Report I2019-0559 All Recommendation Responses
Report I2019-0559: California Prison Industry Authority: It Gave Nearly $1.3 Million in Unlawful Gifts to Other State Agencies and Repeatedly Violated Merit‑Based Employment Principles (Release Date: July 2021)
Case Number I2019-0559
Recommendation #1 To: Prison Industry Authority
CalPIA should take appropriate disciplinary action against any of the employees responsible for authorizing the unlawful use of funds. If any such individuals are no longer employed by CalPIA, consider placing a notice of this investigation in their personnel files.
Agency Response From September 2021
CalPIA provided to us a copy of the memorandum it placed in the official personnel files of any former employees who were responsible for authorizing the unlawful use of funds.
California State Auditor's Assessment of Status: Fully Implemented
Agency Response From June 2021
CalPIA stated that any employees responsible for authorizing the unlawful use of funds are no longer employed at CalPIA. It stated that it will place a notice of this investigation into the appropriate personnel files.
California State Auditor's Assessment of Status: Pending
Case Number I2019-0559
Recommendation #2 To: Prison Industry Authority
CalPIA should work with the Prison Industry Board to establish sufficient controls, such as providing training to executive staff to better understand how CalPIA funds and resources should be used, and implement a more thorough approval process to ensure that CalPIA does not gift funds to other state agencies.
Agency Response From March 2022
In February 2022, CalPIA provided evidence that it held a training with executive staff to instruct them that CalPIA purchases must support the mission, vision, and goals of CalPIA, all of which focus on benefitting incarcerated individuals.
California State Auditor's Assessment of Status: Fully Implemented
Agency Response From January 2022
In January 2022, CalPIA reported that it would update its internal training materials to ensure that executive staff are trained on how CalPIA funds should only be used to benefit or further the purposes of CalPIA. It has agreed to provide us with copies of the new training materials once completed.
California State Auditor's Assessment of Status: Partially Implemented
Agency Response From September 2021
CalPIA reported that it has implemented a new policy for transferring sample products to other agencies. This policy states that the Prison Industry Board will review all sample transfer requests that cost CalPIA more than $5,000 and will determine whether the potential marketing value justifies the cost to CalPIA.
Moreover, CalPIA began training its staff in 2019 on various procurement methods. CalPIA reported that all levels of staff, including executives involved in the procurement process, are required to take this training on an annual basis. We reviewed the training materials and found that the training provided sufficient instruction on how to properly complete the necessary forms for purchases but did not address the factors an employee or executive should consider when determining whether a purchase or service contract is appropriate. We requested that CalPIA notify us when all its executives have completed the recommended training.
California State Auditor's Assessment of Status: Partially Implemented
Agency Response From June 2021
CalPIA stated that it is working with the Prison Industry Board to establish functioning sub-committees of oversight for CalPIA. One of these sub-committees is focused on CalPIA's financial operations to ensure that its financial controls are appropriate and are followed. CalPIA also stated that it plans to train executive staff on the appropriate use of CalPIA funds and resources to prevent it from gifting funds or resources to other state agencies.
California State Auditor's Assessment of Status: Pending
Case Number I2019-0559
Recommendation #3 To: Prison Industry Authority
CalPIA should cancel the executive leadership training contract so that no additional funds are spent from it.
Agency Response From September 2021
CalPIA reported that the executive leadership training contract expired on June 30, 2021, and it was not extended or renewed.
California State Auditor's Assessment of Status: Resolved
Agency Response From June 2021
CalPIA reported that the executive leadership training contract expires in June 2021 and that it will not renew the contract.
California State Auditor's Assessment of Status: Resolved
Case Number I2019-0559
Recommendation #4 To: Corrections and Rehabilitation, Department of
CDCR should implement new, or strengthen existing, controls and procedures to ensure that a gift to the agency from any source, public or private, is appropriately accepted or declined and that sufficient documentation is kept to create a record of it.
Agency Response From December 2021
In November 2021, CDCR provided us with copies of the procedures it created regarding the acceptance of gifts and donations. In December 2021, it sent a memorandum to each hiring authority requiring applicable staff to receive annual training on the new procedures.
California State Auditor's Assessment of Status: Fully Implemented
Agency Response From October 2021
In October 2021, CDCR stated that it is currently developing processes and procedures to review, document, and accept or deny all gifts of goods and services. It stated that it planned to train staff on the new processes by the end of November 2021.
California State Auditor's Assessment of Status: Partially Implemented
Agency Response From June 2021
CDCR reported that it plans to provide a detailed response in its 60-day Corrective Action Plan on how it will implement our recommendation.
California State Auditor's Assessment of Status: Pending
Case Number I2019-0559
Recommendation #5 To: Conservation Corps, California
Conservation Corps should implement new, or strengthen existing, controls and procedures to ensure that a gift to the agency from any source, public or private, is appropriately accepted or declined and that sufficient documentation is kept to create a record of it.
