 2009 followed a $177 billion loss for the funds in 2008.

The data come from the Local Public Employee Retirement Systems Survey, which takes an annual snapshot of the financial activity and membership information of the nation's state and local public employee retirement systems. The figures include funds' revenues, expenditures and investment holdings nationally and broken out by state and local government categories.

A new study by the Center for Retirement Research and Boston College refutes the notion that state and local government workers as a group end up a lot richer than their private sector counterparts.

The study used 1996-2006 data from the University of Michigan's Health and Retirement Study to examine whether state and local government employees are wealthier in their retirement years.

UC Berkeley's Center for Labor Research and Education has released "Meeting California's Retirement Security Challenge," which argues for a return to private-sector defined benefit pensions.

The center said that the work was supported by International Brotherhood of Electrical Workers Local 1245, Service Employees International Union California State Council, and Californians for Retirement Security.

Over on our sister blog, Capitol Alert, Dan Walters has some details. We've also posted the 118-page research compilation below.

The Fair Political Practices Commission signed off on fines for more than a dozen current and former CalPERS board members and employees today, closing the books on an investigation that started with 58 people connected to the mammoth pension fund.

The action today rubber stamped penalties already agreed to by 16 individuals who violated state law by failing to report meals, alcohol, clothing, sports and entertainment tickets and other gifts received from CalPERS investment partners since 2006.

The fines ranged from $3,600 against portfolio manager Shaun Greenwood to $200 for Sue Kane an adviser to CalPERS' board President Rob Feckner.

With just 400 to 450 words for our weekly State Worker column, most of what we learn each week never sees print. Column Extras give you some of the notes, the quotes and the observations that inform what's published.

Our column in today's Bee looks at the final chapter of the Fair Political Practices Commission's investigation into gift reporting lapses at CalPERS.

Bottom line: The investigation turned up paperwork gaps and 16 people have agreed to pay fines totaling about $20,000 for failing to disclose some freebies they received from companies doing business with CalPERS.

In an unusual move, FPPC Chief of Enforcement Gary Winuk, wrote a memo to commissioners about the investigation in advance of the Sept. 22 hearing set to consider the 16 stipulated settlements reached. He concluded that there were several factors working in CalPERS favor, including the employees' and board members' cooperation, confusion between an in-house reporting mandate and what the law requires and CalPERS' "strict no-gifts rule for staff and ethics training programs that go beyond the requirements of state law."
CalPERS investigation memo by FFPC Enforcement Chief Gary Winuk

A measure that would require state agencies and departments to terminate illegal private contracts is on its way to Gov. Jerry Brown's desk.

Assembly Bill 740, authored by Assemblyman Bob Blumenfield, D-Woodland Hills, cleared the Senate last Thursday on a 24-14 vote. The Assembly voted 54-17 in May to approve it.

SEIU Local 1000, the American Federation of State, County and Municipal Employees and Professional Engineers in California Government, supported the bill, which aims to strengthen laws against needless private contracting.

The Legislative Analyst's Office has issued a webcast and handout summarizing the major provisions of collective bargaining agreeements that lawmakers ratified in fiscal 2010-11.

Think of it as a sort of an analytical cleansing of the contractual palate as the first wave of state workers return to regular hours and pay after 31 months of furloughs and personal leave programs.

View the video above, read the summary below.
Summary of State Collective Bargaining Agreements

The Bureau of State Audits has just released its latest whistleblower report. Some highlights:

* -- An official appointed to a post at the Department of Mental Health claimed he was conducting state business in 2009 when he hobnobbed with celebrities in Southern California, planned fundraising galas and attended events such as golf tournaments, the Golden Globe Awards, a celebrity's funeral and a Julio Iglesias concert (see chart at left). Those activities, he said, allowed him to network with celebrities and enlist their support for Mental Health programs.

The auditor said the activities didn't benefit the state, but it did cost at least $51,244 in salary for the wasted time. The official used a state car, but the bureau couldn't figure out how much of the official's travel wasn't on state business, so it didn't estimate that cost.

State Auditor Elaine Howle has placed funding the California State Teachers' Retirement System on a growing list of "high risk" issues facing state government. CalSTRS joins a fiscal and political gallery of tough problems that include the state's budget, managing the state's workforce and maintaining California's infrastructure.

Bee colleague Dale Kasler has more in this report. You can read the audit below. Click here to see a summary of California's high-risk issues and departments.
The California State Auditor's Updated Assessment of High‑Risk Issues the State and Select State Agencies ...

As we reported Wednesday, Controller John Chiang's auditors found several problems with how the Department of Corrections and Rehabilitation accounts for some payroll and travel expenses.

Several blog users asked us to post the audit. Here it is.
Audit Report: ADMINISTRATIVE AND INTERNAL ACCOUNTING CONTROLS OVER THE OFFICE REVOLVING FUND

A fired state employee received a final lump-sum paycheck for nearly $15,000 -- twice.

An $8,000 salary advance to one state worker went uncollected -- for nearly three years.

Overpayments to employees approaching a half-million dollars were carried on the books for three years or more.

Those are just three examples of what Controller John Chiang this afternoon called, "grossly inadequate" payroll and travel advance tracking discovered through an audit of the California Department of Corrections and Rehabilitation.

The state has dumped 44 percent of its cellphone inventory, according to this report by The Bee's David Siders, but Gov. Jerry Brown wants to shut off more.

