Report 2012-121.2 Summary - September 2013
Department of Parks and Recreation:
Flaws in Its Budget Allocation Processes Hinder Its Ability to Effectively Manage the Park System
Our audit on the budgeting and personnel practices of the Department of Parks and Recreation (department) revealed the following:
- The department has not established effective processes for providing districts with their budget allocations and for tracking district expenditures.
- Districts do not receive their budget allocations until several months into the State's fiscal year, making planning of their expenditures challenging during critical summer months.
- Untimely budget allocations cause districts to rely on prior-year allocations to operate, resulting in problems when the official allocations are less than the prior-year allocations.
- The limitations of the department's Fiscal Tracking System generates duplicate information in tracking district expenditures.
- The department has not fully implemented a process for tracking expenditures at the park level to comply with the provisions of state law.
- The department has not done enough to prevent unauthorized leave buybacks from occurring in the future.
- The Executive Personnel Review Committee (EPRC) does not have policies and procedures in place to govern the roles and responsibilities of its members.
- The EPRC does not communicate its decisions to the department director or executive office to ensure its decisions are consistent with the vision of the department.
RESULTS IN BRIEF
With a budget of nearly $574 million for fiscal year 2012-13, the Department of Parks and Recreation (department) manages 280 park units, such as state beaches, state historic parks, and off-highway vehicle parks. Yet despite the magnitude of its budget and responsibilities, the department has not established effective processes for providing districts with their budget allocations and for tracking district expenditures. As a result, the five districts we visited identified significant concerns with the informal processes the department employs. Specifically, the department provides the districts with their budget allocations months after the fiscal year begins. As a result, the districts operate during the busy summer season using prior-year allocations as their budgets, which some districts indicated was problematic in recent years because the official allocations they eventually received were sometimes significantly less than the prior-year allocations. In addition, the department's process for tracking district expenditures to ensure that they remain within budget results in it performing unnecessary and duplicative work.
These concerns, if not corrected, will hamper the department's current efforts to establish a process for budgeting and tracking expenditures at the park level. State law requires that if the department sustains a required budget reduction after June 30, 2014, it must conduct a specific analysis prior to closing, partially closing, or reducing services at its parks. However, in a previous audit of the department that we issued in February 2013, we concluded that the department lacked the ability to comply with this law because it did not track expenditures at the park level. To address this issue, the director of the department distributed a memo in June 2013 to all managers and supervisors describing the process the department intended to use in calculating each park's past expenditures and future costs—the elements needed to complete the analysis required by state law. The methodology outlines three phases: calculating expenditures by park unit for fiscal year 2010-11, defining a process to track expenditures by park unit for fiscal year 2013-14, and developing individual park unit budgets to define what each park unit costs to operate.
Although the department received expenditure information for fiscal year 2010-11 by park unit from the districts in early August 2013, it still needs to allocate additional expenditures to park units, such as headquarters overhead, to complete phase one. Additionally, we have concerns about the department's ability to complete the remaining two phases of the methodology before the moratorium on park closures expires on June 30, 2014. Without a complete and fully implemented process to calculate park unit costs, the department cannot comply with the provisions in state law or provide information to decision makers concerning the funding needed compared to the funding available to operate the parks.
We also noted significant concerns related to some of the department's personnel processes. In 2012 three state agencies reported on the department's unauthorized leave buybacks caused by weak controls and certain employees' circumvention of state policies and procedures. A leave buyback occurs when a department purchases accumulated leave time from employees in lieu of those employees taking the time off in the future. Although the State allows departments to purchase accumulated leave from employees covered by collective bargaining unit agreements in some specific circumstances, it has not authorized leave buybacks for employees not covered by bargaining unit agreements since 2007. However, in March 2012 the department's internal audit office reported that the department had inappropriately bought back nearly $271,000 in leave from 56 employees, primarily in its administrative services division, during 2011. Additionally, the internal audit report indicated that the department's Off-Highway Motor Vehicle Recreation Division (OHMVR division) had allowed unauthorized leave buybacks in 2007 and 2008. In May 2012 the Office of the Attorney General issued an investigative report concerning the administrative services division's 2011 buybacks and recommended the termination of the deputy director of administrative services—the highest-ranking employee who had knowledge of the buybacks at the department. Further, in December 2012 the State Controller's Office (state controller) released a payroll review in which it identified details on the controls the department breached to perform the 2011 buybacks.
