Report 2019-046 Recommendation 16 Responses

Report 2019-046: Proposition 56 Tobacco Tax: State Agencies' Weak Administration Reduced Revenue by Millions of Dollars and Led to the Improper Use and Inadequate Disclosure of Funds (Release Date: January 2021)

Recommendation #16 To: Education, Department of

To obtain its full share of the fiscal year 2017-18 Proposition 56 revenues, Education should negotiate with Finance and Public Health to ensure that it receives the full amount of its proportional share of the fiscal year 2017-18 Proposition 56 funds.

Annual Follow-Up Agency Response From October 2023

DOF determined that Education is owed $17,910,930.19 for its proportional share of 2017-18 Proposition 56 revenue. To make Education whole for this amount, transfers will occur across three fiscal years.

On January 20, 2023, DOF submitted an Executive Order transferring $15,233,233.08 from Fund 3309, the Tobacco Prevention and Control Programs Account, California Healthcare, Research and Prevention Tobacco Tax Act of 2016 Fund to Fund 3321, Education's Subaccount, Tobacco Prevention and Control Programs Account, CA Healthcare, Research and Prevention Tobacco Tax Act of 2016 Fund. The second transfer in the amount of $1,338,848.56 will occur in Fiscal Year 2023-24 and the third and final transfer in the amount of $1,338,848.55 will occur in Fiscal Year 2024-25.

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

Education's response indicates that the Department of Finance has begun transferring the funds owed to Education. We will assess whether this recommendation has been fully implemented after all of the transfers have been completed which, according to Education's response, will occur in Fiscal Year 2024-25.

Annual Follow-Up Agency Response From October 2022

DOF calculated Education's proportional share of fund 3309 for fiscal year 2017-18, and will transfer the amount owed into fund 3321; however, DOF is currently working on calculating revenues/expenditures for the remaining affected departments and does not have a timeline yet for when the transfer will be completed.

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

Education is waiting for Finance to transfer the amount owed to Education.

1-Year Agency Response

Education contacted DOF and requested a status of their analysis to determine the correct proportional shares each department was entitled to for fund 3309 for fiscal year 2017-18; DOF is continuing to finalize their analysis and any proportional shares owed to the CDE will be provided in fiscal year 2022-23.

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

In this response, Education indicates that the Department of Finance's timeframe for addressing this issue has shifted from fiscal year 2021-22 to 2022-23. Education did not provide an explanation for this change.

6-Month Agency Response

Education contacted DOF and requested a status of their analysis to determine the correct proportional shares each department was entitled to for fund 3309 for fiscal year 2017-18; DOF is finalizing their analysis and any proportional shares owed to the CDE will be provided in fiscal year 2021-22.

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

60-Day Agency Response

Education met with DOF to discuss concerns regarding the proportional share of Fund 3309 received for fiscal year 2017-18 and to determine if the amount was incorrect. Once the financial statements are submitted by all departments utilizing Fund 3309, DOF will complete an analysis to determine the correct proportional shares each department was entitled to; further discussions will take place regarding the results of the analysis.

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

All Recommendations in 2019-046

Agency responses received are posted verbatim.