Here's a spreadsheet with a breakdown of cellphone inventory by department. Use the tool bar at the bottom of the embedded document to magnify or reduce the image. Look for more about Brown's war on cellphones in tomorrow's Bee.
California state cellphone inventory by department

The Legislative Analyst's Office has published its review of the tentative agreements reached with California Association of Professional Scientists and with Professional Engineers in California Government.

This review, like those before it, says that the administration has overstated the contract's cost savings for the current fiscal year and that the savings for 2011-12 are about 6 percent, short of the 8 percent to 10 percent in contract savings that Gov. Jerry Brown has said that he needs.

The Department of Personnel Administration's savings estimates don't include a provision that it negotiated later with the California Correctional Peace Officers Association and then applied via a March 30 memo to the five units that reached deals with Brown. The provision gives cash value to personal leave program time.

The analyst published its analysis of the contracts on Friday. That same day, DPA sent the CCPOA contract to the LAO for review. The analyst has 10 days to issue its review of the deal, although we expect it will finish earlier.

Here's the fiscal analysis of the contracts for units 9 and 10:

The Assembly Public Employees, Retirement and Social Security Committee has approved a bill that would freeze the pay of state employees earning more than $150,000 per year.

Assembly Bill 7, authored by Assemblyman Anthony Portantino, D- Pasadena, prohibits the salary increases or bonuses for those higher-end employees until Jan.1, 2014, while they are employed in the same position or job classification.

The measure exempts unionized state employees and anyone "who occupies a classification that is deemed necessary to public safety and security by the Governor through an executive order, or a person whose salary is set by the State Constitution," according to this Assembly committee analysis.

Portantino's bill doesn't affect UC system employees, but, "(a)t a time when the University of California Board of Regents is raising student fees, it is imperative that they show leadership and fiscal responsibility for two years by not granting raises or bonuses for employees that make in excess of $150,000 per year," the bill says.

This is the seventh time Portantino has introduced pay freeze legislation. It now goes to the Assembly Appropriations Committee for another hearing.
Assembly Bill 7, introduced by Assemblyman Anthony Portantino, D-Pasadena

The Bureau of State Audits says that the state Employment Development Department, squeezed by soaring unemployment rates and funding problems, has struggled to meet federal standards to process first-time benefits claims. While a hiring spree and allowing employees to work more overtime eased the crunch to degree, the department is still dealing with technical issues -- phones, software -- that are slowing the public's access to services and has put federal stimulus funding at risk.

Furloughs? Not an issue, auditors said:

We also found that the former governor's furlough orders, which affected program representatives, had minimal impact on the department's performance because the average overtime hours worked by program representatives generally exceeded their average number of leave hours.

A few highlights from the report, which you can read in full by clicking here:

Talk about irony.

Work on a massive state computer hardware and software system to improve its financial reporting continues, but no one seems to know for sure how much the project will eventually cost or how to pay for it, according to a new state report.

The uncertain future of the Financial Information System for California project, or FI$Cal, and former Gov. Arnold Schwarzenegger's hiring restrictions translated into high turnover among the project's key staff and hurt efforts to hire qualified replacements.

That further hampered work on the project, which aims to integrate the state government's vast and varied accounting, human resources and procurement systems into one. Currently, the state's financial data networks are a patchwork of dissimilar systems built piecemeal over many years.

State Auditor Elaine Howle's five-page update on the project notes:

A new report blasts the "questionable wisdom" of giving guns and cars to lawyers and auditors at the Office of Inspector General and classifying them as peace officers.

We touched on the policy in last week's State Worker column, noting that the OIG has started relieving some employees of their firearms and going from take-home cars to a motor pool system. But the office isn't changing anyone's peace officer status.

Today's highly critical 53-page report, published by the Senate Office of Oversight and Outcomes, goes into more detail and recommends that the state re-examine whether lawyers and inspectors should get the guns, cars and pensions that police and firefighters receive.

We found that the peace-officer designation stems from the unsupported premise that OIG staff must be prepared to stave off violence and wield weaponry. In reality, such actions seldom if ever arise in these job categories. We also found that OIG uses peace officer perquisites - generous pensions and take-home state cars - to attract and retain its professional team of lawyers and auditors.

Among the report's findings:

The Bureau of State Audits has released a report that says the state doesn't fully comply with the Dymally-Alatorre Bilingual Services Act. The 1973 law mandates that government agencies serving a "substantial" number of non-English-speaking people must employ enough bilingual workers to "ensure provision of information and services to the public in the language of the non-English-speaking person."

The State Personnel Board needs to do more to enforce the law at the state level, auditors said, and the departments/agencies reviewed needed to do a better job of surveying their foreign language needs and follow through, such as providing translations of written materials.

Auditors in 1999 had many of the same criticisms, the report says.

Local governments surveyed by the BSA fell down on the job, too. Of the 10 locals reviewed, nine conducted required language surveys, but four reported "erroneous results and two could not adequately support their results."

Click here for the summary of the report, scroll or word search the full document below using Scribd's tools, or click the link to download the PDF. Responses from the Personnel Board, Highway Patrol, DMV, Justice and other audited state departments start on page 71.

Dymally-Alatorre Bilingual Services Act Audit

Litigation over state worker minimum wage has been moving so quickly that we're just now catching up to the news that Controller John Chiang filed a court papers late Tuesday opposing Gov. Arnold Schwarzenegger's minimum wage pay order.

You can download the opposition brief here. It's a continuation of the legal back-and-forth that restarted last week.

The filings include these declarations by former state payroll chief John Harrigan, Chiang, consultant Brent Ehrman and others who say that the state payroll system cannot turn on and turn off minimum wage in a way that complies with Schwarzenegger's order without running afoul of federal law.

