-
University of
California Sends Work to Kansas.
All undergraduates
entering the University of California system must demonstrate their writing
ability either by reaching certain scores on standardized tests or by passing
the Analytical Writing Placement Examination (AWPE). Before taking the AWPE, a
student must pay an examination fee currently $90 online or through the
mail. The prepaid envelope for sending payment has a return address of
"University of California AWPE; 3833 Greenway Drive; Lawrence, KS 66046-9900."
The building located at that Kansas address houses Scantron, the Education
Measurement Group and other affiliates of NCS Pearson Inc.
Cal-Tax
recommendation: State officials should examine why the University of California
is using a Kansas-based company to process payments for tests taken in
California and graded by UC faculty. If UC is using out-of-state companies
because the costs are higher here, steps should be taken to restore California's
competiveness by reducing the cost of doing business in this state.
-
Stockton School District
Asked to Repay Nearly $1 Million in Unapproved Spending.
The California Department of
Education is asking the Stockton Unified School District to return $962,000 that
was spent on unapproved classroom materials.
The request was made after
the Department of Education sent in auditors. According to school board members,
former Superintendent Anthony Amato was advised by district staff not to
purchase the materials in question for a program called "Success for All"
because the district would not be able to use them.
The "Success for All"
materials now reside in a district warehouse, gathering dust. Mr. Amato was
fired in September, and is now heading up a school in New Orleans. Mr. Amato
previously was let go from superintendent positions in New Orleans, Hartford and
Kansas City.
School board members claim
they were kept in the dark about the questionable purchases. Beverly Fitch
McCarthy, the school board president, said: "It never occurred to us to say, 'Is
this on the approved list?' He's the superintendent. He should be knowledgeable.
He shouldn't even be bringing us these programs if they're not approved."
The chief financial officer
of the district said the district is facing a "bare-bones budget," and currently
is able to repay the state only $140,000. (Source: Mike Luery's On the
Money, CBS 13-Sacramento, July 7.)
(Cal-Tax recommendation:
School board members, as elected officials representing parents, students and
taxpayers, should be knowledgeable about how schools are spending the
hard-earned tax dollars of the district's residents. School board members should
take responsibility for the district's finances by asking the district's staff
how their funds are being spent. Cal-Tax applauds the Department of Education
for keeping local school districts accountable, and encourages the auditors to
continue investigating how tax dollars are used in other schools.)
-
San Jose College Leader
Worked Another Job While on Sick Leave.
The San Jose Mercury News reports: "A top executive at the financially
troubled San Jose/Evergreen Community College District earned a full salary
while on sick leave this spring yet, during that same period, she earned a
separate salary teaching at another nearby district."
Bayinaah Jones, whose title
at the San Jose district is executive director of institutional effectiveness,
earned $30,672 on sick leave there, but apparently was healthy enough to hold
down a $5,775 teaching position in the Foothill-DeAnza Community College
District.
The revelation follows a
searing state audit of the San Jose district's books. Auditors were critical of
spending by former Chancellor Rosa Perez, who is Ms. Jones' live-in partner, and
who also took paid sick leave for eight months, earning $25,000 each month
until retiring this month due to health reasons.
Records show that Ms. Jones
took sick leave from her $123,000 position "per my physician's order," she
wrote in an e-mail message in April, May and June of this year. She said she
remains sick "until further notice."
During those same months, the
Mercury News reported, she commuted to a job teaching Introduction to
Sociology classes at DeAnza College, for three hours a night every Monday and
Wednesday during the spring quarter. In e-mails to the newspaper, both DeAnza
and San Jose/Evergreen confirmed Ms. Jones' employment. However, Ms. Jones told
the newspaper in an e-mail: "I do not have concurrent employment. Your
information is incorrect." She declined to explain further, and referred
questions to school officials who said they would not comment because the
situation involves confidential medical information.
The state Department of
Finance said the district's board is fiscally responsible for Ms. Jones'
behavior.
The Mercury News noted
that budget cuts have resulted in the cancellation of classes and lay-offs of 19
workers last year. "They sacked several employees whose only crime was to remain
at their posts," said San Jose City College photography professor Ciaran
MacGowan.
The situation involving Ms.
Jones "shows a complete lack of respect for taxpayers, students, faculties and
administrations of both districts," said Randi Kinman, a former San Jose
planning commissioner who now helps lead the nearby Sherman Oaks Neighborhood
Association. (Source: San Jose Mercury News, July 5.)
Cal-Tax recommendation:
School officials should examine how their existing policies allowed this
situation to occur, and should make sure it doesn't happen again. They also
should thoroughly assess Ms. Jones' claims and take disciplinary steps if
warranted.
-
Grand Jury Says Peralta
Community College District Is Wasting Tax Dollars.
A grand jury released a report July 7 slamming the Peralta Community College
District for lax oversight and wasting taxpayer dollars.
The district is marked by a
lack of transparency and accountability, the Alameda County civil grand jury
wrote in its annual report. Spending on travel and dining have run rampant in
the four-college district, jurors found, and trustees have shown little
responsibility in their oversight. (Cal-Tax: As reported on page 14, an
accrediting commission has put the district on probation because of fiscal
concerns.)
The grand jury's nine-month
investigation was prompted by a series of stories published by Bay Area News
Group in July 2009, the report noted.
The San Jose Mercury News
reported: "The jury specifically criticized Peralta trustees for their silence
on important issues. 'Their willingness to remain individually silent on
multiple issues, such as the chancellor's performance, has led the board to
questionable decision-making,' the jury concluded. 'The board as a whole has
failed to provide the leadership for the district to which they were elected.'"
Among trustees'
transgressions were double-dipping on meals during trips (receiving a daily
stipend for food while also including the same meals on hotel bills), spending
hundreds of public dollars per month on home offices without adequate oversight
or documentation, and misusing the district's credit cards.
The district includes four
campuses: Laney and Merritt Colleges in Oakland, Berkeley City College and
College of Alameda. (Source: San Jose Mercury News, July 7.)
Cal-Tax recommendation:
Voters should replace the school board with reformers who will take an active
interest in their duty to safeguard public funds and direct every available
penny to the classroom.
-
Department of General
Services Doesn't Oversee Contracting Program Properly, Auditor Says.
The state auditor reported July 8 that its review of the Department of General
Services' "strategically sourced" contracting practices revealed several lapses
in oversight.
The auditor noted that the
purpose of strategic sourcing is to enter into statewide contracts that leverage
the state's purchasing power to save money on the goods and services purchased
most frequently by state agencies. The strategic sourcing process involves
identifying goods and services through a systematic analysis of past purchasing
data, and projecting what savings can be expected through new contracts.
The department awarded 33
statewide strategically sourced contracts for 10 categories of goods between
February 2005 and July 2006, and the good news is that the department accrued at
least $160 million in net savings as of June 30, 2007. (Cal-Tax: The
actual savings to taxpayers was less, because the department paid the consultant
who assisted in implementing the strategic sourcing initiative 10.5 percent of
the accrued savings realized through these contracts.)
The bad news is that the
department is lax in overseeing many areas of the contracting program, the audit
said. The non-partisan auditor reported that the department:
-
Did not continue to formally
calculate the savings after June 2007 when its consulting contract expired.
-
Has not strategically sourced
20 other categories of goods or services that were recommended by the
consultant, and had not prepared an analysis to document its rationale for not
strategically sourcing.
-
Incurred significant costs to
train staff and to develop written procedures on strategic sourcing, yet has not
awarded any new strategically sourced contracts using the procedures or reviewed
comprehensive purchasing data to identify new opportunities.
-
Lacks data to determine the
impact of strategic sourcing on the participation by small businesses and
Disabled Veteran Business Enterprises (DVBEs).
-
Does not monitor small
business and DVBE subcontractors to ensure that they perform commercially useful
functions in providing goods or services once a contract has been awarded.
-
Does not have standard
procedures to recover any overcharges identified despite its new automated
process designed to monitor compliance with contract pricing terms.
(Source: Bureau of State
Audits
report No. 2009-114, "Department
of General Services: It No Longer Strategically Sources Contracts and Has Not
Assessed Their Impact on Small Businesses and Disabled Veteran Business
Enterprises," July 8.)
Cal-Tax recommendation: The
Legislature and governor should follow up on the audit to make sure the
Department of General Services dramatically improves its oversight of this
contracting program.
-
UC Berkeley Report Says
High-Speed Rail Estimates Are Hopelessly Flawed.
Researchers at the University of California at Berkeley have released an
analysis contending that the California High-Speed Rail Authority's ridership
projections suffer from statistical modeling flaws that render them useless.
"The forecast of ridership is
unlikely to be very close to the ridership that would actually materialize if
the system were built," concluded Samer Madanat of Berkeley's Institute of
Transportation Studies. "As such, it is not possible to predict whether the
proposed high-speed rail system in California will experience healthy profits or
severe revenue shortfalls."
Rail officials have said the
high-speed project, which would cost more than $40 billion, would start with a
San Francisco-to-Los Angeles line, and that revenue generated from that line
would be used to extend service to Sacramento. If the revenue projections miss
their mark, Sacramento residents may not have access to the expensive high-speed
rail system, which is funded in part by a voter-approved bond.
The Berkeley analysis was
commissioned by the state Senate Transportation and Housing Committee. Senator
Alan Lowenthal, who chairs the committee, said the report is "damning," and
recommended that the rail officials thoroughly scrutinize their projections.
A spokeswoman for the
high-speed rail authority defended the revenue estimates and said the ridership
projection continue to be "a sound tool for use in high-speed rail planning and
environmental analysis." (Source: The Sacramento Bee, July 2.)
Cal-Tax recommendation:
Senator Lowenthal and other state officials should continue to pressure the
authority to base their planning on realistic assumptions so financial problems
can be resolved before the rail project is halfway through the construction
phase and hemorrhaging red ink.
-
Small Cities Offer City
Managers Big Bucks.
A June 30 report by the
Placer County Grand Jury found that the cities of Auburn, Colfax, Lincoln,
Rocklin, Roseville and Loomis are paying their city managers excessive salaries
and other benefits. The grand jury said the city managers are receiving pay
comparable to city managers in the San Francisco Bay Area, where the cost of
living is 30 percent higher.
|
Compensation of City Managers in Placer County, 2009-10 |
|
City |
Pop. |
2009-10 City Budget |
Total Compensation |
Other Benefits |
|
Auburn |
12,500 |
$28.25 million |
$165,154 |
Car allowance, $4,800. |
|
Colfax |
1,750 |
$8.52 million |
$75,000 |
Mileage reimbursement of
55 cents per mile. Bonus of up to 10 percent of base salary. |
|
Lincoln |
37,410 |
$46.16 million |
$279,781 |
Car allowance, $8,400.
Relocation pay, $18,000. |
|
Rocklin |
54,754 |
$61.20 million |
$300,398 |
None. |
|
Roseville |
112,343 |
$447.20 million |
$393,675 |
Car allowance, $9,000. |
|
Loomis |
6,300 |
$3.22 million |
$132,671 |
Car allowance, $3,600.
Relocation pay, $3,000. |
While the grand jury noted
that the pay for city managers is very generous, the report indicates a welcome
trend in Placer County with declining tax revenues during the recession, a
number of cities are beginning to scale back pay and retirement benefits. For
example, Auburn, Colfax and Lincoln each cut compensation packages for their
city managers. The Auburn City Council and manager recently agreed to scale down
the city manager's pay by $15,160, bringing the salary to $132,371.
In Rocklin, Carlos Urrutia
retired from his post as city manager in 2009, after 25 years. Mr. Urrutia will
stay on the city's payroll working for a fixed annual stipend of $139,000 with
no benefits until the city finds a replacement. In addition to paying the
stipend and Mr. Urrutia's retirement benefits, Rocklin taxpayers will shell out
$300,000 in 2010 for Mr. Urrutia.
Roseville California's
fastest-growing city, according to data from the Department of Finance
recently parted ways with City Manager Craig Robinson and agreed to a severance
contract offering Mr. Robinson one year of pay and benefits, amounting to a
package of $393,675. Roseville's assistant city manager took over with a much
smaller salary of $185,226. (Source: Placer County 2009-2010 Grand Jury Final
Report: "City Managers' Salaries, The Delicate Art of Setting Salaries,"
June 30.)
Cal-Tax recommendation:
Cities throughout the state should examine their pay structures for all city
jobs and look for ways to reduce payroll, pension and fringe benefit spending so
they can provide needed services at the lowest possible cost.
-
Audit Finds Los Angeles
Fails to Collect Nearly Half of Its Debts.
Los Angeles City Controller Wendy Greuel reports that the city has failed to
collect at least $260 million a year for traffic tickets, ambulance
transportation and other services an amount that accounts for approximately 47
percent of the money owed to the city.
The controller sampled
collections from several city agencies to arrive at the estimate. The percentage
of uncollected debt is down only 1 percent from three years ago, when a similar
audit was conducted.
Ms. Greuel said the
collection rate is "not acceptable," and added that part of the problem is the
amount of time it takes the city to process bills and request payment. "If it
takes six months to get a bill to someone, they are less likely to pay," she
said.
A spokesman for the
Department of Transportation said traffic tickets often are paid late, but most
are paid eventually because people can't renew their vehicle registration if
they have outstanding tickets.
Councilman Paul Koretz said,
"Maybe it's time we held the department heads accountable and looked at their
overall budget to see if it should be cut unless they improve collections."
(Source: Los Angeles Daily News, July 1.)
Cal-Tax recommendation:
Councilman Koretz's suggestion is a good one, and should be implemented. The
best way to force department heads to take the problem seriously is to cut their
funding until they make improvements. The audit three years ago has not resulted
in any improvement, and it's doubtful that this one will, either, unless
penalties are put in place for those who accept the status quo.
-
Welfare Benefits Being
Withdrawn at Strip Club ATMs.
In a follow-up story to an
investigative story cited in last week's Cal-Taxletter, the Los
Angeles Times reports that welfare recipients withdrew $12,000 in cash from
the Temporary Assistance for Needy Families program from ATMs in strip clubs
throughout the state between 2007 and 2009.
The California Department of
Social Services said the governor has ordered the department to correct the
problem by removing strip clubs and casinos from the list of businesses where
recipients can withdraw taxpayer dollars. In an e-mail to the Times,
department spokeswoman Lizelda Lopez said: "We'll take a wide-ranging look and
apply some common sense to the list of outlets where cash assistance should not
be withdrawn."
The Times earlier
reported that welfare recipients have been withdrawing cash benefits at ATMs in
casinos and cardrooms. The state has now calculated the amount of money that has
been withdrawn from the state's welfare program using ATMs located in casinos:
$1.8 million in just eight months (October 2009 through May 2010). (Source:
Los Angeles Times, June 30.)
Cal-Tax recommendation: Kudos
to the Los Angeles Times for revealing that cash welfare benefits are
being withdrawn at casinos and strip clubs, where much of the cash probably
remained. The state needs to find a better way to help those who truly need
assistance, and to stop giving cash to those who are using it for
extracurricular activities. The governor's orders are a step in the right
direction, but welfare recipients can get around the orders by simply stopping
at other ATMs on the way to the casino or strip club. More safeguards are
needed.
-
Auditor Says State
Employee Misconduct and Mismanagement Costs Taxpayers Millions.
State Auditor Elaine Howle released
a report June 29 documenting major
cases of state employee wrongdoing and mismanagement during the 2009 calendar
year, and also reported that one state agency took years to follow up on a past
recommendation for more than a million in savings.
