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Report Number : 2016-036

Indian Gaming Special Distribution Fund
The Method Used to Mitigate Casino Impacts Has Changed, and Two Counties' Benefit Committees Did Not Ensure Compliance With State Law When Awarding Grants

Responses to the Audit

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Fresno County

February 15, 2017

Ms. Elaine M. Howle, CPA
State Auditor
621 Capitol Mall, Suite 1200
Sacramento, CA 95814

Subject: Response to Report 2016-036

Dear Ms. Howle:

1

Thank you for the opportunity to address the Recommendations included in the California State Auditor’s (CSA) draft audit report entitled “Indian Gaming Special Distribution Fund Report 2016-036” (Report).  While the final report will be shared with the Fresno County Indian Gaming Local Community Benefit Committee (Committee) for consideration, the County wishes to note that the five-day timeframe for response and confidentiality requirements did not allow for the full Committee to meet, review the report and provide input into the response provided in this letter.  County staff is responsible for the administration of the grant and staffing the Committee.  The following includes the CSA’s Recommendations followed by the County’s Response. 

Recommendation:

If the Legislature appropriates funding from the distribution fund for mitigation grants in the future, to comply with state law, the benefit committee for Fresno County should ensure that they obtain sufficient documentation from grant applicants to demonstrate that the requested funding represents the correct proportionate share of the costs attributable to casino impacts.

Response:

The recommendation has not yet been implemented, but will be implemented in the future, if the Legislature appropriates funding from the distribution fund for mitigation grants in the future.

Recommendation:

If the Legislature appropriates funding from the distribution fund for mitigation grants in future years, Fresno County's benefit committee should revise its procedures to include specific steps to verify that grantees will place grant funds into interest-bearing accounts when awarding any mitigation grants. These steps should include requiring grantees to report the interest accrued in their quarterly reports and substantiate those reports with bank statements or other reports of interest earned, and following up with the grantee when the grantee reports no earned interest for the period.

Response:

The recommendation has not yet been implemented, but will be implemented in the future, if the Legislature appropriates funding from the distribution fund for mitigation grants in the future.

Recommendation:

Fresno County's benefit committee should develop procedures to ensure it complies with the reform act by collecting all required statements of economic interest in a timely manner, and that it complies with its record retention policy by maintaining those statements for the required period of time.

Response:

2

The recommendation has been implemented, the Filing Officer has purchased SouthTech’s DisclosureDocs and eDisclosure systems to manage and maintain Statements of Economic Interests Form (Form 700) information and the Filing Official is aware of their responsibilities per Government Codes.  In addition, it is ultimately the filer’s responsibility to file their Form 700 in a timely manner.

Again, thank you for the opportunity to review and respond to the draft Report. If you have any questions, please do not hesitate to contact me at 559.600.1710.

Sincerely,

 

Deborah Paolinelli, CPA
Assistant County Administrative Officer






Comments

CALIFORNIA STATE AUDITOR’S COMMENTS ON THE RESPONSE FROM FRESNO COUNTY

To provide clarity and perspective, we are commenting on the response to our audit from Fresno County. The numbers below correspond to the numbers we have placed in the margin of the county’s response.

1

The county’s statement that the five-day time frame for response and confidentiality requirements did not allow for the full benefit committee to meet, review the report, and provide input into the response provided is misleading. We informed the county in September 2016 at our opening conference of the legal process that can be used for the full committee to meet in closed session to review the draft report. We also reminded the county again at the closing conference on February 1, 2017, and provided the specific dates that it would receive the draft report. The county also asked for the citation of the legal authority that authorizes it to hold a closed session, which we provided the same day.

2
Although the county indicates it has purchased an electronic system to manage and maintain its statements of economic interests, it does not indicate whether it plans to develop procedures for staff to follow in using this new system that will ensure it collects all required statements in a timely manner. Further, we do not disagree that it is a filer’s responsibility to submit his or her forms in a timely manner; however, developing procedures for collecting and maintaining the forms as well as following up with individuals who do not file on time will help the county ensure compliance with requirements.



