California State Auditor Elaine M. Howle issued two reports within the last month that reviewed her agency’s track record over the years, each one claiming around an 85% successful compliance rate while reminding the governor and lawmakers of the obvious: “Our audit efforts bring the greatest return when the entity acts upon our findings and recommendations.”
In reviewing audits conducted for eight years, beginning January 1, 2005, Howle estimated that if entities had implemented all the auditor’s recommendations, the state would net $1.5 billion. Her office issued 106 reports between November 2005 and October 2011, which included 1,249 recommendations. As of September 2012, 83% had been implemented.
Over the past two years, the auditor has made 609 recommendations, of which 270 have been fully implemented and 129 partially implemented. Corrective action is pending in 115 instances and no action has been taken in 95 of them. The auditor’s office summarized its experiences in a February report.
Tales from the Auditor
1. Administrative Office of the Courts was dinged in February 2011 for mismanaging the billion-dollar Court Case Management System. The Legislature cut off funding a year later and the project folded after spending $500 million. Deloitte Consulting agreed to compensate for delays caused by numerous quality issues and in December 2012 repaid the state $16 million.
2. Department of Developmental Services did not generally examine how regional centers established rates or selected particular vendors. The auditor recommended they do that, and they did, netting a quick $15 million, according to an August 2010 report.
3. Department of Health Care Services overpaid equipment providers involved in Medi-Cal and the auditor said it cost the state $13 million between October 2006 and September 2007. Although the auditor estimated the $13 million cost would be annual if the department didn’t monitor reimbursements better, no mention is made of future issues.
4. Department of Social Services let counties keep millions of federal dollars they received every year in overpayments recovered from food stamp recipients. The auditor’s 2009 report said the practice had been going on for six years and cost the state $12.45 million.
5. Employment Development Department didn’t have a very good grant review and approval process in March 2012 when the auditor identified $10.5 million in missed revenue opportunities. Six federal grants for workforce investment went unclaimed, but the department’ review process was so deficient the auditor was “unable to substantiate EDD’s reasons for foregoing grant opportunities.”
6. Department of Health Services was told by the auditor to spiff up its outreach to school districts and get them to participate in a school-based Medi-Cal administrative activities program. A 2005 report said school districts claimed they didn’t know about the program. The auditor estimated it cost them $57 million in fiscal year 2002-03 and $10.3 million a year now that the word was out to get with the program.
7. Department of Fish and Game let several state employees and volunteers live in state-owned homes without charging them rent. A subsequent housing review by the Department of Personnel Administration found that all 13 state departments that own employee housing may be underreporting or failing to report housing fringe benefits. The auditor calculated in a March 2006 report that the state could increase revenues as much as $8.3 million by charging fair-market rents.
8. Department of Health Services had a flawed procedure that allowed authorization of Medi-Cal duplicate payments by a contract consultant to facilities. The auditor identified $6.08 million in February 2007 that could be recouped but suspected there were a bunch of other duplicate payments they missed.
9. State Lands Commission let around 140 of its 1,000 revenue-generating leases expire, failed to promptly conduct rent reviews and allowed leases to become delinquent, according to an August 2011 auditor’s report. The commission also used a rate to establish rent for pipelines on state property that was more than 30 years old. The auditor pegged the cost at $4.16 million.
10. Department of Public Health used a database that wasn’t properly programmed to calculate health facility penalties, the auditor reported in June 2010. But the big savings, $3.3 million, was missed during the period of fiscal year 2003–04 through March 2010 because the monetary penalties amounts had not been adjusted for inflation.
–Ken Broder
To Learn More:
California Auditor Says Some Cost-Cutting Ideas Ignored (by Patrick McGreevy, Los Angeles Times)
Recommendations Not Fully Implemented after One Year (California State Auditor) (pdf)
Implementation of State Auditor’s Recommendations (California State Auditor) (pdf)