The auditor reported cases in
2009 in which employees were:
-
Participating in other
employment during state work hours and misusing state resources at a total cost
to the state of $70,105.
-
Misusing the time of two
psychiatric technicians, resulting in a loss to the state of $110,797.
-
Improperly allowing a
business owner to use state university facilities, equipment, and supplies
costing $20,790.
-
Claiming $392 in travel
expenses not incurred and violating state law by accepting gifts in the form of
substantial hotel discounts.
-
Failing to report 82 hours of
leave taken, for which the state paid $2,605.
-
Receiving at least $1,840 in
gifts from a vendor, thus creating the appearance that the gifts were rewards
for doing business.
-
Failing to account accurately
for absences that cost $1,206.
-
Improperly exempting an
estimated 3,000 after-school education programs from child-care licensing
requirements.
The auditor also provided
updates on past reports of wrongdoing, and noted that some state agencies did
not act quickly to follow up on the recommendations. A striking example, as
described in the auditor's report:
"In September 2005 we
reported that the Department of Corrections and Rehabilitation (Corrections) did
not track the total number of hours available in a release time bank (time bank)
composed of leave hours donated by members of the California Correctional Peace
Officers Association (union) so that union representatives could cover union
business. Our investigation revealed 10,980 hours that three union
representatives used from May 2003 through April 2005 but that Corrections
failed to charge against the time bank, costing the State $395,256. Following
our report, Corrections still did not attempt to obtain reimbursements for the
time that the three employees spent on union activities in May and June 2005,
resulting in an additional cost to the State of $39,151. In fact, Corrections
informed us later that it was unable to reconstruct an accurate leave history
for any period before July 2005 for the three union representatives.
Consequently, Corrections will not seek reimbursements that total $434,407.
Instead, Corrections submitted to the union monthly invoices that total
$1,037,698 for union work performed by the employees from July 2005 through
December 2009. As of June 2010, Corrections had only received a payment of
$16,530 on any of these invoices. Thus, the unrecovered reimbursements for the
three employees' time for May 2003 through December 2009 cost the State a total
of $1,455,575." (The report notes that just last month, the department said it
has initiated litigation to try to get the money from the union.) (Source:
California State Auditor's report, "Investigations of Improper Activities by
State Employees: Misuse of State Time and Resources, Improper Gifts, Inadequate
Administrative Controls, and Other Violations of State Law, January 2009 Through
December 2009," June 29.)
Cal-Tax recommendation: State
lawmakers should keep the state auditor's reports handy when writing the budget
for the next fiscal year, and should take action to force agencies to follow
through on recommendations for improvement.
-
Placer County Approves
More Than $1 Million in Raises for County Employees.
The Placer County Board of
Supervisors met June 22 and approved new employee contracts that will likely
cost taxpayers more than $1.3 million a year.
The county approved new pay
and compensation packages for adult services chief psychiatrist Dr. Olga
Ignatowicz ($371,372 annually); health and human services employee Dr. Richard
Malek ($303,193 annually); county forensic pathologist Dr. Donald Henrikson
($297,797 annually); and also approved salaries of $181,680 and $150,115 for two
county psychiatrists.
Law enforcement and public
health officials lobbied the Board of Supervisors for the pay raises, claiming
they were needed to keep government jobs competitive with private-sector jobs.
Also, public employees noted that they hadn't received a pay raise in four
years.
Supervisor Kirk Uhler, who
represents the communities of Roseville and Granite Bay, justified his decision
to support the pay increase, saying: "Market forces are at work. It's what the
market bears." (Source: Roseville Press Tribune, June 30.)
Cal-Tax recommendation:
Placer County has been using reserves, furloughing employees and taking other
steps to deal with major declines in revenue. The county shouldn't negate this
work by granting salary and benefit increases that will be very costly in the
long term.
-
San Diego School District
Spends $2.3 Million to Rehire Retirees After Giving Severance Deals.
The San Diego Unified School
District, after offering early retirement to more than 1,000 of the district's
highest paid employees, has begun rehiring these same employees.
The district chose to offer
early retirement to a number of employees as a cost-saving measure that was
projected to save the district more than $41 million. The early retirement
incentive was that if an employee chose to retire, the district would offer the
employee one year of pay without working. Now, the district claims that it is
suffering from a "brain drain," and has rehired district workers.
For example, the district
rehired Karen Bachofer, an employee who oversaw school research and evaluations.
When she left, Ms. Bachofer had an unfinished project to determine if students
met certain college admission requirements. She was quickly rehired by the
district and paid $10,000 to complete her project while earning her normal
salary of $134,000, which the district paid out as an early retirement
agreement.
The district originally
intended to rehire three dozen employees after offering them early retirement.
Instead, more than 10 times that number were rehired. Since offering early
retirement last year, the district has spent $2.3 million to rehire employees
and paid $24 million to employees for taking early retirement. (Source: Voice
of San Diego, July 2.)
Cal-Tax recommendation: The
school district should rethink its management strategies, and residents of the
district should get involved to force the district to be more prudent with the
tax dollars it receives.
-
Auditor Says Lax Oversight
of Recycling Program Cost State Nearly $2.2 Million.
The state auditor released
a report June 22 stating that the
Beverage Container Recycling Program at the Department of Resources Recycling
and Recovery did not ensure that recipients of grants met their commitments for
six completed market development and expansion grants that were reviewed
ultimately costing the state nearly $2.2 million.
Auditors said the program
uses a flawed fiscal forecasting process, and that the flaws resulted in a
$158.1 million overstatement in the 2009-10 budget proposed by the governor. "In
addition, the actual balance in the beverage fund was understated in the
governor' s budget for three fiscal years 2004-05 through 2006-07 because
revenues were not corrected to include prior year adjustments," the auditor
stated.
The audit of the recycling
program found:
-
Its forecasting process is
outdated and not able to reliably project revenues and expenditures.
-
Over the past five years
projections have differed from actuals by between 3 percent and 15 percent a
problem the auditors attributed to "ineffective supervisory oversight and lack
of review of the accuracy of the forecasts."
-
A projected fund balance
deficit in May 2009 prompted the department to reduce payments to beverage
program participants.
-
For one audit with identified
underpayments of $941,000 including interest, the department took six months to
bill the distributor.
-
In two instances, the
department could not collect a total of $324,000 because it exceeded the
two-year statute of limitations on collecting underpayments.
-
It may be missing
opportunities to detect fraud because it lacks a systematic and documented
methodology for analyzing data regarding the volume of recycled containers.
-
It does not always perform
key steps to monitor grants awarded to private entities and local governments
and ensure that funds are properly used by visiting grantees and obtaining
project status reports.
The Beverage Container
Recycling Program was created in 1986 with the intent of increasing consumer
recycling. The program requires beverage distributors to make a redemption
payment to the Beverage Container Recycling Fund for every qualified beverage
container sold or offered for sale. The cost of the redemption payment is passed
along to consumers when they purchase beverages and, to encourage recycling,
consumers can return used containers to recycling centers and receive a payment
representing the initial California refund value. (Source: Bureau of State
Audits report, "2010-101, Department of Resources Recycling and Recovery:
Deficiencies in Forecasting and Ineffective Management Have Hindered the
Beverage Container Recycling Program," June 22.)
Cal-Tax recommendation: The
department should follow the auditor's recommendations to implement a new
forecasting model and to immediately take steps to improve management of the
entire recycling program.
-
Santa Clara County
Supervisor Overspends Annual Office Budget by $87,500.
Scott Herhold, a columnist for the San Jose Mercury News, reports that
for the fiscal year that ends June 30, Santa Clara County Supervisor George
Shirakawa Jr. overspent his $1 million-plus office budget by $87,500, nearly 9
percent. Now, the supervisor is "asking for a bailout from the financially
pressed county's contingency fund," Mr. Herhold writes.
The columnist adds: "Let me
put this in the simplest possible terms. A guy that we've elected to supervise
the county's budget to make decisions on hundreds of millions of dollars at a
crucial time can't keep within a budget for himself and his nine staffers."
The supervisor, the only one
on the five-member board who had an overspending problem, said in a memo to his
colleagues that "this unfortunate overage was due to unforeseen employee benefit
costs." An aide said the office has two part-time employees who were intended to
be classified as contractors, but were classified as employees, which means they
qualified for benefits that had not been budgeted. (Source: San Jose Mercury
News, June 21.)
Cal-Tax recommendation: The
county should follow Mr. Herhold's suggested recommendations to take the money
out of the supervisor's next budget, and to require that he explain in a public
meeting how the fiscal mismanagement occurred.
-
Governor Issues Executive
Order Banning Welfare Recipients From Accessing Taxpayer-Provided Benefits at
Casino ATMs. The
Los Angeles Times reported June 24 that "California welfare recipients
are able to use state-issued debit cards to withdraw cash on gaming floors in
more than half of the casinos in the state." The newspaper compared a list of
ATM addresses on the California Department of Social Services' website to a list
of casinos and poker rooms on the California Gambling Control Commission's site,
and found that 32 of 58 tribal casinos and 47 of 90 poker rooms had ATMs that
accept the state's welfare benefits cards.
The amount of money withdrawn
at these gambling facilities is not known, state officials said.
Responding to the report,
Governor Arnold Schwarzenegger on June 24 directed the Department of Social
Services to take immediate action to prevent welfare recipients from being able
to access state-provided cash benefits from ATMs in gambling establishments. "I
will use every available power I have to protect taxpayers from waste, fraud and
abuse in government," the governor said. "I urge the Legislature to pass more
aggressive laws preventing benefit recipients from withdrawing cash assistance
at casino and other gambling location ATMs that I will sign as soon as it hits
my desk." (Sources: Los Angeles Times, June 24; News release from
Governor's Office, June 24.)
(Cal-Tax recommendation: The
Legislature should follow the governor's suggestion, and all state officials
should investigate ways to prevent misuse of state funds with the same intensity
as the Times reporters who uncovered this hole in the state's welfare
system.)
-
State Sends One-Cent
Payments to Counties, at a Cost of 71 Cents Each.
The state has reduced its Williamson Act subventions to counties so drastically
that some counties received a single penny when the annual checks arrived this
month. The state distributes the funds electronically, at a cost of 71 cents per
payment. Six of the payments were for amounts less than 71 cents.
Williamson Act funding was
cut from $38 million to $1,000 an amount that was divided among 47
participating cities and counties. (Source: Los Angeles Times, June 18.)
Cal-Tax recommendation: This
appears to be a unique circumstance, and it is likely that addressing the
situation would cost a great deal more than the amount of wasted money in
question. However, if there is a simple, no-cost way to consolidate small
payments to avoid this situation in the future, state officials should do it.
Every penny counts.
-
Bell City Council Members
Paid Nearly $100,000 for Part-Time Service.
The Los Angeles County District Attorney's Office is investigating why members
of the Bell City Council are being paid $8,083 a month for their part-time
service on the council. A letter from the district attorney notes that under
state law and based on population, part-time city councils should be paid $400 a
month.
The district attorney's
representative said it appears that members of the City Council are receiving a
base salary of $150 per month, and then are inflating their pay by nearly $8,000
a month by receiving salaries for serving on various bodies including the
Community Redevelopment Agency, Public Finance Authority and Surplus Property
Authority. The population of Bell is approximately 40,000.
Bell's vice mayor said the
$8,083-a-month figure is misleading, because it includes the cost of medical
insurance, retirement and other benefits. (Source: Los Angeles Times,
June 24.)
Cal-Tax recommendation:
District attorneys throughout the state should examine whether other city
councils are engaging in similar shenanigans.
-
Los Angeles County
Probation Workers Escaped Discipline Because of Missed Deadlines.
Los Angeles County's Office of Independent Review, asked in March by the Board
of Supervisors to examine the internal investigation functions of the Los
Angeles County Probation Department, has found that the department has "a number
of significant problems," including employee discipline cases that had to be
dropped due to missed deadlines.
"Our review of this
6,000-member department revealed a number of significant problems in the units
most directly involved with internal investigations and administrative
discipline," the panel said. "We discovered inordinate delays in completing and
reviewing internal investigations. As a result, in at least 31 cases over the
past two calendar years, the department may well be unable to discipline sworn
employees who violated policy because it was unable to complete the cases on
time."
The review said those cases
"are only emblematic of a wholesale systems breakdown in which over half of all
disciplinary cases were completed five days or less shy of the statutory
one-year deadline." This caused victims, complainants, subject employees, and
department managers in over half the cases to wait almost a year before the
cases were finalized. "The bottlenecks that caused the delay derived primarily
from bureaucratic inefficiencies, insufficient tracking, and weak case
management," the review found.
In the Internal Affairs unit,
the review found "quality deficiencies in the investigations and a clear need
for training in basic investigative skills to professionalize their methods and
work product." In the Performance Management unit, the review found "significant
holes in documentation and an obscure, inconsistent process of case evaluation
and discipline decision-making."
"When we asked why some
seemingly counterproductive procedures exist, we often heard, 'That's the way
we've always done it,'" the report said.
On the plus side, the
investigators stated: "During our review, we observed a department already
actively engaging in reforms on many fronts with the assistance of the County
offices of the CEO, the Auditor/Controller and Human Resources. The Probation
Department's managers have already modified some aspects of their process during
our review as a result of our continuing dialogue with them. We hope that the
receptive attitude we encountered from its leaders will continue to sustain the
Department through this dynamic period of challenge and reform." (Source: "Evaluation
and Recommendations Concerning Internal Investigations at the Los Angeles County
Probation Department A Special Report by the Office of Independent Review,
County of Los Angeles," June 2.)
Cal-Tax recommendation: The
Probation Department should continue its efforts to improve its internal
workings, and the Board of Supervisors should keep up the pressure for
meaningful reforms.
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State Auditor Says School
District Used $451,000 Inappropriately.
The state auditor reported
June 15 that the San Dieguito Union High School District's (San Diego County)
has generally used its bond funds appropriately, but spent $451,000 for
inappropriate purposes.
The money was spent on
relocatable facilities that were used as administrative offices rather than as
classrooms, and for housing and demographic studies.
The auditor also stated that
"although the school district's responses to public requests for records usually
met legally mandated deadlines, deficiencies in the school district's records
often prevented us from determining whether the school district provided the
requested documents."
The spending involved money
generated by bonds that are repaid through a special tax levied on the owners of
property located within the district. (Source:
California State Audit Report 2009-116,
June 15.)
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San Diego Official
Promised to Take Pay Cut, but Says Oversight Kept Full Salary in Place.
The San Diego Union-Tribune reports: "The San Diego city auditor, in
charge of holding officials accountable for how they spend taxpayer money,
neglected to sign documentation that would have led to his overall compensation
being reduced by $5,000 during the past year. Eduardo Luna, who was hired in
2007 but became the city's first independent auditor last year, had promised to
take a 6 percent pay cut along with nearly 10,000 other employees to help solve
a budget crisis. But Luna took only about half the proposed cut after he failed
to sign paperwork to change the city's matching contributions to a retirement
account."
The issue became part of a
larger City Council discussion June 14 after an internal document showed that
the promised benefit changes had never been applied. Councilman Todd Gloria then
questioned whether Mr. Luna had indeed taken the full 6 percent reduction in
compensation as required by his contract.
Mr. Luna took responsibility
for the mistake and said he is working to reimburse the city for the roughly
$5,000 he received. He said he overlooked signing the form and didn't realize
his error until he was notified in April.
Under his contract, Luna
makes $168,000 annually. He intended to give up two separate city matches to his
retirement account, which would have saved the city $10,080. Half of that total
didn't require any action on his part. Because the money involved was a city
match, there was no change in his take-home pay, and Mr. Luna said he had no
reason to believe he wasn't complying with his promise to take the cut. (Source:
San Diego Union-Tribune, June 15.)