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San Diego County

February 15, 2017

Ms. Elaine M. Howle, State Auditor
California State Auditor
621 Capitol Mall, Suite 1200
Sacramento, CA 95814

Dear Ms. Howle,

RESPONSE TO RECOMMENDATIONS IN THE FEBRUARY 2016 AUDIT

Thank you for the letter, dated February 9, 2017 that includes redacted draft copies of the draft audit report titled, “Indian Gaming Special Distribution Fund”.  This response is prepared on behalf of the San Diego County Indian Gaming Local Community Benefit Committee (IGLCBC) by the County of San Diego Grant Administrators.  IGLCBC staff has worked with the Bureau of State Audits (Bureau) since the Fall of 2016 and appreciates the time the Bureau took during the process to review information provided and comment on the responsive revisions and process changes that have occurred since the previous audit.    

The audit concluded that there is only one recommendation for the IGLCBC, however the audit also notes that there is not a guarantee that there will be additional funding allocated to this program in the future.  While San Diego County does have individual agreements with gaming facilities under the process set forth in the gaming compacts, this funding program included a funding source that was important to mitigate local impacts using a holistic look at impacts from gaming facilities to important public infrastructure and programs in the San Diego region.  The IGLCBC program should be replaced by the State of California.

This constitutes the first response from the IGLCBC on these issues, who will review and provide additional responses once the report is finalized and published, as required by the Bureau.  The IGLCBC staff would request additional information on what time periods the State auditor requests the responses be sent, due to the nature of the recommendation. 

1) Recommendation 1: If the legislature appropriates funding from the distribution fund for mitigation grants in the future, to comply with state law, the benefit committee for [redacted] San Diego County should ensure that they obtain sufficient documentation from grant applicants to demonstrate that the requested funding represents the correct proportionate share of the costs attributable to casino impacts.

County Response:The San Diego IGLCBC has implemented several process improvements since the 2014 audit and has required increasing levels of information for applicants to demonstrate proportional share for compliance with state law. IGLCBC staff explained this progress and no findings were made on the process, which includes an evaluation by County Counsel, staff, and the IGLCBC members.  This finding relates to the documentation of that analysis in the grant application.  If funding is awarded to San Diego, the IGLCBC staff will implement additional review for compliance with this finding.

As requested, the County provides the below contact information for the individual responsible for implementation of the recommendations.  Please contact Eric Lardy for additional questions or information on this program.

Eric Lardy, Staff to the SD IGLCBC
County of San Diego
5570 Overland Ave, Suite 102
San Diego, CA 92103
Phone: 858-505-6932
Eric.Lardy@sdcounty.ca.gov

 

If you have questions, please call Eric Lardy at 858-505-6932.

Sincerely,

 

SARAH E. AGHASSI
Deputy Chief Administrative Officer


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Riverside County

February 22, 2017

Elaine M. Howle
California State Auditor
555 Capitol Mall, Suite 300
Sacramento, CA 95814

Dear Ms. Howle,

1

The California Auditor's office reviewed Riverside County's Indian Gaming Mitigation Grant program during the six-month period ending January 2017. Over the course of the review, the team of auditors looked at every aspect of the administrative and procedural elements of the program and audited two specific grant-funded projects.

Riverside County is proud of the program developed in 2003, with guidance coming only from Senate Bill 621. Subsequently, additional guidance was received through priorState Auditor reports, resulting in clarifying legislation, SB 288 and AB 158. Given the challenges in arriving at this point, we are pleased and honored that the State Auditor found Riverside County's program to be operating in accordance with the law and the Auditor's recommendations.

Sincerely,

Jay E. Orr
County Executive Officer
County of Riverside




Comment

CALIFORNIA STATE AUDITOR’S COMMENT ON THE RESPONSE FROM RIVERSIDE COUNTY

To provide clarity and perspective, we are commenting on the response to our audit from Riversdie County. The number below corresponds to the number we have placed in the margin of the county’s response.

1

The county’s statement that the team of auditors looked at every aspect of the administrative and procedural elements of the program and audited two specific grant-funded projects overstates the scope of our audit. Although the county is correct in its statement that we audited two specific grants, we did not review every aspect of the administrative and procedural elements of the program. We include the specific areas of our review in Table 6.



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