Agency Response From August 2021
The Conservation Corps stated that it updated its operations manual to address our recommendation in July 2021. It provided our office with a copy of its updated policy and informed us that it trained its staff on the new policy in August 2021.
California State Auditor's Assessment of Status: Fully Implemented
Agency Response From June 2021
The Conservation Corps informed us that it will no longer accept any goods or materials from another state entity without the appropriate documentation on file. The Conservation Corps stated that, in the coming weeks, it will incorporate these rules as policies and procedures in its operations manual and provide training to relevant staff.
California State Auditor's Assessment of Status: Pending
Case Number I2019-0559
Recommendation #6 To: Prison Industry Authority
CalPIA should take disciplinary action against executives who failed to uphold their duty to protect the merit-based system for hiring civil servants. If any of the employees responsible for these appointments are no longer employed by CalPIA, consider placing a notice of this investigation in their personnel files.
Agency Response From March 2022
In March 2022, CalPIA reported that its general manager met with both of the executives who still work with CalPIA to verbally counsel them. The general manager noted that he informed the executives that although some of their actions were done under duress, their failure to follow proper hiring practices in the future would result in disciplinary action.
Given CalPIA's decision to minimally discipline the two executives still working at CalPIA with only verbal counseling, we requested to see a copy of the investigation that CalPIA stated it would request from CDCR in June 2021. CalPIA did not provide an investigative report but instead stated that after various consultations with CDCR, it concluded that verbal counseling was the appropriate discipline because it had already taken action to mitigate the issues, and the executives had neither any previous disciplinary action at CalPIA nor any repeat offenses. As verbal counseling is disciplinary in nature, we agree that CalPIA has fully implemented the recommendation.
California State Auditor's Assessment of Status: Fully Implemented
Agency Response From January 2022
In January 2022, CalPIA reported that it continues to work with CDCR to determine an appropriate level of discipline against the executives who still work for CalPIA.
California State Auditor's Assessment of Status: Partially Implemented
Agency Response From September 2021
In August 2021, CalPIA placed a notice of this investigation in the personnel files of all its former employees who were responsible for these appointments. Moreover, in September 2021, it reported that it will meet with CDCR to consult on disciplinary action for current executives.
California State Auditor's Assessment of Status: Partially Implemented
Agency Response From June 2021
CalPIA reported that it would request that CDCR conduct an investigation into these executives' activities and advise CalPIA on appropriate disciplinary action. CalPIA stated that it would place a notice of this investigation in the personnel files of those executives whom CalPIA no longer employs.
California State Auditor's Assessment of Status: Pending
Case Number I2019-0559
Recommendation #7 To: Prison Industry Authority
CalPIA should review all special consultant positions and work with CalHR to determine whether they are properly classified.
Agency Response From July 2022
In June 2022, CalPIA reported that it completed its class study and that CalHR agreed that the special consultant positions should be transitioned to the Prison Industry Manager classification and that CalPIA should complete a class specification revision to accommodate the shift.
California State Auditor's Assessment of Status: Fully Implemented
Agency Response From May 2022
CalPIA reported in March 2022 that it is meeting with CalHR on a monthly basis to transition its special consultant positions to permanent civil service classifications. As part of this effort, CalPIA is completing a class study, which is anticipated to result in revisions to the class specifications for several CalPIA-specific classifications. It asserted that these revisions will ensure that it accurately allocates positions in the future.
In May 2022, CalPIA stated that the employee it was working with at CalHR had left the department, so the monthly meetings are on hold until CalHR assigns a replacement.
California State Auditor's Assessment of Status: Partially Implemented
Agency Response From January 2022
CalPIA reported in October 2021 that it provided to CalHR information about its usage of special consultants. As of January 2022, it is still awaiting CalHR's response.
California State Auditor's Assessment of Status: Partially Implemented
Agency Response From September 2021
CalPIA reported in August 2021 that by the beginning of 2019, it had eliminated the two special consultant positions identified in this investigation. It stated that it is working with CalHR to determine the appropriateness of its remaining seven special consultant positions.
California State Auditor's Assessment of Status: Partially Implemented
Agency Response From June 2021
CalPIA reported that it will work with CalHR to review the special consultant positions it currently employs to perform specialized work to ensure the positions are properly classified.
California State Auditor's Assessment of Status: Pending
Case Number I2019-0559
Recommendation #8 To: Prison Industry Authority
CalPIA should require all executives, hiring managers, and human resource managers to undergo CalHR or Personnel Board training on the requirements for making good faith appointments.
Agency Response From December 2021
As of December 2021, CalPIA provided evidence that all of the recommended staff completed training on the requirements for making good faith appointments.
California State Auditor's Assessment of Status: Fully Implemented
Agency Response From September 2021
In August and September 2021, CalPIA reported that it is requiring all executives, hiring managers, and human resources managers to take CalHR's Best Hiring Practices training, which covers the requirements for making good faith appointments. It provided our office with a list of staff who have completed the training course and informed us that those who have yet to take the course are scheduled to do so by October 2021. In addition, CalPIA implemented a new hiring system that includes training on the hiring process requirements. Lastly, CalPIA stated that it has increased its efforts to ensure that all employees know their responsibility for reporting impropriety.