The SCO also commissioned public accounting and consulting firm Crowe Horwath to study the payroll system. The firm issued this study, dated July 2, that backs up the minimum wage arguments that the controller has made.

Another report dated July 11 lays out several options to get the SCO in position to execute a minimum wage withholding during a budget impasse. It concludes that the best options would require up to four years and up to $11.7 million to implement. Even those would be "partial" solutions.

PHOTO: Gov. Arnold Schwarzenegger speaks with State Controller John Chiang after he delivered an address to the state Legislature last month. The two are at odds again over pay for state workers. / Hector Amezcua, 2009 Bee file

The Bureau of State Audits released a Corrections and Rehabilitation Department report yesterday that looked at the costs of health care for "three strikes" inmates. What grabbed our attention was the section titled, "Furloughs Have Created New Liabilities," which starts on page 60 of the 80-page document.

At page 61, the auditor makes these calculations and conclusions (we've added paragraphs and bold type for readability and emphasis):

Officials at the state Division of Occupational Safety and Health on Monday issued a "clarification" of a controversial employee questionnaire that drew fire from the American Civil Liberties Union and the state engineers' union for what they said was an invasion of employee privacy.

The 2-page form (which you can read by clicking here) went out to employees on Mar. 1 after a yet-to-be-released Bureau of State Audits report "revealed several serious problems with regard to a former Division employee who, among other inappropriate activities, taught and delivered presentations concerning occupational safety and health for pay and other compensation while working for the Division as a full-time employee," according to this Feb. 24 memo to DOSH staff from division Chief Len Welsh.

His boss, Department of Industrial Relations Director John Duncan deputized department Chief Counsel Vanessa Holton and Senior Special Investigator Frank Dickey to conduct an internal DIR investigation into "the inappropriate activities discovered by the BSA."

A week later, Dickey issued the questionnaire, titled "DOSH AUDIT," asking "under penalty of perjury" that professional staff to detail their "teaching, training or presentations in any form" including "those for which you were compensated or not and performed during work hours or not." Division employees had until Monday to fill out the form, sign and return it. You can click here to read the memo from Dickey that accompanied the questions.

Click the following link to read more about the DOSH questionnaire, the questions it raised, the protests that ensued and how the division clarified what investigators want to know.

Sen. Jenny Oropeza, D-Long Beach, has introduced a measure that would set standards for state agencies to track and dispose of computers, fax machines, TVs and other electronic devices. The California Department of Toxic Substances Control would oversee the program.

Click here to read SB 1052. This link opens Oropeza's press announcement about it, which includes references to a 2008 audit of five state agencies that found problems with how the state handles e-waste disposal. Click here to read the summary of "Electronic Waste: Some State Agencies Have Discarded Their Electronic Waste Improperly, While State and Local Oversight Is Limited."

State Auditor Elaine Howle estimates that unheeded recommendations dating back to 2002 have cost the state $1.4 billion in lost opportunities and waste, according a report released this morning.

In the last two years, more than 20 percent of the recommendations made by the Bureau of State Audits have gone unheeded, the reports says. Auditors in 2008 and 2009 made 281 recommendations to departments and agencies. Of those, 132 have been completely implemented and another 88 partially implemented. The other 61, about 22 percent, haven't been implemented.

Click here to open the summary of "Implementation of State Auditor's Recommendations: Audits Released in January 2008 Through December 2009." The page contains links to the introduction and content links organized by entity or by legislative oversight committee.

Today, the IRS begins an 18-month-long audit of state government's 2008 vehicle home storage permits. As we reported in this blog post and in today's Bee, the feds want to know if state employees have driven state cars and trucks for personal use without reporting it. If so, they could be liable to pay back taxes for the perk -- and the state could be on the hook, too.

Some pertinent links:

A May 2009 memo to departments from Kathy Hicks, who at the time was chief of the Office of Fleet and Asset Management, requesting annual vehicle home storage permit counts from departments.

A vehicle home storage request/permit form, which includes codes governing state vehicle use. Check out page 2, which lays out the penalties for misusing state cars and trucks:

The department, upon its own initiative, may suspend from state service without pay for a period not exceeding 30 days, any officer or employee of this state exempt from civil service for violating this chapter or the rules and regulations adopted pursuant thereto.

And this:

An employee shall be liable to the State for the actual costs to the State attributable to his/her misuse of a state-owned motor vehicle. Where, however, and to the extent that a superior directs the misuse, the superior and not the subordinate shall be liable.

The IRS newsletter from 2002 that lays out the conditions under which vehicles can be excluded from consideration as taxable income. Scroll down to pages 9 through 11.

To look at business vehicles from the employer's side of the tax code, click here to open Publication 15 "Employer's Tax Guide." Scroll down to "Accountable plan," and read through "non-accountable plan."

And finally, in case that's not enough, read, "Vehicle Provided by Your Employer" "Reimbursements" "Accountable Plans" and "Nonaccountable Plans" in Chapter 6 of Publication 463, "Travel, Entertainment, Gift, and Car Expenses," by clicking this link.

The IRS wants a peek at how state employees used state-owned and state-leased vehicles in 2008.

A Jan. 27 memo from Department of General Services Acting Director Ron Diedrich lays out the info that federal auditors want:

The Department of General Services (DGS) has been informed by the State Controller's Office (SCO) that the Internal Revenue Service (IRS) will be conducting an audit regarding tax reporting associated with personal use of state-owned or -leased vehicles. Specifically, the IRS has requested that DGS assist the SCO by obtaining a list of all civil service and exempt employees from each department and agency that had state-owned or -leased vehicles assigned to them and/or home storage permits authorized during calendar year 2008. This list must include: 1) Employee Name; 2) Social Security Number; 3) Date Vehicle or Home Storage Permit was assigned that coincides with the 2008 calendar year.