Cal-Tax recommendation: We
applaud Mr. Luna for owning up to the mistake and promising to reimburse the
city, and we hope that this situation prompts all city officials to keep a
closer eye on employee pay issues.
-
Department of Public
Health Fails to Collect Fines from Nursing Homes and Hospitals, New Audit Finds.
The Department of
Public Health failed to collect more than $15 million in penalties and fines
that would have benefited both state and federal coffers, according to a state
audit released June 17.
The department, which is
responsible for licensing and monitoring health care facilities, is authorized
to impose a civil penalty if a health care facility is not operating within
compliance of state or federal regulations. Penalties collected are deposited
into a special fund for the State Health Facilities Citation Penalties Account
or the Federal Health Facilities Citation Penalties Account. The collected
penalties and fines are used to protect patients from abuse or neglect. The
audit reviewed the department's operations between 2003 and 2007.
The state auditor recommended
a number of changes, including changing state laws regarding how penalties are
imposed and adjusting the penalty to reflect inflation. The auditor also
recommended requiring the department to deposit penalties into an account that
generates interest. Other recommendations suggested making sure that funds are
not based on poor estimates and that facilities are surveyed every two years, as
required by state law, to ensure that the facilities meet state and federal
compliance. (Source: California State Audit Report 2010-108, June 17.)
Cal-Tax recommendation: The
auditor's recommendations should be followed. Monitoring the quality of nursing
homes is important, and state officials should improve their process for doing
this work.
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In Orange
County, Government Lobbyists Spent $1.1 Million to Lobby Other Government
Officials.
The Orange County Register's OC Watchdog blog reports: "A tally of
lobbying expenditures for just eight local governments in Orange County shows
that $1.1 million was spent on government-to-government influence-peddling,
reports the Orange County Grand Jury in its ominously-titled 'Lobbying:
The Shadow Government.'"
The biggest spender
was the Orange County Transportation Authority, spending $336,000 on lobbyists.
In second was the county itself, spending $240,000. Other government agencies
spending big on lobbying included: the Orange County Water District, $120,000;
the Orange County Sanitation District, $110,000; the Municipal Water District of
Orange County, $80,000; the Orange County Fire Authority, $60,000; the Orange
County Employee Retirement System, $40,000; and the Orange County
Clerk-Recorder, $30,000.
The blog noted that
this spending is just the tip of the iceberg: "When you consider that just about
all of OC's governments 34 cities, and 28 school districts, and 31 special
districts, and four community college districts employ lobbyists, well, it's
clear we're talking about millions upon millions of dollars spent just so one
branch of government (that's supposed to be working for We The People) can ask
for something from another branch of government (that's also supposed to be
working for We The People)." (Source: Orange County Register's OC Watchdog
blog, June 10.)
Cal-Tax
recommendation: Government agencies at all levels should reduce or eliminate
lobbying expenses and redirect the money to programs that serve those in need.
Government officials are elected to represent the people in their districts, and
should be expected to be aware of their constituents' needs without being
lobbied by other elected officials.
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L.A. Controller
Says Department of Water and Power Tried to Extort the City Council.
Los Angeles City
Controller Wendy Greuel released an audit June 10 blasting the Los Angeles
Department of Water and Power for claims the department made during a dispute
over whether it could afford to transfer $73.5 million to the city to help with
budget problems.
"I can say with 100
percent certainty that the DWP did have the $73.5 million available to transfer
to the City, and could have done so without putting itself in ANY financial
jeopardy," Controller Greuel said. "My audit lays out in detail that none of the
reasons given by the DWP for refusing to transfer the money are supported by
facts. As of April 1, the DWP's Power Revenue Fund had approximately $752
million dollars in it, more than enough money to transfer the $73.5 million to
the City."
The controller also
said the department did not need a controversial Energy Cost Adjustment Factor
increase to complete the revenue transfer, as it had claimed.
On April 5, the DWP
sent a letter to Controller Greuel giving five reasons why it "could not
transfer" the $73.5 million.
"It's hard to look
at these numbers and not say that the DWP was trying to extort the City Council
into passing its proposed ECAF increase," the controller said. "This audit is
clear, there needs to be greater transparency at the DWP. The insulated culture
and the lack of accountability in the Department must change. The DWP has lost
the trust of the public through this debacle and it will require dramatic steps
over the coming months and years to rebuild the confidence of the ratepayers."
(Source: Report from the Office of the Los Angeles City Controller, June 10.)
Cal-Tax
recommendation: While taking money from the Department of Water and Power in
order to address the city's general fund imbalance may or may not be a good
idea, the proposal should be decided based on sound data and reliable reports
from all government staffers. We applaud the city controller for looking into
the department's claims and speaking out strongly about the problems she
discovered.
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State Auditor
Finds Lack of Transparency in Program for Low-Income Women.
The state auditor reported June 10 that the Department of Public Health's
administration of the Every Woman Counts (EWC) program has been lax in several
respects.
The auditor found:
-
Contrary to its
previous claims, the Department of Public Health has a great deal of flexibility
to use existing EWC program funds to provide screening services to women. "We
estimate that had Public Health redirected one-half of the amount it spent on
various contracts for nonclinical activities in fiscal year 2008-09, it could
have dedicated nearly $5.1 million to pay for screening activities," the auditor
wrote. "This funding would have allowed more than 41,500 additional women to
obtain services from EWC."
-
The department's
ability to redirect funds is hampered because it cannot easily identify funds it
uses for activities that do not directly support women. "Public Health's ability
to identify and redirect funds toward activities that directly support women is
hampered by the fact that Public Health cannot determine how much its
contractors spend on other activities," the auditor reported. "For example,
Public Health spent more than $10 million on various contracts with local
governments and nonprofit organizations during fiscal year 2008-09; however, it
does not know how much these contractors spent on each contracted activity."
-
The department does
not provide the Legislature with estimates of the number of women it expects to
serve in a fiscal year, even though it provides this information to the federal
government to secure federal funds.
-
The department has
not fully complied with certain aspects of state law. Specifically, it has not
developed regulations that implement the EWC program nearly 16 years after the
program began nor has it evaluated the effectiveness of the EWC program in
annual reports to the Legislature (since 1994, only one report has been
submitted). "This lack of information on the effectiveness of the EWC program
limits Public Health's ability to advocate for appropriate funding and hampers
the Legislature's and the public's ability to exercise oversight," the auditor
said.
Spending nearly
$52.1 million in fiscal year 2008-09, the EWC program provides funding for
breast and cervical cancer screening services for low-income women. During
fiscal year 2008-09, Public Health provided EWC services to nearly 350,000
women. Under the EWC program, medical providers submit claims to the state for
the screening services they provide to women enrolled in the program.
The auditor also
found that funding the program will likely be more difficult in the future in
part because it relies on a declining revenue source the tobacco tax. (Source:
State Auditor Report: "Department
of Public Health: It Faces Significant Fiscal Challenges and Lacks Transparency
in Its Administration of the Every Woman Counts Program," June
10.)
Cal-Tax
recommendation: The state needs to increase oversight of this program and all
others, and staffers should rededicate themselves to providing their important
services in the most transparent and cost-effective manner possible.
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L.A. Probation
Department Can't Verify Where Funds Were Spent.
The Los Angeles Probation Department's lack of financial oversight makes it
impossible to determine how it is spending its $630 million annual budget,
according to a review by the county's chief executive officer. The CEO, William
Fujioka, said, "The problems of this department are shocking."
The review was
initiated to determine whether the department had properly used $79.5 million in
county funding for improving juvenile halls, camps and management. The CEO
reported that "because of the inadequacy of Probation's records," it is "not
able to verify
whether all of the funds were expended for their intended
purpose."
A review of the
department's Downey facility found that 146 of the 548 employees reported to be
working there were actually deployed elsewhere. (Source: Los Angeles Daily
News, June 7.)
Cal-Tax
recommendation: County supervisors have indicated that they will follow up on
this report by making sure the Probation Department improves its oversight of
taxpayers' money. Los Angeles County residents should maintain pressure on their
elected officials to make sure this follow-up occurs.
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During Budget Crisis,
University of California Adds to Ranks of Highly Paid Senior Officials.
The San Francisco Chronicle reports: "It has been a period of austerity
at the University of California, with layoffs, across-the-board pay cuts and fee
hikes. Yet some UC employees earned significantly more money in 2009 than in
2008, with two more million-dollar earners added to the payroll, new salary data
show. The number of UC employees classified as 'senior officials' earning more
than $214,000 in total compensation rose 6.3 percent, to 3,184 from 2,996
people. Lucrative overtime pay also rose sharply. Employees earning more than
$10,000 in OT climbed 79 percent, to 2,733 from 1,531 employees."
The paper noted that UC's top
overtime earner, an operating room nurse at UC San Francisco Medical Center,
took in nearly $97,000, boosting her total compensation to more than $320,000.
The figures come from payroll data for 250,249 people paid by UC in calendar
year 2009, and from UC's new report on executive compensation. (Source: San
Francisco Chronicle, June 3.)
Cal-Tax recommendation:
Clearly, operating room nurses are crucial employees who deserve fair
compensation, but massive overtime spending raises red flags about possible
management problems. State lawmakers should review the UC's pay and management
policies as they craft the new state budget.
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Grand Jury Says San Diego
Schools Misspent $100,000.
The San Diego County grand jury has uncovered the misuse of $100,000 in student
funds within the San Diego Unified School District, and is recommending
heightened oversight and fraud detection.
The grand jury found that
Associated Student Body funds were used for a staff Christmas party at a magnet
school, and for staff mugs, polo shirts and other unauthorized expenses. The
panel also reported that some schools illegally charged student fees for
everything from band instruments to cheerleading uniforms for decades.
(Source: San Diego Union-Tribune, June 2.)
Cal-Tax recommendation: The
school district says it has already taken steps to correct some of the problems,
but residents should attend school board meetings and maintain pressure on
school officials to make sure they address the problems. Especially during times
of budget upheaval, school officials should do everything they can to make sure
money is going to vital classroom instruction for students, and is not being
squandered on perks for adults.
-
San Francisco Spends
$175,000 to Move a Small Shrub.
San Francisco Chronicle columnists Phillip Matier and Andrew Ross have
uncovered a doozy: San Francisco taxpayers recently paid $175,000 to move an
8-inch-tall, 20-foot-wide shrub. They write: "Money may not grow on trees, but
it sure cost taxpayers a bundle to move a bush that was found growing in the
path of the Doyle Drive rebuild. Not just any bush this was the Franciscan
manzanita, a city native that was thought for 60 years to be extinct until the
bush was spotted late last year. With the final bills in, the cost of moving the
bush in January came to $175,000 $140,000 to dig up and move the shrub, and
$35,000 for "support" services from geological, botanical and climate experts in
preparation for its new home in the Presidio less than a mile away."
Cal-Tax recommendation: San
Francisco officials need to find out how it could possibly cost $140,000 to dig
up and move a shrub, and then must eliminate the waste that caused the price tag
to grow like a weed.
-
Audits Reveal Waste in
L.A. County Departments.
Auditors in Los Angeles
County recently released a report documenting 101 cases of fraud that occurred
from June through December of 2009. The cases were discovered after auditors
reviewed calls made to the county's fraud hotline. The hotline generates about
500 tips every six months.
Some of the findings:
-
An employee in the Department
of Public Social Services obtained personal and confidential information for 82
welfare recipients. The information was obtained during home visits to the
recipients and from the department's computer systems. The employee, Trang Dinh,
reportedly used the information to file fraudulent income tax returns and
refunds totaling $100,000.
-
Los Angeles County's Beaches
and Harbors and Library departments paid $842,000 for custodial and janitorial
services that were never performed. The departments had a contract with a phony
company. When the fraudulent contract was discovered, the owner of the
"maintenance company" was arrested and convicted of a felony. He has been
ordered him to pay back the county.
-
Three county Fire Department
officials played golf during work hours, but claimed a full work day on their
time card. One official went as far as to claim overtime. Two of the officials
were not disciplined. Previous employee regulations allowed employees to report
a full work day as long as the employee worked at least one hour.
-
Fire Department Deputy Chief
Helen Jo received a reprimand for hiring one of the county official's future
sons-in-law. According to the audit, Ed'ward Rhone was overpaid and received
more benefits that most new employees are entitled to. Since the audit was
performed, the employee was transferred to a more demanding position to justify
his pay. (Source: Los Angeles Times, May 27.)
-
Nearly $1 Million in
County Purchases Unaccounted for in Orange County.
A report by Orange County Auditor-Controller David Sundstrom reveals that county
staff can't account for nearly $1 million in items purchased with taxpayers'
money. The report said 60 big-ticket items including a covered trailer, laser
printers and LCD projectors cannot be accounted for.
Mr. Sundstrom said the
majority of the missing items are electronics that are so old that they are no
longer valuable. "That's true," the OC Watchdog blog said. "All but two
of the items are more than 6 years old: An enclosed trailer bought in January
2005 for $20,741.88 was reported missing to county supervisors on February 3,
2009, (and) a VHF radio transceiver, bought in October 2007 for $8,429.91 is
missing."
The most expensive item on
the list was a pharmacy dispensing machine purchased for more than $152,000 in
1999. An official in the county's Health Care Agency said the device was traded
in to the manufacturer. (Source: Orange County Register's OC Watchdog
blog, May 25.)
Cal-Tax recommendation: The
county needs to tighten up its recordkeeping and oversight. The list of missing
items includes many expensive items that are not easily misplaced, including a
$5,500 oven at the sheriff-coroner's office, a $95,000 film imagesetter at the
Department of Public Works, and a $12,600 steam generator at the Health Care
Agency. County officials should know whether the equipment was traded in, junked
or stolen, or else they won't be able to do an adequate job of safeguarding the
taxpayers' money.
-
County Builds $23 Million
Pet Shelter, Then Ponders Closing the Facility.
The Sacramento Bee reports on one of the more remarkable examples of poor
long-range planning: "Six months after unveiling its $23 million shelter for
unwanted dogs and cats, Sacramento County is contemplating getting out of the
animal care business, a county executive acknowledged Thursday. The county has
dismissed its shelter director, Pat Claerbout, and on Thursday met with area
officials to discuss the possible consolidation of animal care services across
the region."
The county has faced deficits
for three consecutive years, and a county official said, "Unless we come up with
a different revenue stream, the current model (for sheltering abandoned animals)
is not sustainable."
"The gleaming new shelter on
Bradshaw Road opened to fanfare in October," The Bee reports. "It was
publicly financed, and the county inherited a $1.6 million annual bond
obligation on the building." (Source: The Sacramento Bee, May 28.)
Cal-Tax recommendation:
Consolidating animal care services with city-run facilities sounds like a good
idea, and the county also should consider eliminating its fiscal planning staff,
since the taxpayers don't appear to be getting any benefit from their services.
In addition to building a pricy high-end animal shelter when keeping it open
should have been a foreseeable challenge, the county supervisors decided in
mid-2007 to spend $295,000 on a handful of sculptures to beautify the building.
The county needs to examine its priorities.
-
State Auditor Reports
Problems at the Department of Health Care Services.
In
a report released May 27, the
state auditor revealed several problems at the California Department of Health
Care Services.
