Report 2013-036 Recommendation 7 Responses

Report 2013-036: Indian Gaming Special Distribution Fund: Counties' Benefit Committees Did Not Always Comply With State Laws for Distribution Fund Grants (Release Date: March 2014)

Recommendation #7 To: Butte, County of

To ensure that grant recipients comply with state law concerning interest earned on mitigation grant funds, by June 2014, the Butte County benefit committee should establish policies and procedures to verify that grant recipients have placed grant awards in interest-bearing accounts, and that the interest is spent only on activities that mitigate the effect of tribal gaming on local jurisdictions.

Annual Follow-Up Agency Response From October 2018

On April 13, 2014 the IGLCBC adopted by-laws that added the requirement to place grant funds in interest-bearing accounts and use interest earned on mitigating casino impacts. On September 16, 2015, the IGLCBC added the requirement to report on the use of interest earnings to show interest being spent only on activities that mitigate the effect of tribal gaming on local jurisdictions.

Completion Date: September 2016

California State Auditor's Assessment of Annual Follow-Up Status: Not Currently Feasible

Although Butte County's benefit committee has established requirements for the grantees to report interest earned as part of grantees' annual reports, it has not established policies and procedures for its staff to verify that grant recipients comply with those requirements. It is important to acknowledge that the Legislature has not appropriated any funding for mitigation grants since fiscal year 2013-14.

Auditee did not substantiate its claim of full implementation

Annual Follow-Up Agency Response From October 2017

Completion Date: September 2015

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

Although Butte County's benefit committee has established requirements for the grantees to report interest earned as part of grantees' annual reports, it has not established policies and procedures for its staff to establish that grant recipients comply with those requirements. It is important to acknowledge that the Legislature has not appropriated any funding for mitigation grants since fiscal year 2013-14.

Auditee did not address all aspects of the recommendation

Annual Follow-Up Agency Response From October 2016

Completion Date: September 2015

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented

Auditee did not address all aspects of the recommendation

Annual Follow-Up Agency Response From October 2015

On April 13, 2014 the IGLCBC adopted by-laws that added the requirement to place grant funds in interest-bearing accounts and use interest earned on mitigating casino impacts. Additionally, the requirement to report on interest earnings was added to the annual report, which was accepted by the IGLCBC on September 16, 2015.

Completion Date: September 2015

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

Butte County provided documentation showing that the county adopted a requirement that recipients of mitigation grant funds deposit the funds in interest bearing accounts and self-report interest earned. However, Butte's process does not include procedures to verify that grantees have deposited the funds in interest bearing accounts.

Auditee did not address all aspects of the recommendation

1-Year Agency Response

In order to comply with state law concerning interest earned on mitigation grant funds, the Butte County Indian Gaming Local Community Benefits Committee (BCIGLCBC) added a requirement to the grant funds application which states: "A local government jurisdiction that receives a grant from an Individual Tribal Casino Account shall deposit all funds received in an interest-bearing account and use the interest from those funds only for the purpose of mitigating an impact from a casino. If any portions of the funds in the account are used for any other purpose, the remaining portion shall revert to the Indian Gaming Special Distribution Fund."

In addition, the BCIGLCBC amended its bylaws, Article V, Section 1, adding letter h. as follows: "Require grant recipients to place funds in interest bearing accounts and use interest earned on mitigating casino impacts."

Finally, to verify grant recipients proper use of interest earnings, Butte County IGLCBC staff worked with CSAC to update the "Indian Gaming Special Distribution Fund Annual Report" to include a column titled "Interest earned on grant funds through end of FY xx". In the worksheet, this amount rolls into the total funds and expenditures.

This process requires the BCIGLCBC to award grants only to those who acknowledge and agree to the interest earning provisions, and requires grant recipients to report on interest earnings and how they were used.

This recommendation is considered fully implemented at this point. The Indian Gaming Special Distribution Fund program has been discontinued due to lack of funding, therefore it is not reasonable to expend additional public resources to set up processes to monitor a non-existing program.

Completion Date: April 2014
Response Date: February 2015

California State Auditor's Assessment of 1-Year Status: Partially Implemented

Butte County provided documents showing that it now requires recipients of Indian Gaming Special Distribution Fund moneys to deposit the funds in interest bearing accounts. However, it's process only requires grantees to self-report interest earned. As a result, Butte's process does not verify that grantees have in fact deposited the funds in interest bearing accounts.

6-Month Agency Response

The Butte County Benefits Committee Application Procedures include the following statement:

22. A local government jurisdiction that receives a grant from an Individual Tribal Casino Account shall deposit all funds received in an interest-bearing account and use the interest from those funds only for the purpose of mitigating an impact from a casino. If any portions of the funds in the account are used for any other purpose, the remaining portion shall revert to the Indian Gaming Special Distribution Fund.

At its April 3, 2014 meeting, the BCIGLCBC updated its bylaws, Article V, Section 1, adding letter h. as follows: "Require grant recipients to place funds in interest bearing accounts and use interest earned on mitigating casino impacts."

To verify grant recipients proper use of interest earnings, Butte County IGLCBC staff worked with CSAC to update the "Indian Gaming Special Distribution Fund Annual Report" to include a column titled "Interest earned on grant funds through end of FY xx". In the worksheet, this amount rolls into the total funds and expenditures.

Completion Date: April 2014
Response Date: January 2015

California State Auditor's Assessment of 6-Month Status: Pending

Although its response indicates that it worked to update the annual report to include a column about interest earned on grant funds, Butte County did not provide documentation that it has established policies and procedures to verify that grant recipients are complying with state law regarding interest earned on mitigation grant funds.

Auditee did not substantiate its claim of full implementation

60-Day Agency Response

At its April 3, 2014 meeting, the IGLCBC adopted updated by-laws that added the requirement to place grant funds in interest-bearing accounts and use interest earned on mitigating casino impacts. In addition, the annual report will add the requirement to report on the use of interest earned.

Completion Date: April 2014
Response Date: May 2014

California State Auditor's Assessment of 60-Day Status: Pending

Butte County has not yet provided the documentation referenced in its response.

Auditee did not substantiate its claim of full implementation

All Recommendations in 2013-036

Agency responses received are posted verbatim.