The SCO is working closely with the Department of Personnel Administration to prepare for an eighteen-month IRS audit. The IRS informed the SCO that it will issue summons for payroll records to review State employee tax reporting associated with the taxable event
triggered by the use of an employer-provided vehicle for personal use,

The Controller's Office confirmed that the IRS is conducting a state vehicle audit. The Diedrich memo says that departments and agencies have until today to fax their lists to the SCO. The IRS starts digging in on Tuesday.

Click here to read the entire Diedrich memo.

Hat tip to blog user T for bringing this to The State Worker's attention.

In an unrelated breaking story on our sister blog, Capitol Alert, Bee colleague Andrew McIntosh has this report:

The Department of Health Care Services said today it may have breached the privacy of 49,352 state residents who receive adult day health care services from the state.

In a terse news release, the department said that letters it mailed a week ago to 49,352 beneficiaries wrongly included those patients' Social Security Number on address labels.

The Department said the incident took place Feb. 1. It was notified of the error on Feb. 4. It started to notify the 49,352 beneficiaries about the problem on Sunday.

Click here for more.

The Bureau of State Audits released a report this morning that California is on the verge of losing $93 million in American Recovery and Reinvestment Act money earmarked for residential weatherization. The money is contingent on California proving it has effectively used $93 million already received through July of last year for the same purpose, but "as of December 1, 2009, no homes had been weatherized," auditors found.

The state's Department of Community Services and Development, which is the responsible for using the money, says that a lack of timely guidance at the federal level over things like prevailing wage standards for weatherization workers delayed lining up contractors. And the department takes seriously its obligation to be transparent and to choose contractors wisely -- priorities that have understandably slowed down the process, CSD Director Lloyd Throne said in a response letter attached to the audit.

Click here to download the BSA report. This link will open the audit's fact sheet.

Added at 11:30 a.m.: Click here to read California Recovery Task Force Director Herb K. Schultz's response to the audit.

The Bureau of State Audits has released a report on recommendations it made to departments at least one year ago that haven't been fully implemented. From the bureau's fact sheet on the report:

From January 2005 through October 2008, the bureau issued 69 reports on audits requested by the Joint Legislative Audit Committee or required in legislation. Based on the most recent responses from state agencies, the bureau reports the following:

• There were 131 recommendations made to 29 state agencies that had been outstanding for at least one year but were not fully implemented. Of the 131 recommendations, 90 remain not fully implemented.

• Although not all recommendations have been fully implemented, many agencies have reported progress. For example, the Department of Health Care Services reported that, as a result of the bureau's findings and recommendations, it has begun recouping payments it incorrectly made to providers. The department reported that it has thus far recovered $5.3 million.

• In many cases, agencies stated that they expect to fully implement outstanding recommendations by the end of 2010. In other instances, agencies reported that they do not expect to fully implement recommendations for several years. For example, one agency stated that it will not fully implement a specific recommendation until 2015. In a few cases, agencies indicated they will not implement certain recommendations.

Click here to download the BSA report.

The managers overseeing the massive FI$Cal project to modernize California's ailing and antiquated financial systems have awarded a $1.3 million contract as a small step forward on the billion-dollar effort.

News about the contract was tucked inside the latest update on FI$Cal on the project by  Elaine Howle, the state auditor.  To read Howle's latest project monitoring letter, click here.

The Financial Information System for California (FI$Cal) project office awarded the contract to Cambria Solutions Inc. in December.

Between now and the early fall, Cambria's job will be "documenting the current business processes of 44 current state entities," says Howle's letter to the governor and legislators. 

In regular English, that means Cambria will contact each of the 44 assigned state organizations and write up an inventory of each entity's computer financial management methods, listing the applications (software) and systems (hardware) that support the work.

No word on why a consultant was needed to do that seemingly simple job.

Also included in Howle's report was a list of state departments and agencies whose workers will be among the first wave to implement FI$Cal when it's ready to launch.

Among them: staffers at the Board of Equalization and the Department of Justice.

The Bureau of State Audits has released a new report on the Board of Pilot Commissioners for the Bays of San Francisco, San Pablo and Suisun, which licenses and regulates the pilots who guide ships in those bays and ports in West Sacramento and Stockton.

The 68-page document, which you can read by clicking here, outlines nine areas of concern, including:

• The board paid for business-class airfare for pilots attending training in France, which may constitute a misuse of public funds.
• The board lacked a procedure, required in state law, for access to confidential information, and it released information to the public that included a pilot's home address and Social Security number.
• The board did not consistently adhere to state law when licensing pilots. In one case, it licensed a pilot 28 days before he received a required physical examination; he piloted vessels 18 times during this period.
• The board renewed some pilots' licenses even though the pilots had received physical examinations from physicians the board had not appointed and, in one case, renewed a license for a pilot who had not had a physical examination that year.
• Of the 24 investigations we reviewed, 17 went beyond the 90-day statutory deadline for completion.
• The board did not investigate reports of suspected safety standard violations of pilot boarding equipment, as required by law.
• The board failed to ensure that all pilots completed required training within specified time frames.
• The board did not ensure that some of its members and investigators filed required statements of economic interests.
• The board did not approve several changes to the rates pilots charge for their services, as required by law.

Click the following link to read excerpts of the auditor's report about travel to France and the board's no-bid arrangement for physical exams for pilots.