The auditor reviewed the
administration of the California Medical Assistance Program treatment
authorization request (TAR) process, and found that the Department of Health
Care Services:
-
Is not processing drug TARs
within the legal time limits for prescriptions requiring prior approval (the
auditor found that the department took longer than the allowed 24 hours to
respond to 84 percent of manually adjudicated drug TARs in fiscal year 2007-08,
and 58 percent in fiscal year 2008-09). The auditor stated: "Further, it has
interpreted the 24-hour limit in law improperly to mean the next business day.
Using this interpretation, Health Care Services could assert that it processes a
TAR within the next business day even though it could take as long as 96 hours,
depending on when the TAR was received."
-
Does not monitor its
processing times for prior-authorization medical TARs even though state law
requires those to be processed within an average of five working days.
-
Manually adjudicates all
medical TARs, including those rarely denied.
-
Did not consider
administrative costs to process TARs associated with service categories with low
denial rates in its previous analyses.
-
Does not separately track
costs related to administering the TAR process.
The auditor reported that the
department "is missing opportunities to streamline the provision of California
Medical Assistance Program (Medi-Cal) services and improve its level of
service."
The report continued:
"Overall, Health Care Services' data indicates that the TAR process as a whole
saves substantially more money in avoided paid claims to Medi-Cal providers than
it costs to administer. There are compelling reasons for Health Care Services to
perform a cost-benefit analysis of the segment of its TAR process associated
with service categories with low denial rates, but it has not done so. Our
analysis reveals that Health Care Services may have spent $14.5 million annually
40 percent of its total TAR-related expenditures processing roughly 4
million medical TARs with denial rates of less than 4 percent in fiscal years
2007-08 and 2008-09. Consequently, the cost of processing this population of
TARs is high. Health Care Services performed limited analyses that considered
the costs and benefits of its TAR process. These analyses did not contemplate
whether administrative costs to process TARs for service categories with low
denial rates were greater than or equal to how much it saved, in the form of
costs avoided by denying inappropriate services."
The department told the
auditor that it generally agrees with several recommendations for improvement,
and will take various corrective actions. However, the department indicated that
it does not plan to change its "next business day" practice for adjudicating
drug TARs, because the offices where TARs are processed are not staffed 24 hours
a day. The department also indicated that its attention to requests that are
seldom declined has a deterrent effect, helping the state stop Medi-Cal fraud.
(Source: California State Auditor report, May 27.)
Cal-Tax recommendation: The
department, which does serve an important role in deterring Medi-Cal fraud,
should follow the auditor's recommendations to improve its services, and should
follow the state and federal laws regarding deadlines for responding to
treatment authorization requests.
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Bay Area Public Employees
Help Push Local Governments Into Bankruptcy.
While many Bay Area local
governments are nearly bankrupt, a Santa Clara County Grand Jury reported May 26
that public employee compensation has far outpaced cost-of-living expenses, pay
granted to similar private-sector positions, and revenues generated by local
governments. The 33-page report charged city councils with bending to local
unions to favor public employees, rather than the funding needs of their cities.
The report notes that public
employee salaries have continued to rise "even when the economy struggles."
Since 2000, most public employees' wages and pensions have increased 37 percent,
while fire and police officer compensation has increased 41 percent.
San Jose Mayor Chuck Reed and
City Councilmen Pierluigi Oliverio and Pete Constant have recently called for
city employees to accept a 10 percent cut in pay and benefits. They said the
report backs up their position.
The report said that the
primary compensation problems are that many employees are not required to
contribute much to their employer health plan, employees are given large
"cash-out" bonuses for unused sick leave and vacation time, and that retirement
pension benefits have been increased 25 percent to 50 percent. Menlo Park voters
will have the option of scaling back public employee retirement benefits this
November, since the City Council decided to place a pension reform measure on
the ballot.
Public employee unions
criticized the report's methodology and claimed that the conclusions are
ill-informed. (Source: San Jose Mercury News, May 27.)
In related news, the
Contra Costa Times reported that a new database has been developed by the
Bay Area News Group to let people view and search public employee salaries. The
database shows that taxpayers paid $12.2 billion to fund the salaries of
government workers in 109 government agencies in the Bay Area last year.
The database points out
several examples of employees making several hundred thousand dollars per year.
For example, Nancy Farber, chief administrator of a hospital in Fremont,
received $847,811 (her pay dropped $30,000 from 2008); Charles Keohane, a San
Francisco policeman, received $516,118; and Jana Dolnikova, a doctor at a Santa
Clara hospital, was paid $507,748. (Source: Contra Costa Times, May 24.)
Cal-Tax recommendation:
Massive salaries for government workers are not sustainable, and they make it
difficult for local governments to provide quality services for residents who
need them. Every local government should take a hard look at its salaries and
benefits, and should correct problems that have been allowed to grow.
-
UC Planning to Cut $500
Million of Administrative Waste.
At a University of California
Board of Regents meeting on May 19 in San Francisco, university officials
presented a plan to cut administrative waste by $500 million. UC President Mark
Yudof said the university wastes money by being too decentralized.
A recent study commissioned
by UC Berkeley found that that campus alone could save $93 million to $135
million through operational efficiencies (see
Cal-Taxletter of April 16).
President Yudof said: "If we
can agree (to consolidate) some of those things we can save a lot of money and
put it back into students and faculty and staff, which is where it belongs in
the first place."
Nathan Brostrom, the
executive vice president for business operations, said: "It is imperative that
we re-examine now the way we operate both as a system and campuses."
Russell Gould, chair of the
Board of Regents and a former director of finance under Governor Pete Wilson,
said that this efficiency push is a top priority.
One area of potential savings
is purchasing, where UC spends $4 billion a year on supplies. UC Chief Financial
Officer Peter Taylor said that in the past, each campus ordered its own supplies
and from different suppliers. Centralization of some purchases can result in
lower prices. He said he has already saved $48 million in this area and believes
savings of an additional $100 million are possible. Citing another example of
savings, Mr. Taylor said he was shocked to find that almost every employee in
the UC's Office of the President had his or her own printer. Mr. Taylor said
that since he started work there, he has gotten rid of 400 printers, saving UC
$300,000 in ink, equipment and maintenance though that still leaves a staff of
700 with more than 200 printers, or one printer for every three or four workers.
(Cal-Tax has been calling for
the elimination of waste as a top priority and recently published an expansive
report on waste and fraud.)
(Sources: University of California Press Release, May 19,
The Sacramento Bee,
May 20.)
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Local Government Employees
Doing Well One City Manager Makes $460,000 a Year.
The Orange County Register's OC Watchdog blog reported May 17 that a
compensation study by graduate students from Brandman/Chapman and Pepperdine
universities found that city managers are doing quite well in that area.
In addition to
determining the standard salary, benefits, deferred compensation and pension
contributions, the students asked the county's 34 cities how much was spent on
the city manager's vehicle purchase/payments, car insurance, car repair, car
maintenance, gasoline, cell phone equipment and usage, toll road fees, in-home
computer/office equipment, dues and subscriptions, travel and meetings, payouts
for unused vacation and sick leave.
The most highly
compensated city manager in Orange County is not from Anaheim or Santa Ana --
its largest cities -- but from one of its smallest cities: Bruce Channing of
Laguna Hills, at $460,809, the
report says.
In the two largest
cities, Anaheim's David M. Morgan received $317,923, while Santa Ana's David N.
Ream received $327,074.
Earning the least
is the executive of Villa Park. The city manager there works 32 hours a week and
receives $170,920.
"This study may
well serve as a wake-up call to citizens to question the adequacy of municipal
financial data," Barbara Kogerman writes in a forward to the report that her
students prepared. "'Transparency,' a popular buzz-word among politicians, is
easy to claim but difficult to find; obscurity is the more common practice."
Meanwhile, the
Daily Post of Palo Alto reported May 17 that top officials in the Burlingame
Police Department will receive 2 percent salary hikes for three years, despite
the city's budget problems.
The current average
salary for a sergeant is $139,532 plus benefits, while a police captain receives
$180,852 plus fringe benefits. (Sources: OC Watchdog blog and Daily
Post, both May 17.)
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Audit Says S.F. Transit
System Could Save $3 Million a Year by Managing Employees Better.
San Francisco's Municipal
Transportation Agency could save at least $3 million a year by eliminating
driver-friendly work rules and reining in overtime, according to an audit
released May 11 by the San Francisco Board of Supervisors' budget analyst.
An unusually high level of
operator absenteeism is expensive and creates unreliable service at San
Francisco's financially flailing transit agency, the audit found.
Under the current rules,
drivers have a financial incentive to call in sick and skip a regularly
scheduled day because they can still work overtime and earn time and a half,
even if they have not worked 40 hours that week, according to the audit.
The rate of unscheduled
absenteeism for San Francisco's operators is 15 percent, compared with 11
percent in Philadelphia, 6 percent in Los Angeles and 4 percent in Seattle, the
audit found.
The audit comes three days
after the agency cut service by 10 percent to save an estimated $29 million a
year. The agency, with a proposed annual operating budget next year of $750
million, already has raised transit fares and parking fees to help balance the
books.
The auditor recommends that
when management negotiates its next contract with the Transport Workers Union,
it curb overtime costs by forcing operators to work 40-hour workweeks before
they can earn overtime. The audit also recommends that Muni save $608,625 per
year by not paying the salaries of six of the seven operators who work full-time
on union duties.
Muni management's inability
to use part-time drivers also caught the attention of auditors. Because peak
demand for service is during the morning and evening commutes, overtime is used
to keep full-time operators on the clock to cover both rush-hour periods. Many
drivers, meanwhile, are pulled off the road during off-peak hours and put on
paid, nonproductive standby. Standby time, ranging from a few minutes to six
hours, is built into 49 percent of Muni's 1,278 regularly scheduled weekday
runs. (Source: San Francisco Chronicle, May 12.)
Cal-Tax recommendation: City
officials should take the auditor's recommendations, and should take control of
their employees in order to deliver better service to residents at the same or
lower cost. Since transit workers' have a generous pay provision written into
the City Charter, voters should support a proposed ballot measure that would
remove this provision and ensure that management regains more power when
bargaining future employment contracts with the transit workers.
-
Lottery Officials Get
Taken Out to the Ball Game.
California State Lottery
Director Joan Borucki and her staff bilked taxpayers by using $3,000 in
department funds to travel to several Los Angeles Dodgers and San Francisco
Giants baseball games, according to an investigative report by CBS News
in Sacramento.
Out of every dollar raised
from state lottery funds, 34 cents is intended to go to education. The
department justified the staffers' attendance at the baseball games by claiming
that the lottery director is a public figure and since the lottery is a baseball
sponsor, it makes sense for the department to attend the baseball games.
Assemblyman Hector De La
Torre, chair of the Assembly Committee on Accountability and Administrative
Review, said the department has lost sight of its core mission.
In addition to paying for the
baseball games, the $3,000 went toward travel claims for mileage, meals, a
$189-per-night hotel room, and a meeting with a state senator in his Southern
California district. Assemblywoman Alyson Huber, a member of the oversight
committee, said: "There are telephones. I don't know why those meetings have to
take place in person in Southern California." (Source: CBS 13 News, On the
Money, May 10.)
(Cal-Tax recommendation: Even
if California wasn't facing a deficit of approximately $20 billion, each state
agency should be ensuring that available resources are used where they are most
effective in serving the public. State policymakers must continue to press state
agencies on how they are spending their resources. This oversight can be
accomplished during department budget hearings and during fiscal reviews.)
-
San Luis Obispo County
Paid Half a Million to Workers on Leave.
The Tribune of San Luis Obispo reports that over a three-year period, the
county paid $519,460 to 60 employees who were on leave while their work
performance was being investigated. The figure comes from a civil grand jury
report on the county's disciplinary procedures.
The grand jury found that the
average administrative leave lasted 31 work days. Because of personnel
confidentiality rules, the grand jury did not identify those who were placed on
leave.
The discipline system was
found to be "appropriate," but the grand jury recommended that the county
increase its training of managers. Supervisors "occasionally fail either to
notice or to document employee behavior that falls short," the grand jury wrote.
It cited three cases in which employees were marked satisfactory, "when
subsequent investigation revealed that the behavior had been unacceptable."
Grand jurors said they did
not know whether this was due to an oversight by the supervisor, a failure to
document inadequacies, "the supervisor did not have the courage or the skill to
provide the employee with honest feedback," or some other reason. (Source:
The Tribune, May 12.)
Cal-Tax recommendation:
Despite the lack of names in the report, the media reported that some of the
leave was paid to people who made headlines for inappropriate behavior,
including a woman who was let go for failing to disclose that she was in a
relationship with a union official with whom she was negotiating a county
contract. This raises the question of whether all employees should be placed on
paid leave during investigations, or whether some wrongdoing is so obvious that
there is no need to take the precaution of paying the employee during the
investigation. To the extent that it is possible to do so, the county should
keep its options open.
-
Students Shut Out of
College Aid Due to School District's Error.
The Ventura County Star
reports: "Some Oxnard Union High School District seniors did not receive state
grants in their college financial aid packages because the district provided
incorrect graduation dates for them. As many as 1,500 students might have been
affected, officials said. The mistake is being fixed, but at least one student
said it led her to turn down her dream school for one that would be less
expensive."
Adding insult to injury, the
newspaper reported that the error was discovered at Pacifica High School in
April, but the school district did not act quickly once it was informed of the
error by Pacifica's principal. The error wasn't addressed by the district until
after May 1, when students nationwide must tell colleges that accepted them
whether they are planning to enroll.
The mistake happened when a
worker put 2008, instead of 2010, as the graduation date for this year's seniors
on forms sent to the California Student Aid Commission. That made those students
ineligible for Cal Grants, which the commission distributes, said Martha Mutz,
the district's assistant superintendent for educational services.
Cal Grants provide up to
$4,026 a year for a California State University campus, $7,788 for the
University of California and $9,708 for private universities. The grants are
provided on a sliding scale, but they generally go to lower-income students.
The Student Aid Commission
has assigned three people to re-enter information for the approximately 1,500
students affected, said Tae Kang, Cal Grant operations manager. Mr. Kang added,
"We get mistakes like this every year, but not usually of this magnitude."
Some schools have announced
that they are open to appeals from students who turned down acceptance offers
due to financial worries caused by the error. (Source: Ventura County Star,
May 12.)
Cal-Tax recommendation: This
is the same district that last week was ordered by a jury to pay $5,700 in
damages to the family of an autistic student whose lunch money was stolen on a
daily basis by a teacher's aide. Clearly, the district needs to improve its
oversight of staff, before any more students are robbed of lunch money or the
opportunity for financial aid.
-
Audit Shows City of Los
Angeles Misplaced 45 Percent of Purchases.
A new audit reports that the city of Los Angeles, facing a budget deficit of
$222 million, has misplaced hundreds of purchased items worth a total of almost
$1 million. Auditors also found that the city spent taxpayer dollars on many
items that were unneeded and sat in storage.
Auditors could not locate 115
items (45 percent of the items purchased by the city), including a $60,000 video
camera purchased by the Los Angeles Information Technology Agency (ITA).
The audit also found that ITA
and the Los Angeles Recreation and Parks Department purchased 138 items that
were unneeded, including some that have remained in storage for more than seven
years. These items include refrigerators, stoves, a swimming pool heater, a deep
fryer, two televisions, nine microwaves, and several computers and printers. The
unused items in storage are worth $237,000. (Cal-Tax: Of course, a
seven-year-old computer isn't worth much now.)
City Controller Wendy Greuel
said: "With the city facing such a large budget deficit, it's essential that any
equipment that we are able to purchase is easily located if needed and utilized
immediately. It's critical that we keep tight controls on the city's scarce
resources. Unfortunately, we found in this case that no one was minding the
store."