California State Auditor's Assessment of Status: Partially Implemented
Agency Response From June 2021
CalPIA reported that it is adding a mandatory training for all executives, hiring managers, and human resource managers to ensure CalPIA complies with the requirements for making good faith appointments.
California State Auditor's Assessment of Status: Pending
Case Number I2019-0559
Recommendation #9 To: Prison Industry Authority
CalPIA should, in consultation with the Personnel Board, consider voiding appointments and requiring employees who acted in bad faith to return all compensation as the Table on page 22 shows.
Agency Response From October 2023
In October 2023, CalPIA reported that despite recent follow-up efforts with CalHR, it is still waiting for the Personnel Board to make a final determination for each appointment. CalPIA still plans to promptly perform the required steps to comply with the Personnel Board's pending direction.
California State Auditor's Assessment of Status: Partially Implemented
Agency Response From November 2022
In November 2022, CalPIA acknowledged that it had cited the incorrect criteria in its unlawful hiring packages but reiterated that because CalPIA acted in other than good faith, it had requested that the employees not be penalized for its actions. However, even when employees are found to have acted in good faith, state law allows departments to correct unlawful appointments.
Moreover, CalPIA noted that it takes responsibility for the unlawful appointments for six of the seven employees included in our report and does not believe the employees acted in bad faith. Therefore, it did not request that any of those employees return compensation even though we recommended that it consider doing so for one of those employees, who we found acted in bad faith. CalPIA failed to identify any errors in our report that would lead it to believe that the employee did not act in bad faith. In addition, although CalPIA agreed that Employee D acted in bad faith for one of his three appointments, it still did not request to have Employee D return the compensation he received. CalPIA did not provide an explanation as to why it did not request that Employee D return compensation and instead stated that it is waiting for the Personnel Board to make a final decision on the unlawful hiring packages.
Lastly, CalPIA stated that prior to submitting its first unlawful hiring package in March 2022, CalHR directed it to work with and submit the packages directly to CalHR rather than the Personnel Board. Later in July 2022, CalPIA spoke to an individual at the Personnel Board to confirm that it had received the documentation that CalPIA had submitted to CalHR. At that time, CalPIA also confirmed that the Personnel Board was working with CalHR to review the unlawful hiring documents provided by CalPIA. CalPIA stated that once the Personnel Board makes a determination for each unlawful appointment we identified, CalPIA plans to promptly perform the required steps to comply with the Personnel Board's direction.
California State Auditor's Assessment of Status: Partially Implemented
Agency Response From July 2022
By July 2022, CalPIA provided to us copies of the unlawful hiring packages that it submitted to CalHR for all seven individuals identified in our report. In the packages, CalPIA incorrectly claimed that when more than one year passes from the date of an appointment and the employee is not found to have acted in bad faith, the appointment should stand. As a result, it did not specifically request that any of the 10 unlawful appointments we identified in the report be voided. Under state law, unlawful appointments that have been in effect for more than one year may be voided if only the appointing power acted in other than good faith. The law does not require that the employee acted in other than good faith for an appointment to be voided.
CalPIA also did not request that any of the employees be required to return compensation, despite our findings that three of the individuals acted in bad faith and could be required to return all the compensation they unlawfully earned. Further, the packages it submitted to CalHR contained other erroneous information that conflicted with the evidence we found and did not include important details regarding some of the appointments.
Finally, CalPIA has yet to consult with the Personnel Board as we recommended. As we noted in the report, Personnel Board staff assisted us as subject matter experts during this investigation and have an intimate knowledge of the appointments in question. They could have provided valuable guidance to CalPIA as it drafted the unlawful appointment packages.
California State Auditor's Assessment of Status: Partially Implemented
Agency Response From May 2022
In April 2022, CalPIA reported that it is working on completing unlawful appointment packages for each of the appointments discussed in our report. Because CalPIA does not have the authority to void appointments after one year, it submitted the unlawful appointment packages to CalHR to review. Upon approval from CalHR, the packages will be forwarded to the Personnel Board for approval before submission to the State Controller's Office for processing.
As of May 2022, CalPIA has submitted unlawful appointment packages to CalHR for four of the seven appointments.
California State Auditor's Assessment of Status: Partially Implemented
Agency Response From January 2022
CalPIA reported in January 2021 that it is still continuing to work with CalHR on this recommendation.
California State Auditor's Assessment of Status: Partially Implemented
Agency Response From September 2021
CalPIA stated that it met with CalHR in August 2021 to determine the appropriate actions for those employees who acted in bad faith. It stated that once CalHR provides direction, CalPIA plans to promptly respond to CalHR's requests.
California State Auditor's Assessment of Status: Partially Implemented
Agency Response From June 2021
CalPIA responded that it will work with CalHR to take appropriate action for all employees and their respective positions identified in this report, regardless of their current employment status with CalPIA.