State Auditor Elaine Howle says that the California's Department of Veterans Affairs isn't delivering services like it should to the 2.1 million veterans living here. The Bureau of State Audits report outlines these problems:

• The department sees its role as providing few direct services to address issues California's veterans face, such as homelessness and mental illness. Instead, it relies on other entities to provide such services and its Veterans Services division (Veterans Services) is responsible for collaborating with these different entities.

• The department has only recently shifted its attention from its primary focus on veterans homes, deciding that Veterans Services should take a more active role in informing veterans about available benefits and coordinating with other entities.

• One of the department's primary goals for Veterans Services is to increase veterans' participation in federal disability compensation and pension benefits (C&P benefits). However, its ability to meet this goal is hampered by various barriers, including veterans' lack of awareness of the benefits, the complexity of the claims process, and delays at the federal level in processing these claims.

• Both Veterans Services and the County Veterans Service Officer programs (CVSOs) assist veterans to obtain C&P benefits. However, better coordination with the CVSOs and the use of additional data may enhance Veterans Services' ability to increase veterans' participation in these benefits.

• The department did not formally assess veterans' needs or include key stakeholders such as the CVSOs in its strategic planning process, nor did it effectively measure its progress toward meeting the goals and objectives identified in its strategic plan.
• As of March 2009 the CalVet Home Loan program served 12,500 veterans. However, the program is generally not designed to serve homeless veterans or veterans in need of multifamily or transitional housing.

Howle suggests a number of fixes for those problems that are outlined in this executive summary. You can click here to download the 92-PDF-page audit.

Click the link below to read the department's response and link to a 2-year-old report that highlights similar DVA problems:.

The Bureau of State Audits has released a report that employees at five entities -- not including the Department of Corrections and Rehabilitation -- accounted for at least $1.3 billion of the more than $2.1 billion in overtime pay from 2003-04 to 2007-08.

And of those, the auditors found, a good chunk of that OT went to relatively few workers in a couple of job classes at the departments of Mental Health and Developmental Services. From the report:

For instance, in fiscal year 2007-08, at Mental Health's Napa State Hospital (Napa), 19, or 4 percent, of the 489 nurses in the registered nurse- safety classification averaged $78,000 in regular pay and $99,000 in overtime compensation.

Staffing demands accounted for the reason for the extreme overtime at Napa State Hospital and Sonoma Developmental Center, two facilities auditors examined, and raise concerns that employees working so many hours in safety and public health positions might pose a danger to their own or to their patients' well-being.

The other departments that logged heavy OT: the Highway Patrol, Forestry and Fire Protection and Veterans Affairs.

The report contains this caveat:

State law was changed in February 2009 to no longer allow leave to be counted in computing overtime for the two job classifications we tested. However, this same state law indicates that it may be superceded by agreements ratified subsequent to the law's effective date that once again could contain provisions that allow employees' leave time to be counted as time worked in computing overtime.

Click here to read a summary of the audit. Clicking here will download the full report. And this link opens an audit fact sheet.

The Bureau of State Audits has released a report on vendor contracts at the departments of Health Care Services and Public Health. Here are highlights from the audit:

Over the last five years, the State Personnel Board (board) has disapproved 17 of 23 IT contracts challenged by a union.

Many of the board's decisions were moot because the contracts had already expired before the board rendered its decisions.

Of the six IT contracts still active at the time of the board's decisions, only three were terminated because of board disapprovals.

Health Care Services did not comply with state policy regarding the use of blanket positions and was disingenuous with budgetary oversight entities.

Neither Health Care Services nor Public Health has a complete database that allows it to identify active IT contracts and purchase orders.

The departments complied with many, but not all, state procurement requirements.

The departments did not obtain the requisite financial interest statements from half the sampled employees responsible for evaluating contract bids and offers.

Click here for the audit summary, which includes recommendations to increase the role of the State Personnel Board and unions in contracting. View the complete report, all 89 PDF pages, by clicking here.

With just 400 to 450 words for our Thursday State Worker column, much of what we learn in the ramp up to writing it never sees print. Column Extras give you some of the notes, the quotes and the observations that don't make the cut.

Today we looked a bit at state correctional officer overtime through the lens of Tuesday's CDCR report by the Bureau of State Audits. (We blogged about the report when it was released. Click here for that report.)

The column in today's fiber and cyber Bee includes overtime figures for this calendar year that weren't part of the audit. As we noted, the numbers are down significantly from last year.

You can click this link to see the year-over-year January through June numbers we received from Corrections in response to our request for overtime figures. Disregard the last paragraph leading into the 2008 numbers: Department Deputy Director for Fiscal Services Dave Lewis told us in an interview on Wednesday that the drop in OT this year isn't a result of furloughs. Instead, as the column mentions, it's from policy changes that exclude leave time from counting toward the threshold for overtime and an influx of new hires through last year.

The Bureau of State Audits has issued a report on the Department of Corrections and Rehabilitation. Some highlights:

While Corrections' expenditures have increased by almost 32 percent in the last three years, the inmate population has decreased by 1 percent during the same period.
Corrections' ability to determine the influence that factors such as overcrowding, vacant positions, escalating overtime costs, and aging inmates have on the cost of operations is limited because of a lack of information.

The cost of housing an inmate out of state in fiscal year 2007-08 was less per inmate than the amount Corrections spent to house inmates in some of its institutions.
Overtime is so prevalent that of the almost 28,000 correctional officers paid in fiscal year 2007-08, more than 8,400 earned pay in excess of the top pay rate for officers two ranks above a correctional officer.