Ms. Greuel offered several
recommendations: departments should update their inventories at least once a
month when assets are disposed or transferred; departments should conduct
biennial physical inventories of all equipment, as required; guidelines should
be developed for departments to follow when conducting physical inventories of
the city's assets; departments should use purchased items by putting them into
service as soon as possible, and such items should not go into storage upon
being purchased; departments should develop policies to monitor and track assets
that cost less than $5,000 and are susceptible to theft or loss; and departments
should place identification tags on every asset owned by the city, to assist in
the inventory process. (Source: News release from Los Angeles City Controller,
May 3.)
Cal-Tax recommendation: Other
cities and counties should follow Controller Greuel's lead and review recent
purchases. It is critical that officials conduct oversight of taxpayer dollars,
especially in times of fiscal hardship. The audit included a number of
recommendations that all local governments should follow.
-
State Agency Defeats
Purpose of Stimulus Funds by Delaying Use of $135.6 Million.
The California Emergency
Management Agency (Cal EMA) has yet to distribute $135.6 million in federal
stimulus funds received nearly eight months ago, according to a new report from
the state auditor. Cal EMA claims that it will be able to distribute the funds
by late 2010-11.
The report also highlighted a
lack of organization at Cal EMA, noting that the agency has no organized
strategy, policies or procedures to distribute the funds, and the agency has
failed to consistently report its administrative costs to the federal
government.
Last year, the federal
government enacted the Recover and Reinvestment Act of 2009, which awarded
states $2 billion (California received $225.3 million). Cal EMA was responsible
for allocating 60 percent of California's funds ($135.6 million), and the
remaining $89.7 million was appropriated to local governments from the U.S.
Department of Justice. The Recovery Act says that funds granted to states should
be spent as soon as possible to ensure that the funds achieve their purpose of
stimulating the economy.
State Auditor Elaine Howle
recommended that Cal EMA expedite its process of granting funds to recipients,
plan out what type of workload is needed to grant the funds to recipients, and
improve its activities to ensure that funds are awarded in accordance with
federal standards. (Source: California State Auditor report, May 4.)
Cal-Tax recommendation: The
auditor's report, along with previous reports about the improper handling of
federal stimulus funds, should be required reading for all members of Congress.
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More Than 33 Percent of
San Francisco City Employees Paid Over $100,000.
When San Francisco's
taxpayers ponder where their tax dollars are going, they need to consider the
following: according to the San Francisco Chronicle, one in three city
workers was paid more than $100,000 last year. That figure includes overtime,
but excludes benefits such as health care and pensions.
The paper reported that out
of 27,000 people who work for the city of San Francisco, 9,487 reached the
six-figure club. The average city worker salary was $93,000, according to Deputy
City Controller Monique Zmuda.
Steve Falk, president and
chief executive officer of the San Francisco Chamber of Commerce, said state
Employment Development Department data shows that city workers earn 20 percent
more than those in the private sector. In addition, they have significantly
better health and pension benefits.
Bob Muscat, head of the
Professional and Technical Engineers Local 21, said, "City government is
becoming increasingly technical and more sophisticated, and you have to pay for
the talent."
San Francisco is facing a
$483 million deficit in 2010-11. (Source: San Francisco Chronicle, April
26.)
Cal-Tax recommendation:
Salaries and benefits should be brought in line with job responsibilities and
private-sector standards, so more tax dollars can be freed up to help those
truly in need.
-
High-Speed Rail Authority
Has Weak Financial Oversight, State Auditor Finds.
In
a report released April 29, the
state auditor says the California High-Speed Rail Authority is plagued with
"inadequate planning, weak oversight, and lax contract management."
The agency is responsible for
managing funds authorized for building a high-speed rail network in California.
The funding includes $9 billion in general obligation bonds that the voters
authorized in November 2008.
The state auditor found:
-
The authority's 2009 business
plan estimates it needs $17 billion to $19 billion in federal funds. However,
the authority has no federal commitments beyond $2.25 billion from the American
Recovery and Reinvestment Act of 2009, and other potential federal programs are
small.
-
The authority's plan for
spending includes almost $12 billion in federal and state funds through 2013
more than 2.5 times what is now available.
-
The authority does not have a
system in place to track expenditures according to categories established by the
Safe, Reliable High-Speed Passenger Train Bond Act for the 21st Century, its
largest source of committed funding.
-
The authority has not
completed some systems needed to administer Recovery Act funds for example, a
system to track jobs created and saved.
-
Some monthly progress reports
issued by the authority's contracted program manager to provide a summary of
program status contain inconsistent and inaccurate information.
-
Authority staff paid at least
$4 million of invoices from regional contractors received after December 2008,
without having documented written notification that the program manager had
reviewed and approved the invoices for payment.
-
The authority paid
contractors more than $268,000 for services performed outside of the
contractors' work plans, and purchased $46,000 in furniture for one of its
contractor's use, based on an oral agreement contradicted by a later written
contract.
"To ensure that it does not
run out of funds for administrative and preconstruction tasks prematurely, the
Authority should track expenditures for these activities and develop a long‑term
spending plan for them," the auditor recommended. "It also should develop
procedures and systems to ensure that it complies with Recovery Act
requirements."
Curt Pringle, chairman of the
authority, responded that that agency will take action to improve oversight and
planning.
However, Mr. Pringle took
issue with the report's title: "High-Speed Rail Authority: It Risks Delays or an
Incomplete System Because of Inadequate Planning, Weak Oversight, and Lax
Contract Management." He said the "inflammatory title is overly aggressive
considering that the contents of the audit's findings are not equally scathing."
Political columnist Dan
Walters of The Sacramento Bee described the threat to taxpayers: "There
is a fundamental conflict between voters being told that if they approved the
bonds the bullet train would be self-supporting, without operating subsidies,
and the apparent requirement for 'revenue guarantees,' which probably could come
only from tapping a state budget that's already awash in red ink and/or imposing
some new special tax." (Sources: California State Auditor Report 2009-106, April
29; The Sacramento Bee, April 30.)
Cal-Tax recommendation: This
is the latest report indicating that the High-Speed Rail Authority is not using
sound estimates of revenues and expenses for its budget projections, and critics
believe this is a sign that the project is on a fast track to failure. We
recommend that the agency start using realistic numbers and err on the side of
caution to protect the taxpayers from getting stuck holding the bag.
-
Auditor Finds More Than
$300,000 in Errors in City of Menifee.
An auditor reported this month that the city of Menifee (in Riverside County)
has a severe lack of internal financial controls that has left the city open to
potential fraud since it became a city in July 2008.
The city-commissioned auditor
reviewed six of the city's 31 contracts and took issue with more than $300,000
in billing errors caused by overbilling, backbilling, delayed billing, double
payments or unauthorized payments.
Councilman Scott Mann, who
had pushed for the audits, said, "When you consider the accounting firm only
reviewed six of the city's 31 contracts, the prudent man and the prudent
taxpayer would have to ask, 'Are there additional errors out there that we need
to fix?'"
Among the auditor's findings:
-
An administrator was paid at
an hourly rate of $140 to $145, when $130 was the maximum allowed in a contract.
This resulted in a $16,500 overpayment in a 10-month period.
-
A subcontractor billed the
city for $27,171 for labor hours that had no corresponding timesheets.
-
The city manager who awarded
contracts was simultaneously serving as a manager of a subcontractor that
received contracts, and received bonuses based on the company's performance.
-
Contracts for $236,900 and
$56,600 were awarded without the required City Council approval.
City officials said they were
troubled by both the depth and the breadth of the oversight problems. (Source:
Riverside Press-Enterprise, April 16.)
Cal-Tax recommendation: It
goes without saying that the city's remaining contracts should be audited as
soon as possible. City officials reacted to the audit by indicating they will
institute real checks and balances to safeguard the taxpayers' money, and the
city's residents should hold their elected officials accountable to make sure
the needed reforms actually occur.
-
Ventura Reaffirms Increase
in Firefighters' Pensions.
The Ventura City Council
voted 4-3 on April 26 to reaffirm an increase in firefighters' pension benefits,
despite a city budget shortfall of approximately $7 million.
The deal, originally approved
in August 2008, increases retirement benefits from "2 percent at 50" to "3
percent at 55" (allowing a rank-and-file firefighter to retire at age 55 with a
pension equal to 3 percent of his or her last year's pay, multiplied by years of
service). This will cost the city $548,271 in additional pension contributions
in 2010-11, and will increase the city's unfunded liability for public safety
pensions from $46 million to more than $50 million.
After the change was passed
in 2008, firefighters agreed to postpone the effective date until July of this
year. Members of the Ventura County Taxpayers Association lobbied the City
Council to ask firefighters for another postponement, but the council rejected
that plan.
Council members who voted to
keep the deal in place said they had no choice, because the previous vote was
legally binding and changing the deal now would lead to litigation. The
firefighters' current contract expires December 31, so negotiations for the next
contract will begin soon. (Source: Ventura County Star, April 26.)
Cal-Tax recommendation: The
next contract should not be so generous with taxpayers' money. While
firefighters should be fairly compensated for the difficult and dangerous work
they do, their benefits should not be so high that they jeopardize the city's
ability to stay solvent.
-
San Francisco "Premium
Pay" Rewards Cost $86 Million.
In addition to their regular
salary, San Francisco city employees get $86 million in "premium pay." This
extra amount can be amassed by employees who obtain extra education or serve for
a number of years. (It is not for overtime worked, which is another big ticket
item in the city's budget.)
For example, the $20 million
of premium pay that goes to members of the Fire Department raises their average
annual salary, before overtime, to $111,699 per year. Many engineers get an
extra 7.5 percent pay boost for knowing how to repair heating and air
conditioning systems. Bus drivers get an extra 8 percent for working after 6
p.m. and before 6 a.m. (this is not overtime, but extra pay for working
unpopular hours), and 50 cents per hour extra for working in the same division
for more than five years, plus free fitness club enrollment. (Source: Phillip
Matier and Andrew Ross in the San Francisco Chronicle, April 19.)
Cal-Tax recommendation: The
city should take a close look at whether this added cost for taxpayers is
providing any real benefit to the people of San Francisco.
-
Orange County Retirement
System Makes $228 Million Mistake.
The computer system responsible for determining the cost of future pension
benefits to Orange County employees suffered from an "anomaly" and
underestimated the county's total pension liability by $228 million, county
officials acknowledged. The "anomaly" occurred when the system was being
programmed in 2003. When staff installed the computer program, they had the
Orange County Employees Retirement System compute data based on faulty
assumptions.
In regard to how the problem
will be corrected, OCERS Chief Executive Officer Steve Delaney said: "There are
a number of accounting process options available for dealing with the gains and
losses as they occur each and every year. We are currently exploring appropriate
funding methods with the assistance of our actuary and will discuss those in
more detail at our May Board meeting." (Source: Orange County Watchdog,
April 21.)
Cal-Tax recommendation: The
county should tighten up its financial oversight, and should determine why it
took seven years to discover a computer glitch that threw the books off by $228
million.
-
Tax Dollars for Job
Creation Instead Spent on Trips to the Boardwalk.
The San Francisco Chronicle reports: "Federal stimulus dollars intended
for job creation in Oakland were spent instead on trips to the Santa Cruz Beach
Boardwalk and a Concord water park, rent, church repairs, bus passes, salaries
and car allowances, according to a state review."
Oakland, which has a 17.7
percent unemployment rate, received $3 million last year for summer youth, adult
and dislocated worker programs. But more than $830,000 of the money received
under the American Recovery and Reinvestment Act from February to December 2009
was not properly accounted for or was misspent, according to the state Office of
the Inspector General.
In addition, state auditors
found that the city inflated the number of jobs created, claiming 35 when only
about six jobs were created with the stimulus dollars.
Laura Chick, the state
inspector general overseeing federal recovery dollars, found that stimulus funds
were passed down from a city agency, the Oakland Workforce Investment Board, to
a nonprofit, the Oakland Private Industry Council, which took control of the
money despite the fact that the group had no valid contract with the city from
July 2009 until earlier this month.
Questionable spending
included:
-
$2,806 given to the Spanish
Speaking Citizens Foundation for food and field trips to the Santa Cruz
boardwalk, Waterworld California and Washington Park in Alameda.
-
$5,415 given to the Alameda
County Youth Development program for staff salaries, benefits and bus passes.
-
$9,100 given to the Watkins
Memorial Church of God for salaries, maintenance and repairs, and rent.
Auditors had trouble tracking
money in part because the Industry Council drew stimulus funds based on
arbitrary estimates rather than actual expenditures, Ms. Chick's report said.
(Source: San Francisco Chronicle, April 21.)
Cal-Tax recommendation: The
federal government and the city should put some oversight measures in place, and
funds should not continue to go to agencies who have misused the tax dollars
they previously received.
-
Consultants Find Millions
of Potential Savings at UC Berkeley.
The University of
California's Berkeley campus could save $93 million to $135 million with
operational efficiencies, according to a new report by Bain and Company, a
consulting firm hired to find waste. The report urges university officials to
make an effort "to capture at least $75 million in annual operational cost
savings."
There are five big areas of
what the San Francisco Chronicle refers to as "bloat." They are:
-
Management Overstaffing.
The consultant
sees savings of $40 million to $55 million by reducing management overstaffing.
"The university has many layers (11) and relatively narrow spans of supervisory
controls (average of 4.4)," the report states. In fact, 55 percent of
supervisors have three or fewer direct reports.
-
Inefficient Purchasing.
Fragmented purchasing is undermining campus buying power. There is a lack of
standards for commonly purchased goods, and spending is fragmented across
thousands of vendors 75 percent more vendors per dollar than at benchmark
institutions. The consultants estimate potential savings of $25 million to $40
million in this category.
-
Student Services:
Productivity Varies Significantly and Programs Overlap.
The consultant believes $15
million to $25 million in potential savings are possible by reforming the $220
million spent on student services. Productivity varies significantly, and more
than 50 different services are offered with instances of overlapping programs
and functions across differing units.
-
Information Technology
Standards Lacking.
The campus spends $130 million on information technology and there are savings
of $10 million to $16 million possible in this area. There are few standards,
and procurement leads to increased costs. IT staff and decisions are
decentralized, causing higher institutional cost and risk.
-
Energy Consumption Above
Average. A big
surprise is that at a campus where environmental issues are stressed, energy
consumption is not systematically measured and managed. Consumption is slightly
above average compared to other California universities. A potential savings of
$3 million to $4 million can be achieved in this area.
Berkeley Vice Chancellor
Frank Yeary said: "We will get push-back in certain quarters. But the fact that
the state has so consistently disinvested in our organization
most people
really appreciate the need to change."
Professor Chris Kutz, chair
of the Faculty Senate, said, "We've been a very decentralized, sluggish
bureaucracy for a long time."
Liza Kemish, statewide vice
president of the University Professional and Technical Employees Union, said, "I
imagine we'll want to talk with each other and develop a coordinated plan to
fight back." (Sources: Report by Bain and Company, "Achieving Operational
Excellence at University of California, Berkeley," and San Francisco
Chronicle, April 13.)
Cal-Tax recommendation:
The public should be outraged that it has taken a budget crisis to force the
university to operate efficiently. The university should be doing this as a
steward of taxpayer dollars. It also is upsetting that public employee unions
fight efforts to eliminate waste. We recommend that the state push for
follow-through on the problems identified in this report, and that other
campuses be examined, as well. It is more likely than not that similar studies
at other UC campuses would turn up waste of a similar magnitude.
-
State Wasted $13 Million
on Prison Drug Program, Auditor Says.