During our current audit, we found additional instances in which the department inappropriately bought back leave. In its payroll review, the state controller identified three employees as possibly participating in the administrative services division's 2011 unauthorized leave buybacks. We determined that, although these three employees were not part of the administrative services division's buyback, the department did inappropriately buy back leave from them in 2011 totaling $15,400. We also found that the department inappropriately paid five other employees nearly $16,400 in leave. Specifically, in May 2010 the department's training officer at the time submitted a request to the personnel office to pay down compensating time off (CTO) balances for three support staff employees, even though their bargaining unit agreement did not allow for it. In addition, one staff services analyst who participated in the May 2010 buyback received an additional unauthorized CTO buyback of $8,721 in March 2011, and two other employees received inappropriate buybacks for personal holidays totaling $820 and $410 in October 2010 and February 2011, respectively. The managers authorizing these leave buybacks either relied on past practices or misunderstood the requirements related to leave buybacks, and the department's personnel office processed the transactions even though the department did not have the authority to do so. Despite all the recent concern over and scrutiny of the unauthorized leave buybacks, the department still has not done enough to prevent such practices from occurring. This is because, although it disciplined four managers who were involved in the 2011 leave buybacks, it has not changed its processes or provided appropriate training to its staff.
In the course of this audit we also noted weaknesses in some of the department's other personnel processes. For example, although the department established an Executive Personnel Review Committee (EPRC) to manage its staffing, it has not developed policies and procedures to govern the roles and responsibilities of the EPRC's members. As a result, we noted that the EPRC may not make consistent decisions on staffing requests and does not communicate its decisions to the department director or executive office.
Finally, until early 2012, the department's position control unit had a practice of circumventing state law to prevent the state controller from abolishing positions that were vacant for six consecutive monthly pay periods. The position control unit would temporarily transfer employees into vacant positions to avoid having those positions abolished. By making it appear as though vacant positions had been filled, the department avoided having to justify the need for those positions. The department told us that it has now discontinued this practice, which appears to be consistent with the data we reviewed. However, the department should improve its oversight of the employees who process these types of transactions to ensure that it does not violate state law in the future. Without better controls, training, and guidelines, the department may encounter future difficulties in its staffing and personnel actions.
To ensure that districts receive timely budget allocations, the department should establish and implement a formal allocation process by January 2014 that includes the following:
- A timeline that describes when the department will provide park districts with draft allocations, revisions to draft allocations, and final allocations.
- A description of the roles and responsibilities of key staff involved in the process, including budget office staff, the deputy directors and division chiefs for park operations and the OHMVR division, and district superintendents.
To reduce duplicate expenditure tracking and increase the effectiveness of its budget process, the department should develop procedures requiring the districts to prepare and submit spending plans and to periodically submit their total expenditures after reconciling them with its internally developed accounting system.
To ensure that it can comply with state law in the event that it must close parks or reduce park services in the future, the department should improve its methodology for developing individual park unit budgets and determining and tracking park-level costs.
To ensure that the Legislature has the information necessary to make any future decisions related to service reductions or park closures, beginning in fiscal year 2014-15 the department should provide it with an annual report that includes the costs to operate each park unit.
To prevent unauthorized leave buyback transactions, the department should do the following:
- Provide training by December 2013 to all department managers and personnel staff who might be involved in leave buyback transactions to ensure that they understand the State's requirements regarding leave buybacks.
- Establish written policies and procedures requiring the personnel office's transactions unit to obtain documentation from managers who request leave buyback transactions. The documentation should specify the authority for the leave buyback and include appropriate authorizing signatures.
- Increase the level of supervisory review to ensure that transactions unit staff process only authorized and properly coded leave buyback transactions.
To improve the effectiveness of the EPRC, the department should take the following actions by March 2014:
- Update its administrative manual to specify the members of the EPRC, the members' roles and responsibilities, and the personnel actions that the EPRC is responsible for reviewing.
- Establish policies and procedures to govern the EPRC's decisions on personnel actions. These policies and procedures should include the specific factors and their relative importance that the members must consider when making decisions and should require the EPRC to document its decisions and the reasons for those decisions.
- Require the EPRC to periodically provide a summary report of its decisions to the director's office so that the director can monitor whether those decisions are consistent with his priorities.
To ensure that its position control unit staff do not circumvent state law to preserve vacant positions, the department should establish a process to periodically review any personnel transactions that are not subject to EPRC review. It should provide a summary report of this review to the director's office and the EPRC.
The department indicated that it plans to implement our recommendations.