Over the next 14 years, the difference between providing new correctional officers with enhanced retirement benefits as opposed to the retirement benefits many other state workers receive, will cost the State an additional $1 billion.

Nearly 25 percent of the inmate population is incarcerated under the three strikes law. We estimated that the increase in sentence length due to the three strikes law will cost the State an additional $19.2 billion over the duration of the incarceration of this population.

Although Corrections' budget for academic and vocational programs totaled more than $208 million for fiscal year 2008-09, it is unable to assess the success of its programs.
California Prison Health Care Services' ability to transition to using telemedicine is impeded by a manual scheduling system and limited technology.

And here's a summary of CDCR's response:

Corrections believes that the report does not completely capture the complexity of many of the issues it addresses. For example, Corrections asserts that the source of the difficulty in determining the number of custody officers associated with a given group of inmates is that inmates have multiple characteristics and thus may be a part of more than one group. In addition, it believes that some of the topics discussed in the report are not solely within its purview to address and that while it agrees with our recommendation that it should seek better data to more effectively manage, it questions how this will allow it to reduce certain types of costs. Finally, Corrections believes that it has made progress in several of the areas discussed in the report, and will address the specific recommendations in future corrective action plans.

Click here to download the summary. Access all 112 PDF pages by clicking this link.

Auditors at the Department of General Services discovered a funny thing as they did routine checks on state credit cards issued to Secretary of State's office employees.

Checking logs in the agency's business services unit in 2008 to see if the state's elections boss is following all laws, auditors found trouble with the records.

The logs are a financial control tool. They list and keep track of who has one of the 150 or so credit cards in the office, which card, and when they received it.

Two of five employees listed as having state credit cards in the control logs were spot checked. They did not actually have the card in their possession.

Worse, DGS audit chief Rick Gillam and his team couldn't find four of 20 additional cards which control logs recorded as being unissued.

DGS advised Secretary of State Debra Bowen's office, citing its obvious failure to follow state business management policies and law.

Bowen's people said they took immediate action, citing Bowen's "tone-at-the-top culture" to ensure her staff comply with all laws - and then some.

More than a year later, everything is fixed. A full agency-wide reconciliation of the 150 cards has been done, according to a letter written by Janice Lumsden, Bowen's deputy of operations.

Lumsden's July 6 letter to the DGS auditor, and the DGS audit, which describes other problems, were obtained by The State Worker.

To read both, click here.

Several Bee and State Worker readers contacted me after we published a story Wednesday about the state wasting $580,000 to lease office space that went unused for four years.

That story cited a report by state auditor Elaine Howle, which described how the General Services and Corrections and Rehabilitation departments had wasted $580,000 on office space they leased but did not use for a variety of reasons.

"Who benefited?" you wondered.

State audits don't always mention names of private vendors or building owners -- and Howle's report did not mention it in this case, either.

We have your answer.

The space was rented  from a company called Hyundai Rio Vista Inc. in San Diego for space in a building located at 8880 Rio San Diego Drive.

State Auditor Elaine Howle today updated a 2007 report in which she said that the rising cost of providing health and dental benefits to retired state workers represented a significant risk to state finances if legislators don't deal with the problem.

In her 2007 report, Howle's office estimated it will cost the state $48 billion to provide future post-employment medical and dental benefits to retired state workers.

California and many other state and local governments only budget enough money every year to pay premiums for retiree insurance, instead of setting aside funds to cover all future costs to the State.  This is known as "pay-as-you-go" funding.

This gives Howle's bean counters a case of financial chills.

Why?  The state must now estimate and report these future costs, or liabilities, in its financial statements as required by new accounting rules.

In its fiscal year 2007-08, the state paid only $1.25 billion of the $3.59 billion annual bill for retiree health and dental benefits. The $2.34 billion difference is a future liability.

In today's update,  Howle said the gap will rise to $4.71 billion for fiscal 2008-09.

Click here to read the full report.

The state auditor's big concern?  If the liability grows so large that it overshadows others in state  financial statements, it could affect California's credit rating.

A weaker credit rating could add to the state's budget woes by making it more expensive for the state to borrow when it issues bonds.

Howle argues this risk could  be reduced if the state starts setting aside more money now for these future bills.

Never again, says Department of General Services Director Will Bush.

Bush has released a response to State Auditor Elaine Howle's report on a leasing deal - signed long before he joined the department - that saw DGS and the Department Corrections and Rehabilitation squander $580,000 on rented office space in San Diego that stayed vacant for four years.

"This is not the kind of efficiency in state government that everyone has a right to expect," Bush said in his statement, which is posted on the DGS Web site. 

"I am committed to improving our leasing program so that this never occurs again."

"I have directed our internal auditor to independently review the DGS leasing portfolio, our processes and procedures for inefficiencies and to recommend improvements to our systems to prevent taxpayer money from being wasted," Bush added.

Bush says that over the past few years, DGS has taken a number of what he described as "tangible steps" to improve the department's leasing programs:

• Hired 15 new space planners to reduce leasing workload backlog.
• Converted the older manual paper process for tracking leasing activities to an online system.
• Implemented a single intake office for all real estate move and change requests.
• Developed clear policies and procedures for disagreements with landlords including specific time periods for dispute escalation to management.
• Expanded the authority for the director of DGS to direct state agencies to use state-owned space, rather than leased space from the private sector.
  

State Auditor Elaine Howle today released a copy of her semiannual report to the Legislature that describes in agonizing detail the results of her investigations into waste and spending abuses by state employees.

Her latest report covers the period of July 1 through Dec. 31, 2008.