A report from the inspector general
for the state prison system says California wasted at least $13 million last
year through inefficiencies in the way it delivers prescription drugs to
prisoners.
The audit was initiated based
on pharmacy staff who approached inspectors from the Office of the Inspector
General during a regular review of prison facilities. The staff was "concerned
about the sheer amount of wasted medication in prison pharmacies," the report
said.
The report continued: "This
report highlights the results of our review and focuses on waste in prison
pharmacy operations in four areas: the failure to restock millions of dollars in
unused medications each year; the lack of adherence to the formulary, which is
an approved list of medications, resulting in millions of dollars overspent on
medications each year; the functionally unreliable computerized pharmacy
inventory system that bears no relation to the actual stock of medications at
any prison pharmacy; and the inconsistent practices among prisons when
transferring inmates with medications, resulting in excess medications that are
most often destroyed. Contrary to expectation, there are almost no procedures
for identifying and restocking medications. This managerial void costs taxpayers
at least $7.7 million, and very likely close to $20 million, every year. In
addition, due to the absence of oversight, CDCR clinicians routinely prescribe
non-formulary medications, costing taxpayers at least another $5.5 million in
2009 alone."
Additional costs were
incurred for staff time "as pharmacists find ways around the state-wide
computerized inventory system, a system so unreliable that pharmacists prefer to
rely on handwritten tallies," the report said. And in the absence of consistent
medication transfer procedures when inmates are transferred among prisons,
prison pharmacies routinely generate unnecessary prescription refills, which are
often destroyed. Since more than 100,000 inmates on medications are transferred
among California's state prisons each year, with each of those inmates receiving
an average of 5.5 prescription medications, the report said "the costs of
filling and destroying unnecessary and unused prescriptions are tremendous."
The federal receiver who
oversees prison medical care said he is making many of the changes recommended
in the report, including using more generic drugs and improving tracking of
prescriptions. (Sources: The Sacramento Bee, April 14; report from Office
of the Inspector General, April 15.)
Cal-Tax recommendation: The
inspector general should review the situation later this year to ensure that the
problem areas are being addressed, and state officials should review any other
program that purchases and distributes prescription drugs to ensure that similar
waste in not occurring there, as well.
-
San Diego Throws Away
$31,000 in Discounts.
An audit of San Diego city departments found that the program used to purchase
goods and services to meet emergency needs is inefficient and wasteful. City
Auditor Eduardo Luna said the program has a cumbersome process, a lack of timely
payment for invoices, and no requirement that departments set aside money to pay
for purchases before placing orders.
The auditor said vendors
offered the city nearly $53,000 in discounts if it paid invoices in a timely
manner, but a poor tracking system led to the city losing nearly $31,000 of
those discounts. (Source: San Diego Union-Tribune, March 31.)
Cal-Tax recommendation: The
city should take the auditor's advice, which is to eliminate the program and
replace it with one that is efficient and has effective controls.
-
Ban on Lawn-Watering
Blamed for Water Main Breaks in Los Angeles.
The Los Angeles Times reports: "A blue-ribbon panel of scientists said
(April 13) that the high-volume water main breaks that bedeviled Los Angeles
last summer and fall were caused in part by the city's restrictions on lawn
watering, and their findings could force the city to remake its strict water
conservation policy."
In June, the city limited the
use of lawn sprinklers to Mondays and Thursdays. Officials said the restrictions
were successful, as in February, Los Angeles had its lowest recorded water use
in 31 years.
However, the fluctuations in
water pressure "accelerated the metal fatigue failures of aged and corroded
cast-iron pipes," the report found. From July through September 2009, the city
recorded 101 major breaks that flooded streets, damaged property and wasted
countless gallons of water. There were 42 such breaks in the entire year of 2008
and 49 in 2007.
The Times noted that
in one break, a water main under Coldwater Canyon Avenue in Studio City
exploded, "sending a 10-foot gusher of water and mud into the air." The paper
continued: "Homes and businesses were flooded. The street, a major thoroughfare
connecting the San Fernando Valley and the Westside, was closed for a week. Less
than 72 hours later, another main burst in Valley Village, creating a sinkhole
that swallowed half a firetruck that responded to the call."
Damages from just the Studio
City break have led to 108 legal claims against the city. (Source: Los
Angeles Times, April 13.)
Cal-Tax recommendation: Next
time, consult with the experts before passing restrictions. This
ill-designed effort will be costly for the city's taxpayers, who already have
watched water flow through the streets while their lawns turned brown.
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Districts Spending
Millions on Error-Filled Math Textbooks.
If you are an elementary
school student in the Sacramento Unified or Folsom-Cordova Unified school
districts, your new math textbook instructs you that "3 x 5 = 5." That's not the
only mistake fourth-grade students have documented 90 errors in the books.
The two districts spent $1.9
million combined on the new math books. It is likely that many other districts
in California also have wasted hard-earned taxpayer dollars on the books.
Teachers also are weighing
in. A teacher in Sacramento Unified said the district had a wonderful program
with Saxon Math and replaced it with an inadequate one. (Source: The
Sacramento Bee, April 1, but not an April Fools' Day joke.)
Cal-Tax recommendation:
Schools are trying to blame the publisher, but someone in the school
districts should take some responsibility for thoroughly checking a textbook
before spending $1.9 million on it. If the districts had done their homework,
they could have refrained from purchasing the books with the errors, and could
have purchased another series. On a more fundamental basis, when schools are
strapped for money and cutting important instructional programs, why buy new
books? Schools should make the old books last a year or two longer, especially
in a subject like elementary school math, which does not change much from year
to year.
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Public Employees Get Big
Bucks in Palo Alto.
It is good to be a public
employee in Palo Alto. Not only is it a wonderful place to live, but
financially, it is very rewarding.
Overtime pay is up 17 percent
in 2009 (from $4.7 million to $5.5 million) a major increase during a tight
budget year. Ryan Stoddard, a fire apparatus operator, earned $77,000 in
overtime, giving him a total of $172,000 in take-home pay. Fire Chief Nick
Marinaro blamed the situation on the fact that more firefighters than usual were
out on disability leave.
For employees hired before
1983, there is a generous policy allowing them to cash out unused sick leave and
vacation time. A janitor for the city, Ted Schroder, got $106,000 added to his
2009 salary of $50,000. He also gets a full pension and lifelong health
coverage.
Despite efforts by City
Manager James Keene to rein in expenses in 2009, the city's total payroll grew
by approximately $1 million, due largely to raises and payouts negotiated in
prior years. (Source: Palo Alto Times, March 24.)
Cal-Tax recommendation: The
city should learn its lesson, and should put tighter restrictions on overtime,
coupled with more fiscally responsible salaries and fringe benefits.
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School Superintendent Gets
Huge Payment to Leave One District, Then Gets Hired by Another District and
Leads it to Failure.
The State Board of Education recently made history by taking over two school
districts for academic and leadership failures. The story of how one of the
districts arrived at this embarrassing juncture is a textbook example of
mismanagement in the public education system.
The district is the Alisal
Union School District in Salinas. The superintendent of the district is
Esperanza Zendejas, who formerly was superintendent of the East Side Union High
School District in San Jose.
Ms. Zendejas was forced out
of the San Jose district in 2005, after two years on the job, and was given a
$337,000 severance deal. Her hand-picked personnel director succeeded her, until
he recently was forced out over allegations of what the San Jose Mercury News
described as "financial shenanigans."
After getting the massive
severance deal, Ms. Zendejas joined the Salinas area district, where her job
performance again led district officials to seek her ouster. The Alisal board
asked her to resign, but she refused. The board got her to leave, but only by
rehiring her as a $14,000-a-month "consultant." While paying this generous sum,
the district also hired an interim superintendent for $168,000 a year.
Now, the State Board of
Education has sent a trustee to take over the district, with the agency citing
the school district's failure to progress toward educational standards. The
state board also said the district's leaders have problems "managing adult
relationships." (Source: San Jose Mercury News, April 4.)
Cal-Tax recommendation:
School boards should do a better job of hiring superintendents, and should not
offer severance deals that waste taxpayers' money.
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Grand Jury Finds Big
Problems at Small Water Agency.
The Sacramento Bee reports: "Citing years of dysfunction, the Sacramento
County grand jury is pushing for an overhaul of the Rio Linda/Elverta Community
Water District. On Monday, the grand jury released the findings of its
investigation into the district, which serves 18 square miles in northern
Sacramento County. The investigation found that political squabbling, lawsuits
and wasted taxpayer money are crippling the district and threatening public
health and safety."
The grand jury report stated:
"The conduct of the board of directors has been deplorable. It has wasted
taxpayers' dollars at the same time that it has brought disrepute on the
District.
Since they have failed repeatedly in the past, there is no reason to
believe that they will be successful in the future. The only hope for the
District is that major changes are enforced."
The grand jury found numerous
problems, including low pressure, unsafe drinking water, questionable spending
and apparent conflicts of interest on the part of the board of directors.
For example, the grand jury
found that residents conservatively pay an extra $100 per year in insurance
premiums for single-family homes partly because of the fire hazard that low
water pressure poses.
Criticizing the agency's use
of tax dollars, the grand jury reported: "Currently the district only has six
employees and has never had more than ten employees; yet the District has spent
hundreds of thousands of dollars on labor negotiations and employee lawsuits."
(Source: The Sacramento Bee, April 6.)
Cal-Tax recommendation: Local
officials should get involved and fix the problems, and there should be more
oversight in the future.
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State Not Following Its
Own Law Against Trashing Electronic Devices.
The CalWatchdog investigative reporting service writes: "Despite a state
auditor's report and a 4-year-old state law that prohibits consumers from
throwing old and broken electronic devices into the trash, many state agencies
are apparently still throwing computers, television sets, radios, printers,
copiers and cell phones into the trash rather than putting them through special
recycling efforts."
A reporter went through
reports filed by state agencies from July to December 2009 and found many
examples of improper disposal, including: the Department of Corrections junking
228 television sets or computer monitors, 235 computers, 127 printers or
copiers, 13 phones and two microwave ovens; the Department of Forestry and Fire
trashing 137 computers, 23 televisions, 42 printers, 50 cell phones, seven
computer batteries and one microwave. (Source: CalWatchdog, March 31.)
Cal-Tax recommendation: The
state should strengthen its oversight to make sure agency employees are not
trying to evade the very laws that the state government forces the private
sector to comply with.
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UPDATE: Los Angeles
Supervisors' Slush Funds Aren't Illegal, County Prosecutors Say.
Los Angeles County prosecutors said April 6 that county supervisors did not
break the law when they spent millions of tax dollars on pet projects without a
public vote or public discussion.
The Los Angeles Times
reports: "The district attorney's inquiry began in response to a complaint
received last month after The Times detailed some of the $3.4 million per
year that each of the five supervisors receives to spend at his or her
discretion."
Deputy District Attorney
David Demerjian, who oversees the district attorney's Public Integrity Division,
said: "I made a determination that there was statutory authority for the board
to adopt a budget. Within their legislative function, it is their right to
determine how the budget should be divided up."
Nor did the supervisors
violate the state's open meetings law, the prosecutors said, because supervisors
have delegated authority to the county's chief executive officer to make the
individual expenditures dictated by the supervisors. (Source: Los Angeles
Times, April 7.)
Cal-Tax recommendation: The
budget for the District Attorney's Office is set by the Board of Supervisors, so
there may have not been the same level of scrutiny applied as there would have
been if a truly independent entity examined the spending. If the spending is, in
fact, allowed by law, then the law should be changed immediately to ensure that
taxpayers' money cannot be spent without a public, recorded vote.
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Los Angeles Supervisors'
Spending Is Under Investigation.
The Los Angeles Times,
which recently reported on Los Angeles County supervisors using $3.4 million
slush funds without any votes to authorize the spending, now reports that
prosecutors are examining whether the spending was a violation of the law.
Supervisors have been using
the money for parties, donations to local groups, drivers, and to buy places for
themselves in "who's who" books.
The head deputy district
attorney said he has assigned two prosecutors to look into the spending. "One is
reviewing whether supervisors violated the state's open meeting law by spending
the funds without a public vote," the Times reported. "The second is
examining whether supervisors had the legal authority to spend the money."
The newspaper also reported
that supervisors used to vote on donations, "until the 1990s, when the
contributions dropped off the public meeting agendas apparently without
explanation."
Questionable spending
included $25,000 by Supervisor Mark Ridley-Thomas to pay for a reception for a
for-profit exhibit organized by a long-time friend, television and radio host
Tavis Smiley. (Source: Los Angeles Times, March 19.)
(Cal-Tax recommendation: This
investigation is good news to Los Angeles taxpayers, who deserve to know where
their tax dollars are going.)
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Worker Claims Retaliation
After Helping Auditors.
An employee at California's Prison Health Care Services agency has filed suit
against a manager, alleging that she was intimidated and threatened for
cooperating with state auditors on improper contracting practices by the
receiver's office.
The complaint was filed last
year, and was recently heard by an officer of the State Personnel Board. A
ruling has not yet been issued.
The Sacramento Bee
reports: "Susan Lew, a contract manager who filed the complaint, said Director
of Administrative Services Mitzi Higashidani retaliated against her after Lew
disclosed information on a $26.7 million information technology contract signed
without competitive bidding."
State Auditor Elaine Howle
said in a 2009 report that Prison Health Services "created an environment that
discourages Corrections' staff working both inside and outside Prison Health
Services from raising concerns about its contracting."
Ms. Lew, who was demoted
after helping the auditor, is seeking reinstatement to her old job with back
pay, along with reimbursement for stress and a transfer to another agency. She
also wants Ms. Higashidani to be disciplined. (Source: The Sacramento Bee,
March 25.)
(Cal-Tax recommendation: We
will wait for the case to be decided before declaring anyone guilty, but the
claims made in this case do seem consistent with the way state whistleblowers
have been treated in the past. If Ms. Lew wins her case, the taxpayers will have
to pay for her manager's mistakes, but there may be long-term savings if other
potential whistleblowers are encouraged to report government waste, fraud and
mismanagement.)
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Rocklin Gives Early
Retirement Deals to City Managers, Then Rehires Them.
The city of Rocklin recently
gave generous early retirement packages to nine managers in an action described
as a salary savings maneuver. However, The Sacramento Bee reports that
"rather than sending the retirees off with some cake, the city rehired them for
their old roles as part-time employees."
Under this arrangement, City
Manager Carlos Urrutia will receive $170,000 a year from his California Public
Employees' Retirement System pension, even while earning $139,000 from the city
as a part-time employee. His total take-home pay will be $309,000, up from his
former base pay of $230,000.
When the managers "retired,"
Rocklin gave them two years of service credits to boost their pensions, making
the double-dipping even more costly.
City officials say that
because the city no longer will be paying medical benefits for the managers, and
will not have to contribute any more to their retirement, the city will save
more than $700,000 addressing an immediate cash-flow problem. But Wally
Reemelin, president of the League of Placer County Taxpayers, said it is
"utterly ridiculous" that "the city is in financial hardship and they give these
gold-plated deals to them." (Source: The Sacramento Bee, March 15.)
(Cal-Tax recommendation: How
about just eliminating some unneeded management positions, filling others will
lower-paid employees, and cutting back on overly generous benefits? Shuffling
employees around does not address the long-term problems, and simply adds to the
public perception that government cares more about padding government workers'
wallets than about protecting taxpayers.)
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Sacramento School District
Hires Six-Figure Spokesman While Teachers Get Pink Slips.
