Report I2015-1 Summary - August 2015
Investigations of Improper Activities by State Agencies and Employees
State employees and agencies engaged in improper activities, including the following:
- A state agency failed to seek competitive bids, wasted $3.2 million of state funds, and improperly paid $1.6 million in advance payments.
- A state agency failed to increase rental rates for more than two years, which resulted in $883,000 in lost revenue to the State.
- State agencies improperly allowed three chief psychologists to earn extra compensation that totaled $96,000.
- Field division staff at a state agency improperly disposed of surplus state property that would cost at least $5,300 to replace, received only $300 from a recycler for the surplus property, and provided a gift of public funds by returning the money to the recycler.
- A state supervisor neglected his duty when he failed to monitor a subordinate's attendance and approved inaccurate time sheets.
- A state agency wasted $50,000 when it purchased equipment that it has used minimally for five years.
RESULTS IN BRIEF
The California Whistleblower Protection Act (whistleblower act) empowers the California State Auditor (state auditor) to investigate and report on improper governmental activities by agencies and employees of the State. Under the whistleblower act, an improper governmental activity is any action by a state agency or employee related to state government that violates a law, is economically wasteful, or involves gross misconduct, incompetence, or inefficiency.1
This report details the results of six particularly significant investigations completed by the state auditor or undertaken jointly by the state auditor and other state agencies between July 1, 2014, and June 30, 2015. This report also outlines the investigative results from another four investigations that were best suited for other state agencies to investigate on behalf of the state auditor during the same one-year period. The following paragraphs briefly summarize the investigations, which are discussed more fully in the individual chapters of this report.
CALIFORNIA CORRECTIONAL HEALTH CARE SERVICES
California Correctional Health Care Services (Correctional Health Care) failed to seek competitive bids from vendors when it sought to upgrade the electrical infrastructure within state prisons beginning in 2011. Instead, it improperly used a master agreement and paid the contractor $17 million even though the electrical goods and services that it needed could not lawfully be provided under that master agreement. As of May 2015 Correctional Health Care had yet to pay an additional $4 million in billings from the contractor. Moreover, Correctional Health Care paid the contractor $3.2 million to do nothing more than process invoices of the subcontractor, who performed all of the work. Further, Correctional Health Care improperly paid the contractor $1.6 million in advance for goods and services that the subcontractor did not provide until about a year later, which violated the State's prohibition against advance payments. Finally, Correctional Health Care had little assurance that it received adequate value for the amounts it paid because the contractor's invoices contained only vague descriptions of goods and services provided under the master agreement, and the employees responsible for reviewing the invoices failed to take any steps to ensure that the billing of goods and services was proper and that the goods and services were actually delivered or performed.
CALIFORNIA DEPARTMENT OF TRANSPORTATION
The California Department of Transportation (Caltrans) failed to increase rental rates to reflect the fair market value of state land rented by telecommunications companies in the San Francisco Bay Area, in violation of a provision in their license agreements. Caltrans' failure to increase rates cost the State nearly $883,000 in revenue from July 1, 2012, through September 30, 2014.
CALIFORNIA DEPARTMENT OF CORRECTIONS AND REHABILITATION AND CORRECTIONAL HEALTH CARE
For nearly two years, the California Department of Corrections and Rehabilitation (Corrections) and Correctional Health Care improperly allowed three chief psychologists to receive extra compensation for being on call or for returning to work after their shifts ended to perform additional duties. As a result, the State overpaid these employees a total of $96,000.
CALIFORNIA DEPARTMENT OF WATER RESOURCES
A field division chief and a civil maintenance branch chief (maintenance manager) with the California Department of Water Resources (Water Resources) failed to follow the appropriate policies when disposing of accumulated surplus property. Specifically, the maintenance manager recycled property, including copper wire, without making the required notification to the branch in charge of property disposal. This denied Water Resources or another state agency the opportunity of reusing copper wire with an estimated replacement value of $5,300 to $7,900. Further, the maintenance manager did not monitor the recycling company's methods for assessing the value of the property. As a result, the recycler valued the property at only $300, when we estimated that the recycled value of the copper wire portion of the property at more than $2,200. Finally, Water Resources made a prohibited gift of public funds to the recycler when it failed to promptly deposit the recycler's $300 check to Water Resources and instead returned it to the recycler.