Look for my story in tomorrow's Bee about Howle's gem of a headliner: how General Services and the Department of Corrections and rehabilitation wasted $580,000 by leasing office space for four years that wasn't being used.

A second chapter tells how General Services wasted $3,000 by paying a private vendor for emergency preparedness training in Los Angeles, even though the California Highway Patrol provides the training free of charge.

But there's more. Howle's accounting gumshoes found several departments improperly paid state workers more than they were entitled to get:

- From October 2003 through March 2008, a Department of Fish and Game official improperly claimed $71,747 for commute and other expenses incurred near her home and headquarters. The employee said the expenses were approved.

- The State Compensation Insurance Fund paid an employee $8,314 for 427 hours that she did not work and that it had not charged against her leave balances.

- The Department of Justice paid an employee $648 that she did not earn and $497 for travel expenses that she did not incur.

A new report from the Bureau of State Audits this morning puts new numbers to the impact of the looming brain drain state government confronts as its workers reach retirement age.

Some highlights from the auditor's report:

• Forty two percent of today's state employees in leadership positions and more than 20 percent of rank-and-file employees may retire over the next seven years.
• California is just beginning to develop workforce and succession plans while other states have done more to develop their plans.
• Efforts to streamline the hiring process to bring new employees into state service are not expected to conclude until fiscal year 2014-15.
• For certain departments that provide critical services, the challenges of filling vacancies due to large numbers of retirements is an immediate concern.

A few other telling statements from the audit's summary:

... nearly half of the employees in rank and file positions at the five departments we reviewed were age 50 or older as of June 30, 2008. Of greater concern is that most of the departments we reviewed generally believe it will be difficult to replace experienced employees due to a variety of factors, including the State's lengthy and complicated hiring process and lower salaries in the public versus the private sector.

In 2008 California's Department of Personnel Administration (personnel administration) started providing guidance as some departments began planning for the retirement of their workers. Further, the State Personnel Board (personnel board) currently offers a one day introductory class for developing workforce and succession plans, but enrollment in this class has declined over the years. Finally, although California is working to streamline its hiring process to better ensure it can bring new employees into state service, these efforts are not expected to conclude until fiscal year 2014-15. Thus, any resulting improvements may not be realized until many workers have already retired.

Click here to read, "High-Risk Update--Human Resources Management: A Significant Number of State Employees Are Beginning to Retire, While Certain Departments That Provide Critical State Services Lack Workforce and Succession Plans." It's 40 pages long.

If it skates like a Duck and hits like an Angel, should taxpayers pay for it?

Apparently not, according to the scorching audit of $2 million in questionable spending by the state avocado commission that surfaced late last week.

One of the more intriguing nuggets uncovered by California Department of Food and Agriculture auditors is a whopping $123,227 the commission spent on season's tickets for the Anaheim Ducks NHL hockey games and Los Angeles Angeles baseball games between 2005 and 2008.  

That tidy sum didn't include food or beverages, either. No word on how much that cost.

Auditors found the bills for tickets - and in the Ducks' case, playoff tickets - were tucked away in a commission ledger called "merchandising, retail performance programs."

The way it was recorded on commission books "was not clearly transparent," auditors reported, adding it was unclear if the commission's oversight board knew about the tickets.

When auditors looked at who was using the tickets and if it was for business, they found internal logs showing 40 percent of Duck tickets went to the commission's own employees and 15 percent of Angels tickets also went to employees.

Another 21 percent of Angels tickets reportedly went unused.

The logs said nothing about what avocado industry business was discussed at hockey and baseball games - or who it was discussed with.

Employees who enjoyed the tickets did not reimburse the commission for them, the auditors added, concluding the expenses "were not in the best interests of the state."

Auditors have recommended that unidentified state employees who used any tickets be required to repay the money if they were used solely for personal purposes.

The Ducks were a hot and hard to get ticket in Southland in 2006-2007, when the team won hockey's Stanley Cup Championship and it made the playoffs again last year.

Former commission president Mark Affleck, who resigned in 2008, is a big ice hockey fan who still plays competitively, according to his biography on his church's web site. 

The audit has been turned over to Attorney General Jerry Brown's Office for further investigation of "possible financial improprieties."

The commission says it's adopted new spending controls to stop such abuses in the future.

Have a look at the audit here.

Last week's state audit of the Unemployment Insurance Appeals Board proves that old saw that rules are made to be broken.

It's hard to know where to start. Bee reporter Andrew McIntosh's story on the audit nailed the conflict-of-interest concerns raised by the report. The Sacramento County District Attorney's Office and the state attorney general's office are looking into the matter. Somebody may be going to jail.

But let's talk about another aspect of the audit, the part that covers "familial relationships and employee favoritism."

We get calls and e-mail blasting this sort of thing all the time. Retirees holler about it years after they've been out of state service. "Families control entire branches of state government," a retiree told us a few months ago. "It's like the Mafia!" We don't remember his name, but we remember the quote because it stuck us at the time as an extreme overstatement.

Now we wonder.

Let's start with a few numbers on page 27 of the 63-page report:

"Employees responding to our survey provided the names of 94 colleagues who were allegedly related to another employee. Those 94 names equate to nearly 15 percent of the 646 individuals who were employed by the appeals board as of April 2008."

That's just counting immediate family relationships, the auditor said. "Because ... we did not ask them to identity all known familial relationships, there could be other familial relationships within the appeals board that were not reported."

According to the auditor's survey, 45 percent of appeals board employees who responded to the questionnaire believed that hiring and promotions were sometimes or often compromised by family relationships or employee favoritism.