The Sacramento City Unified
School District recently handed out 738 pink slips to teachers, notifying them
of the possibility of being laid off later this year, but that didn't stop the
district from hiring a new spokesman for $114,178 per year.
Former Sacramento River Cats
spokesman Gabe Ross will fill the newly created "chief communication officer"
position. Former school spokeswoman Maria Lopez left the district last week to
take a job as a communication associate for the California Department of
Education, which is having budget problems of its own.
In an unintentionally ironic
statement, Mr. Ross said, "It's a time of great need in the district, and I am
looking forward to bringing my experience and expertise to schools when we
desperately need all the resources possible." (Source: The Sacramento Bee,
March 14 and March 17.)
(Cal-Tax recommendation:
Schools should examine their priorities and focus on their primary duty
educating students. In a time of budget shortfalls, keeping dollars in the
classroom should be a higher priority than hiring a six-figure public relations
expert to put out press releases saying more money is needed.)
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Defeated City Councilman
Gets Unemployment Benefits.
Further evidence that some
local officials consider elective government posts as "jobs" rather than public
service, John Nunez, a Rosemead city councilman ousted by voters in March 2009,
was paid $11,250 in state unemployment insurance compensation. The city
protested, but the generous bureaucrats in the Employment Development Department
said the city needed to pay the claim.
The EDD's action, which came
despite a clear provision of state law that prohibits unemployment payments to
"elected officials" (Section 634.5 of the Unemployment Insurance Code), has
caught the attention of two state senators.
Legislation to spell out to
the EDD that "elected officials" include local elected officials (SB
1211, Romero and Dutton) is pending in the Senate Labor
and Industrial Relations Committee. (Source: Text of SB 1211; California
Unemployment Insurance Code; Los Angeles Times, March 10.)
(Cal-Tax recommendation: The
governor should determine who at the Employment Development Department decided
not to follow the law, and should take action to make sure it doesn't happen
again.)
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Santa Clara County Hires
$100,000 Consultants to Provide Same Services That $20 Million Consultants
Recently Provided.
Santa Clara County's chief executive, Jeff Smith, recently signed a $100,000
contract with two consultants who are charged with scouring the Valley Medical
Center's finances and finding a way to keep the county-run hospital afloat. The
San Jose Mercury News reports: "The contract comes less than a year after
another consulting group, hired for $20 million to provide a strikingly similar
service, delivered its recommendations to the county."
Mr. Smith said the previous
work is no longer useful because rapid changes in the economy have made the
county's financial situation even worse. The new $500-an-hour consultants will
provide an updated financial review and, according to the Mercury News,
will suggest "a plan to increase income."
Joy Alexiou, spokeswoman for
Valley Medical Center, told the newspaper that $60 million in savings were
realized as a result of recommendations in the $20 million analysis, but Mr.
Smith disagreed. (Source: San Jose Mercury News, March 11.)
(Cal-Tax recommendation: The
county should give the original plan a chance to work. The original plan for
increasing the hospital's efficiency was written during very bad economic times,
so it should remain valid despite worsening conditions, and the hospital's
representative indicates that the recommendations are paying off. The county
shouldn't spend $100,000 to reinvent the wheel, especially when the county's
stated goal is to cut back on unnecessary spending.)
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Despite Massive Deficit,
Santa Barbara County Spends Big on Remodeling Offices and More.
The Santa Barbara County Board of Supervisors is facing an estimated $40 million
budget shortfall this year, and is considering cutting as many as 400 jobs but
that hasn't stopped the supervisors from spending big on non-essentials,
including $18.4 million for two new county buildings and an office remodel for
the public defender.
Other recently approved
expenses:
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A retirement incentive
program that has cost the county and assorted departments an estimated $13.5
million.
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Creation of the Gaviota Coast
Rural Regional Plan, a $1.4 million, four-year project to establish a blueprint
for the future development of rural areas.
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A "climate action strategy"
that will cost an estimated $500,000.
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Creation of a new countywide
energy financing district that will cost $1 million.
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A $40,000 allocation to
seasonal homeless shelters.
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A $15,000 bill to test ocean
water quality.
However, the Santa Maria
Times reported that on March 10, supervisors "showed a rarely seen frugal
side" and postponed action on a request for $350,000 for the first new computer
system the treasurer-tax collector has had in more than 30 years. The board
asked for more details, and postponed a decision until March 23. (Source:
Santa Maria Times, March 7 and March 10.)
(Cal-Tax recommendation: The
county needs to get its priorities straight. It has spent millions on
unnecessary new buildings, including $5.5 million for a new Board of Supervisors
hearing room, while letting a vital computer system get so outdated that the
county's tax collection system is in jeopardy of failure. The Santa Maria
Times reported that "the
mainframe is antiquated, and the only employees who know how it works are
retiring." In 2008, the system overheated and it took two field engineers and
internal staff members several days to diagnose and repair the computer because
the hardware is so old.)
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Los Angeles Supervisors
Continue Spending Millions on Parties, Chauffeurs and Other Non-Essentials.
The Los Angeles Times reports: "As Los Angeles County supervisors prepare
to carve deeply into everything from public safety to social services, they also
are spending millions in taxpayer dollars to burnish their public images, pay
for chauffeurs, hold parties for friends and lobbyists and support pet projects.
Each supervisor receives $3.4 million a year to spend as he or she sees fit,
without any public vote or scrutiny."
The spending includes:
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$200,000 by Supervisor Zev
Yaroslavsky to support his new website.
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$25,000 by Supervisor Mark
Ridley-Thomas to buy a place in "Who's Who in Black Los Angeles."
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$99,000 by Supervisor Don
Knabe for an armed driver.
The Times reported
that supervisors and county workers have not been cooperative when asked for
documentation of where the money has been spent, and generally refused to be
interviewed. Still, the newspaper obtained a significant amount of information
after filing a Public Records Act request.
The paper reported:
"According to the records, Los Angeles County leaders gave a total of $4.8
million to outside groups in the last 28 months sometimes boosting their
public profiles or benefitting people to whom supervisors had personal or
political ties. Antonovich's name is emblazoned on the schedules of soccer
leagues he supports, and Knabe is listed as a benefactor in many nonprofit
newsletters." (Source: Los Angeles Times, March 10.)
(Cal-Tax recommendation:
These slush funds must be abolished, immediately. There is simply no
justification for the supervisors to be authorized to spend a combined $17
million per year without any vote or public accountability.)
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San Francisco Library
Spends Money on Social Worker Instead of Books.
The main branch of the San Francisco Public Library has become the first known
library in the nation to hire a full-time social worker for $85,000 a year
to help homeless people.
(Cal-Tax: It is
interesting to note that in 1978, as Californians were preparing to go to the
polls to vote on Proposition 13, the San Francisco libraries posted signs
reading: "NOTICE! If Proposition 13 passes on June 6, the San Francisco Public
Library WILL CLOSE EFFECTIVE JUNE 30, 1978." The library not only survived, but
has expanded with a
multimillion-dollar improvement program,
and now is doing well enough to hire a social worker.)
An Associated Press
report explains that the library "is near a neighborhood of single-room
occupancy hotels, soup kitchens and other service providers for the very poor."
The story continues: "Some mornings, just after it opens, the library seems to
have more people who appear to be homeless wearing half their clothes and
carrying the rest than not."
The San Francisco
Chronicle describes the library's situation in more detail: "There has long
been an unwelcome footnote at the San Francisco Main Library in the Civic
Center: homeless people who hang out among the shelves, sometimes cursing loudly
or threatening others. The bathrooms often have proved downright scary, with
people doing drugs, bathing in the sinks and having sex in the stalls. Patrons'
comments collected by the library over the past couple of years include, 'The
Main Branch library, while well-intentioned, looks like a homeless shelter
inside and out.' And, 'The homeless are driving me and many of my professional
friends away.'" (Sources: Associated Press, February 22; San Francisco
Chronicle, January 11.)
(Cal-Tax recommendation: The
city should differentiate between the library and a homeless shelter, rather
than hiring a social worker and further blurring the lines. Turning the library
into a homeless shelter is a disservice to taxpayers who want to use the library
for its intended purpose, and a disservice to homeless people who would receive
more compassion and care at a true shelter.)
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Orange County Spent
$842,450 on Failed Information Technology Plan.
Orange County spent $842,450 to create an information technology plan that
leaves out critical information and fails to guide the policymakers who are
considering the county's future technology needs, according to a report from the
county's performance auditor. "The plan does not achieve its intended purposes:
to serve as an actionable road map for countywide IT operations and investments
over the next five years," according to auditor Steve Danley's report.
For example, the plan does
not discuss outsourcing, even though that option has been weighed, nor does the
plan include any metrics to measure progress toward implementing a strategic IT
plan.
The county's IT chief
disputed the findings of the auditor.
This is not the first time
Orange County has been criticized for its handling of technology. In December,
Mr. Danley reported that the county had awarded $45 million in no-bid contracts
relating to IT projects during a four-year period. In 2006, a $6 million
computer mainframe was delivered to the county before the supervisors even voted
to approve the spending. (Source: OC Watchdog, February 24.)
(Cal-Tax recommendation: The
county already has taken the wise step of calling for audits of IT spending, and
supervisors should be ready to act on the findings of the auditor, before more
money is wasted on flawed plans or more contracts are awarded without
competitive bids.)
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Teachers Union Sues to
Get School District to Pay Teacher for Five Days at Family Reunion.
The Folsom-Cordova Teachers
Union wants taxpayers to pay for the five days that teacher Edith Hiatt took off
work to attend a family reunion. Claiming the union's bargained contract with
the school district requires Ms. Hiatt to be paid, the union filed suit in
Sacramento Superior Court in January.
Mark Schultz, president of
the teachers' union, said, "We have a contract and we feel it should be
honored."
Steven Nichols, a district
spokesman, said: "We don't want teachers to go on vacation in the school year,
during instructional time. It's an additional cost we cannot afford to spend,
especially right now."
(Cal-Tax: However, the
issue is not that clear-cut. Most school boards have caved in to teachers
unions, and now give time off with pay for "personal necessity," usually
amounting to five to 10 days a year. Considering that teachers get ample
vacations over summer, two weeks off at Christmas, a week at spring break and
Easter, as well as sick leave, allowing additional time off for "personal
necessity" is a big boondoggle. The issue in this case is whether attendance at
a family reunion is a "personal necessity.") (Source: The Sacramento Bee,
March 5.)
(Cal-Tax recommendation:
School boards should not expand the opportunities for teachers to get full pay
for not teaching. This is the hidden underbelly of school finance when schools
are promoting additional taxes and students are demonstrating around the state,
this benefit and many others like it should be mentioned as areas where savings
are possible.)
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Tulare County Misspent $1
Million in Federal Stimulus Funds.
State Inspector General Laura
Chick reported March 2 that a Tulare County agency improperly spent $1 million
in federal stimulus money.
The Tulare County Workforce
Investment Board spent the money on rent, equipment, utility bills and other
overhead, when most of the money should have been used for summer jobs for
at-risk youth.
Ms. Chick criticized the
accounting practices of the agency, saying, "Problems included miscoded
revenues, erroneous journal entries, inappropriate allocation methodology and
shifting of expenses."
Among other things, the
agency recorded expenditures for only $2,079,039 of the $6,847,084 in Recovery
Act funds that were received.
Ms. Chick said: "We've been
told not to worry by officials at the Federal Department of Labor and the State
Employment and Development Department. They feel that the (Workforce Investment
Board) will reconcile these discrepancies and make the accounting adjustments at
the end of the 2011 fiscal year. While this might be legal and might make sense
at the end of the day, this kind of confusing and convoluted accounting flies in
the face of the intent and spirit of the Recovery Act." (Source: March 2 letter
from Laura Chick to Governor Arnold Schwarzenegger and to the Tulare County
Workforce Investment Board.)
(Cal-Tax recommendation:
Obviously, Tulare County needs to tighten up on its accounting procedures. We
commend Ms. Chick for continuing to be the government's most outspoken critic of
waste and mismanagement.)
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State Employees Getting
Millions for Cashing Out Unused Vacation Time.
A number of state employees
are getting millions of dollars for unused vacation time above limits set by the
state to prevent abuse of the system.
A study by Chase Davis of
California Watch, published in The Sacramento Bee and San
Francisco Chronicle, said, "State personnel officials acknowledge that at
least $100 million, and perhaps tens of millions more, was paid between 2006 and
mid-2007 to retiring state employees who went over the state cap."
The state has a set limit of
80 days' worth of unused vacation days that can be converted to cash on
retirement a very generous benefit in itself. State workers get between 10
days and 30 days a year of vacation, depending on the type of leave, bargaining
unit and length of service.
As of December 2008, more
than 14,000 employees on the payroll have banked vacation days in excess of the
cap.
One worker got more than
$800,000 in compensatory and vacation time.
According to the report, "In
one case, James C. Tudor Jr., the former president of the State Compensation
Insurance Fund, cashed out six times more vacation time than regulators allow,
taking home more than $550,000 after he was fired in 2007 in the wake of an
internal probe that 'uncovered serious abuses at the highest levels,' according
to state Senate documents." (Sources: San Francisco Chronicle and
Sacramento Bee, February 28.)
(Cal-Tax recommendation: The
limit should be adhered to, in every case. The over-the-limit payouts and
accompanying pension spikes are costing the taxpayers dearly, and this abuse of
the system must stop.)
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Millionaires' Tax Fails to
Help Foster Children.
A new study shows that the "Millionaires' Tax" approved by voters in 2004 with
passage of Proposition 63 does not provide mental health services to the extent
promised during the campaign.
Known as the Mental Health
Services Act, Proposition 63 imposed a 1 percent tax on personal incomes over $1
million. Revenue generated by the tax is intended to be used on mental health
services.
A study released by the
University of San Diego School of Law shows that children in state foster-care
programs are in need of mental health programs however, the funds raised by
Proposition 63 to date have gone to prison inmates and toward destigmatizing
mental illnesses, rather than to help these children. The study argues that
foster children are in need of mental health services because they are more
likely than their peers to commit suicide, serve jail time, drop out of school
or be homeless.
(Cal-Tax recommendation:
Voters should scrutinize how money from new tax initiatives will be used. In
this case, convicted felons are getting preference over foster children a
priority that most voters likely do not share. Meanwhile, the tax is adding to
California's status as a high-tax state, thereby reducing employment
opportunities for former inmates, teenage foster children and all other
Californians.)
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Paper Calls for Cutting
"Explosive" Growth in UC Senior Management.
The University of California
needs to slow the "explosive growth in senior management," The
Sacramento Bee said in a February 28 editorial. According to the paper,
senior management has grown 97 percent in the past 10 years, while student
growth has been 40 percent and the growth in faculty has been 23 percent in the
same time period.
Put another way, the
university now has about as many senior administrators as faculty (8,470 senior
administrators vs. 8,851 faculty). If the number of senior administrators had
grown by the same percentage as faculty over the last 10 years, the savings
would be about $300 million a year.
Administrators typically are
the highest paid people on campuses, The Bee noted, as most earn
over $100,000 a year plus generous benefits. (Source: The Sacramento Bee,
February 28.)
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Taxpayers Pay for Failed
Waterless Urinal Experiment at Environmental Protection Agency.
In 2007, a spokeswoman for the California Environmental Protection Agency told
The Sacramento Bee that the EPA building's waterless urinals were a major
success, because they saved millions of gallons of water per year, and saved
energy that otherwise would be needed to pump that water around the 25-floor
building. The Bee reported that the spokeswoman
explained that "there's very little odor, since there's no smell-causing
bacteria that are created by the urine and water mixing."