From August 2012 through March 2014, a senior transportation engineer for Caltrans neglected his duty to ensure that a subordinate engineer's time sheets were accurate. Although the subordinate's time sheets indicated that he worked the day shift from August 2012 through March 2014, he actually was playing golf for part of 55 workdays during those months. The engineer was later reassigned to a different division, but he was not directly supervised from early May 2014 to early June 2014 because of a failure in communication between two senior transportation engineers. Consequently, Caltrans district management was unable to determine where the engineer was or how much work, if any, he actually performed during this period. Nevertheless, a district manager directed the senior transportation engineer to approve the subordinate's time sheets.
CALIFORNIA DEPARTMENT OF VETERANS AFFAIRS, CHULA VISTA VETERANS HOME
The Chula Vista Veterans Home wasted state funds when it purchased a piece of equipment in July 2010 for nearly $50,000 and rarely used during the past five years, when it could have rented the equipment for much less.
OTHER INVESTIGATIVE RESULTS
In addition to the investigations described previously, the state auditor referred numerous investigations to state departments to perform in response to whistleblower complaints that the departments were best suited to investigate on our behalf. The following investigations substantiated improper governmental activities.
EMPLOYMENT DEVELOPMENT DEPARTMENT
An accounting officer at the Employment Development Department (EDD) misused state resources by using state equipment and materials to type and print a large volume of personal letters, emails, and other documents during work hours. She also used her position to improperly access EDD's database to adjust tax accounts and to obtain confidential information to assist friends, associates, and family members with their unemployment insurance claims.
DEPARTMENT OF INDUSTRIAL RELATIONS
An office services supervisor for the Department of Industrial Relations misused state resources by using his state compensated time and state email account to coordinate the sale of copied DVD movies and music CDs and to send and receive sexually suggestive emails during his work hours. The supervisor also misused state resources to print materials for a coworker's fitness studio using a state owned printer.
CALIFORNIA DEPARTMENT OF FORESTRY AND FIRE PROTECTION
A California Department of Forestry and Fire Protection senior personnel specialist misused state time by frequently arriving at work late without fully accounting for the missed time. Her supervisor also failed to ensure that the senior personnel specialist properly accounted for all of her missed time.
An employment program representative at EDD misused her state computer, state phone line, and state compensated time for personal purposes.
Table 1 summarizes the improper governmental activities detailed in this report, the financial impact of the activities, and the status of recommendations made to address these activities.
|Status of Recommendations|
|Chapter||Department||Issue||Cost to the state as of June 30, 2015*||Fully Implemented||Partially Implemented||Pending||1||California Correctional Health Care Services (Correctional Health Care)||Failure to seek competitive bids, waste of state funds, and improper advance payments||$3,218,636||X||2||California Department of Transportation (Caltrans)||Failure to increase rental rates, loss of state revenue||882,942||X||3||California Department of Corrections and Rehabilitation and Correctional Health Care||Improper payments||96,245||X||4||California Department of Water Resources||Failure to properly dispose of surplus state property, gift of public funds||7,916||X||5||Caltrans||Neglect of supervisory duties, failure to monitor attendance, approval of inaccurate time sheets||NA||X||6||California Department of Veterans Affairs||Waste of state funds||49,937||X||7||Employment Development Department (EDD)||Misuse of state resources||NA||X||7||Department of Industrial Relations||Misuse of state resources||NA||X||7||California Department of Forestry and Fire Protection||Misuse of state time||848||X||7||EDD||Misuse of state resources||NA||X|
Source: California State Auditor.
NA = Not applicable because the situation did not involve a dollar amount or because the finding did not allow us to quantify the financial impact.
* We estimated the costs to the State as noted in individual chapters of this report.
1 For more information about the state auditor's investigations program, please refer to the Appendix.