And who knows what the numbers would have looked like if more board employees had responded? Auditors looked at 355 responses. What about the other 300 employees? Did they fear retaliation if their responses leaked out? (Auditors screened the responses by using employees' work e-mail addresses, which may have made some folks jittery.)

Maybe many of those folks didn't chip in their thoughts because they figured that this was going to be yet another state audit with lots of thunder and no rain.

The State Auditor is great for giving news grinders like us plenty of fodder.But when it comes to producing results, it's a decidedly mixed bag.

The auditor can criticize, make recommendations and occasionally refer the worst sinners to law enforcement officials. Beyond that, its greatest power seems to be embarrassing the audited. For proof, see its January audit of responses to audits: "Recommendations Not Fully Implemented After One Year."

We're planning to write about this topic for our Thursday State Worker column. Want to weigh in on the record? Contact us at (916) 321-1043 or jortiz@sacbee.com. We'd love to hear from that disgruntled retiree.

The state auditor has a new report that finds the Department of Fish and Game's handling of money from the Bay-Delta Sport Fishing Enhancement Stamp is being mismanaged -- but not like you probably think.

The program's spending isn't out of control. Rather, most of the millions of dollars collected through the program aren't being spent because the department has trouble tracking what it does spend.

From the audit's executive summary:

As of June 30, 2008, the fish stamp account had an unspent balance of more than $7 million, although a portion was committed to approved projects that have not yet been funded. Thus, individuals who purchase the fish stamp are not obtaining the full benefit of the fees they are required to pay.

Although individual project managers attempt to track the costs of projects for which they are responsible, they do not always have complete information because not all expenditures charged to specific fish stamp projects are routed to them for approval.

Neither the project managers nor the Fish and Game accounting services branch reconciles to the accounting records the information maintained by project managers. In fact, a reconciliation would be very difficult to complete since the accounting system does not typically identify expenditures by project.

... Fish and Game does not have an accurate accounting of either the administrative expenditures or individual project expenditures for the fish stamp program.

We also identified expenditures that Fish and Game charged inappropriately to the fish stamp account. The law specifying allowable uses of fish stamp revenue is broad, but based on our review of a sample of expenditures, Fish and Game does not ensure that the money is used appropriately.

You can read the summary by clicking here, or download the entire 40-page audit by clicking here.

How much should we blame the managers?

There's always a tendency to read reports like last week's Bureau of State Audits account of improper state employee activity and focus on the workers caught misusing their position or access. But move past that and another theme surfaces -- a failure of state management.

A few examples mentioned in the audit, which you can read by clicking here:

A Department of Justice manager whose failure to track subordinates' work time reporting allowed them to take 727 hours of pay that was "potentially unearned."

An Employment Development Department employee who drank on the job, "and his drinking impeded his ability to perform his duties safely ... his supervisors had been aware of the situation for years."

The supervisors at Housing and Community Development failed either to notice or to act on signs that an employee was absent an estimated 1,200 hours, time she spent working for a nonprofit that gets about 40 percent of its money from HCD. "Through their inaction, HCD's management permitted the employee's improper conduct to occur and continue." Cost to the state: An estimated $34,700 in wages for work that wasn't done.

And in some cases, the boss is the rule breaker, like the CalTrans supervisor who used his state computer to conduct personal business.

There's more, as Bee colleague Andrew McIntosh reported in this story, but you get the idea.

The State Worker fields plenty of comments blasting the boss. Some of the critics contend that if the state upgraded its management corps, many other bureaucratic problems -- inefficiency, low morale, and the like -- would be well on the way to solution.

There is another side to this, however. Managers tell us that it's maddening to supervise people in a system that demands management accountability while undercutting management authority at the same time. Take the guy at EDD with the alcohol problem. His punishment? Two days suspension without pay.

Do what it takes to move out the bad apple and risk that you'll not be backed up, stymied by the rules or blocked by union protections. Leave the bad apple alone and risk rot spreading throughout your unit as your staff questions your dedication, courage, skill or understanding of "what's really going on." Management inaction squashes employee morale, damages management's standing and breeds more bad behavior.

If we're to believe what we hear in letters, e-mails and phone messages from state employees, the BSA's audit is a fleeting glimpse of how workers rip off the state. How much of that happens because bosses aren't watching? Because they're not speaking up? Or is it because the barriers to effective management in today's state bureaucracy in some cases are simply insurmountable?

We're writing about this topic for Thursday's State Worker column in print and online. If you'd like to weigh in, on the record, we'd love to hear from you. Contact us via the e-mail link below or call (916) 321-1043.

IMAGE: MSNBC.com

The State Bureau of Audits has released its latest report of improper employee activity. Our colleague Andrew McIntosh reports the details in this story. You can read the 71-page report by clicking here. The bureau also issued this summary fact sheet.

The audit reminds us of the many anonymous letters, e-mails and phone calls that we receive alleging that state workers have broken rules, taken money or abused their position.

We appreciate the information, and when we can, we follow up. If you're thinking about sending us a tip, there are a few things that you can do to help us investigate it:

Be specific: Names, money amounts, dates and times all lend credence to an accusation and help us narrow the scope of our investigation.

Provide documents: Paper trails are the strongest evidence. If you can't get the documents, tell us who wrote them or who we should ask for them.

Be ready for skepticism: A responsible reporter always asks tough questions before going public with a story that could put someone's reputation or livelihood at stake. So don't be surprised if you get grilled.

Be patient: Investigations can take weeks or months to complete. If you tell us something today, don't expect a story in The Bee tomorrow.