Flush forward
to this month, when the agency quietly removed the 56 waterless urinals due to
complaints about odor and cleanliness.
Sacramento's
KXTV was the first to report on the removal of the fixtures, and it
interviewed another EPA spokeswoman who said there were hundreds of complaints
about strong odors and floors wet with splashed urine. The TV station also
interviewed male CalEPA employees, including one who said of the urinals, "They
were nasty."
The total cost
to taxpayers for this failed experiment is not known. The agency spent $25,000
to replace the waterless urinals with new ones that use a half gallon of water
per flush, and the agency acknowledged that it had been spending the equivalent
of $50,000 a year on the extra cleaning needed for the floors around the
waterless urinals.
Presumably, the
agency also will spend tax dollars to replace the large sign near the men's
restroom on the second floor, since the sign still brags about the benefits of
waterless urinals and describes them as using the same technology developed by
NASA for spacecraft. (Sources: KXTV Channel 10, February 23; The
Sacramento Bee, May 14, 2007.)
(Cal-Tax
recommendation: The agency claims that the $25,000 spent on replacing the
urinals will be recouped within six months in decreased cleaning costs, which
indicates that its cleaning budget should be reduced by at least $50,000 per
year after these six months are up. Also, the state should do more homework
before implementing changes or ordering private businesses to implement
changes based on claimed benefits that have not been proven.)
-
California
Gets $93 Million From Feds, Weatherizes Just 12 Homes.
Following up on a recent state auditor's report (see
Cal-Taxletter
of February 5), the U.S. Department of Energy released a report February 23
showing that despite receiving $93 million in federal stimulus money to
weatherize homes, California has finished weatherizing just 12 homes. (Cal-Tax:
Believe it or not, that's actually an improvement over the state auditor's
report, which said that as of December 1, no homes had been weatherized.)
The federal
agency said the California Department of Community Services and Development has
weatherized just 0.03 percent of the homes it planned to as of February 16. Only
five states had lower rates. (Cal-Tax: The fact that at least six states
have utterly failed to use the "stimulus funds" raises the question of whether
the funds have stimulated anything at all. In fact, the Department of Energy
report stated, "The Nation has not, to date, realized the potential economic
benefits of the $5 billion in Recovery Act funds allocated to the Weatherization
Program. The job creation impact of what was considered to be one of the
Department's most 'shovel ready' projects has not materialized.")
If California
does not begin effectively using the $93 million it already has received, it
risks losing another planned installment of $93 million. (Source: California
Watch blog, February 24.)
(Cal-Tax
recommendation: This should be used as a learning experience, and future
"stimulus" proposals should not be approved unless there is considerable
evidence that the tax dollars will actually be put to good use.)
-
Los Angeles
Flood Control District Fined $275,000 for Allegedly Polluting Harbor.
The Los Angeles Times reports: "The Los Angeles County Flood Control
District faces a state fine of almost $275,000 for allegedly allowing bacterial
pollution to flow into the harbor at Marina del Rey for more than two years."
The state cited 186 violations from 2007 to 2009 of the district's storm water
permit.
The fine is not
yet official. The California Regional Water Quality Control Board will decide
May 17 whether to assess, modify or rejection the fine. (Source: Los Angeles
Times, February 23.)
(Cal-Tax
recommendation: The obvious recommendation is for the water district to correct
its mismanagement issues and start improving water quality the reason for the
district's existence. Unfortunately, when one government agency fines another,
the only person who actually suffers a penalty is John Q. Taxpayer. In this
case, the residents of the flood control district will be paying the fine even
though they also are the people who have suffered from the polluted water.)
-
Parents
Remain on State's Child Abuser List Even After Being Cleared.
The Los Angeles Times reports that more than a year after a court ruled
that California's child-abuse reporting act is unconstitutional because the
wrongly accused have no way to get off the list, "the state has yet to fix the
problem." For example, the paper notes that a Valencia couple remains on the
list even though the courts have ruled that their child fabricated claims
against them, and they are "factually innocent."
The state's
Child Abuse Central Index includes 800,000 names. The Office of the Attorney
General describes the possible uses of the index: "To aid law enforcement
investigations and prosecutions, the Child Protection Program makes information
from the Child Abuse Central Index available, including notices of new child
abuse investigation reports involving the same reported suspects and/or victims.
Information also is provided to designated social welfare agencies to help
screen applicants for licensing or employment in child care facilities and
foster homes, and to aid in background checks for other possible child
placements, and adoptions." (Source: Los Angeles Times, February 23;
Office of the Attorney General
website,
accessed February 24.)
(Cal-Tax
recommendation: The state needs to take this problem seriously. By including the
names of people who are not child abusers on the list, the state is making the
taxpayers financially liable for massive lawsuits.)
-
Los Angeles County Has
Been Buying $40 Pens, Wasting $162,000 a Year.
Los Angeles County officials
recently eliminated thousands of pricy items from the county's official
government office supplies catalog but only after years of allowing county
workers to buy $40 pens and $131 floor mats.
Chief Executive Officer Bill
Fujioka said he "wasn't aware" that county workers have had the choice of buying
fancy pens instead of 24-cent ballpoints. He said that under the new purchasing
options, the county's annual pen bill will drop from $195,000 to $33,000.
The county spends $6 million
a year on office supplies, and a county official estimates that purchasing
lower-cost items will trim 25 percent to 30 percent off the bill. That estimate
came from Joe Sandoval, a purchasing manager who recently went line-by-line
through the 18,000-item office supply catalog and trimmed it in half.
Cal-Tax Vice President of
Communications and Research David Kline was quoted by the Inland Valley Daily
Bulletin, saying: "It just boggles the mind that anyone would consider a $40
pen a wise use of taxpayers' money. It's sad that it took a major recession for
them to even scrutinize this list and eliminate the wasteful spending." (Source:
Inland Valley Daily Bulletin, February 16.)
-
Whistleblower Sued for
Reporting Welfare Fraud.
Laura Zine, a former employee at a medical billing company, testified and helped
convict her ex-boss on charges of Medi-Cal fraud. Now, her former boss is suing
her.
Medi-Cal fraud costs the
state approximately $10 billion per year. To reduce fraud and to convict
criminals, the Department of Health Care Services encourages people to report
cases of fraud, and even allows individuals to report cases anonymously if they
fear retribution.
In Ms. Zine's case, she
reported the fraud, testified in court, and her boss was sentenced to prison.
After serving his time in prison, he sued her, costing Ms. Zine $4,000 in legal
expenses. The federal government recently agreed to represent her in court.
"If you witness a crime, the
good Samaritan shouldn't have to pay the bill for reporting it," Ms. Zine said.
(Source: KCRA Channel 3 News, February 16.)
(Cal-Tax recommendation: The
state already has whistleblower protections for government employees, but
policymakers should look into this situation to see if additional laws are
needed to protect non-government whistleblowers from frivolous lawsuits. People
like Ms. Zine should not be penalized for reporting fraud.)
-
Employment Development
Department Mismanagement Costs $53 Million.
Mismanagement by technology
staff at the Employment Development Department (EDD) has resulted in cost
overruns of approximately $53 million. The funds were part of the federal
stimulus money appropriated to California last year.
A report produced for the
Assembly Insurance Committee said the $53 million is in addition to a five-year
delay and previous cost increases of more than $80 million on computer
modernization projects at EDD.
Assemblyman Charles Calderon
told senior officials at EDD during a hearing: "You've all been here long enough
to be held accountable. Quite frankly, if you were in the private sector, you
would be fired."
Several other legislators
also weighed in on the issue. Assemblyman Jose Solorio said that due to the
"decade of mishaps" relating to the department's modernization efforts, the
Legislature has lost confidence in the department's leadership.
EDD officials defended the
department, and said the "cost overruns" are merely a discrepancy between the
initial estimates by the department and the final project contract costs.
EDD currently uses an
outdated computer system that has been blamed for numerous delays in disability
and unemployment payments to low-income and out-of-work Californians. With
increased state unemployment, the already-lagging computer system has had to
meet a larger service demand.
"I'm shocked at how bad this
situation has become," Mr. Calderon said. He continued: "If there's anything
that government should be doing in these economic times, it's to be getting
unemployment money to families that need it. If we can't do that, what else are
we going to do? We can't govern." (Source: The Sacramento Bee, February
9.)
(Cal-Tax recommendation:
The Legislature should set up a follow-up hearing to see what progress can
be made by the department, and state bureaucrats should be held accountable. If
the department is unable to perform its basic functions, the state should
consider reducing the size of the technology staff and instead contracting out
the duties.)
-
Sacramento City Council
Members Get $50,000 Each to Spend at Their Discretion.
In what critics have labeled
as a "slush fund," each Sacramento City Council member gets $50,000 a year of
taxpayer money to spend as he or she wishes, with no public hearings or votes.
Sacramento Mayor Kevin Johnson, who campaigned on elimination of the funds, said
the "council felt strongly that those were their dollars, and I wasn't going to
get the votes on this."
Jon Coupal, president of the
Howard Jarvis Taxpayers Association, said, "The discretionary funds can be
properly labeled as slush funds."
Most of the contributions
went for sponsorships of activities and for tickets for fundraising dinners of
various organizations and special interest groups, and other activities that
taxpayers would have to pay out of their own pockets to attend. Many of these
expenditures clearly should have come from campaign funds, not taxpayer dollars.
(Cal-Tax: What is particularly unfair is that not all organizations are
treated the same. Why should some PTAs get slush funds while others do not?)
Most of the spending occurred
in small increments, with many items in the neighborhood of $100 to $500, but
the spending adds up significantly.
Some of the expenditures by
individual City Council members:
|
Steve Cohn |
Sponsor prison guards
union conference |
$150 |
|
Robert Fong |
Sponsor "Bamboo Classic
Golf Tournament" |
$2,500 |
|
Robert Fong |
Table at dinner for Asian
Peace Officers Association |
$500 |
|
Robert Fong |
Sponsor Camellia Waldorf
School graduation |
$620 |
|
Lauren Hammond |
KVIE membership renewal |
$35 |
|
Lauren Hammond |
Capitol Public Radio
membership renewal |
$50 |
|
Bonnie Pannell |
Earth Day sponsor |
$500 |
|
Sandy Sheedy |
Sponsor "The Spot" teen
center |
$94,120.14 |
|
Roy Tretheway |
French Film Festival
sponsor |
$120 |
|
Roy Tretheway |
Subscription to the
pricey California Lecture series |
$1,320 |
|
Roy Tretheway |
Tickets to United Farm
Workers union fundraiser |
$250 |
|
Kevin McCarty |
Sponsor event by College
Democrats at Sacramento State honoring Assemblyman Dave Jones and others |
$100 |
|
Kevin McCarty |
Reimbursement to Steve
Maviglio for plants at Stockton and T streets |
$49.36 |
|
Kevin McCarty |
Purchase of laptop
computer |
$559.74 |
Organizations that are
recipients of this largesse can be expected to look favorably on re-electing the
giver, to stay in the gift-recipient loop.
A number of payments are for
ads in various programs or publications of certain groups. For example, City
Councilman Steve Cohn spent $110 for a sponsorship ad in the December 2008 issue
of the Sacramento Valley Union Labor Bulletin. (Source: KCRA-TV,
Sacramento, February 8 and February 9.)
(Cal-Tax recommendation: The
discretionary accounts should be eliminated. There is no public policy
justification for gifting tax dollars to special interest groups. In the
meantime, the ads in various programs and publications should thank the
taxpayers of Sacramento, not the individual council members.)
-
Los Angeles Coffers Empty,
but City Council Members Benefit From Increased Discretionary Budgets.
Discretionary accounts
held by Los Angeles City Council members are flush, even as the city's general
fund is deep in the red, the city controller reported this week.
Council members' accounts
have grown as the city has collected revenue generated from the sale of surplus
property. Under current city law, half of the revenue generated from the sale of
surplus property goes to council members' discretionary funds, while the other
half goes to the city's general fund, which currently faces a $400 million
deficit. Funds deposited into the discretionary funds generally are
unrestricted, and have little oversight.
Los Angeles City Controller
Wendy Gruel reported February 10 that these funds should be made transparent,
and said all of the revenues generated from the sales of surplus property should
be deposited into the city's general fund.
Over the last 12 years, Los
Angeles City Council members have obtained $25 million that otherwise could have
gone into the city's general fund. (Source: Los Angeles City Controller's
Report, February 10.)
(Cal-Tax recommendation:
While the controller's report does not note how the council members used
their discretionary funds, use of the surplus revenues to address the budget
deficit would seem to be a more efficient use of taxpayer funds. This use of the
revenue also would be more transparent to taxpayers, since the spending would be
detailed in the budget. City councils should eliminate discretionary funds to
avoid the appearance that elected officials have "slush funds" of tax dollars
that can be spent without oversight.)
-
Bullet Train Ridership
Estimates Changed After Bond Election.
According to newly released
documents, the rosy ridership assumptions for the multibillion-dollar bullet
train project were based on previously undisclosed assumptions that differ from
those published for public review. According to a story in the Contra Costa
Times: "An internal memo suggests the authorities behind the project
deliberately withheld the final assumptions, and the discrepancy raises
questions about the validity of the forecasts. State transportation officials
downplayed the issue, saying the differences were not significant."
Before the election, backers
said the trains would carry 55 million riders per year by 2030 (that equates to
150,684 per day!). Since the election, the rail authority revised the estimate
to 41 million riders by 2035 (or 112,328 per day).
Senator Alan Lowenthal said
the numbers don't pass the "smell test." (Source: Contra Costa Times,
February 6.)
(Cal-Tax recommendation: An
honest assessment of potential ridership is needed before billions of public
dollars are spent on this project. The Legislature and governor should actively
look into the changing and very optimistic estimates that are being used.)
-
State Still Spends Heavily
on Travel, Conferences and New Vehicles.
The Assembly Accountability and Administrative Review Committee reports that
state agencies spent heavily last year on items that may not have been
necessary, despite state budget problems that were widely viewed as being
extremely dire.
The committee found that
during the brief three-month period of January to March 2009, the following
spending occurred:
-
The Department of Education
spent $945,209 and the Department of Consumer Affairs spent $245,430 on
conferences and outside meetings;
-
The Department of Motor
Vehicles spent $1.73 million on new furniture, while the California Air
Resources Board spent $433,000 on new furnishings, the Department of General
Services spent $785,785, and the Health and Human Services Agency spent
$306,393.
-
New vehicles were purchased
by the Department of Transportation ($10.4 million), the department of Forestry
and Fire ($1.6 million), the Department of Motor Vehicles ($900,000) and the
Department of Parks and Recreation ($5.2 million).
(Source: Assembly
Accountability and Administrative Review Committee report, February 10.)
(Cal-Tax recommendation: When
drafting this year's state budget, the Legislature and governor should eliminate
spending for new furniture and new vehicles that are not absolutely necessary,
such as for emergency response purposes. These are tough times for taxpayers,
and they shouldn't have to pay for non-necessities for government while they are
cutting their own family budgets to the bone.)
-
State Sends Out 1099 Forms
With "Whopping Errors."
The Sacramento Bee reports that the Victim Compensation and Government
Claims Board recently issued thousands of erroneous 1099s to contractors who did
jobs for the agency in 2009. The Bee said the "whopping errors"
dramatically inflated the amount of money that the state claimed to have paid
the contractors. For example, if the board paid a contractor $5,200, the 1099
said the payment was $520,000!
A spokesman for the state
agency said the error in the placement of a decimal point was the result of a
computer software glitch that has since been fixed. The spokesman said the state
has worked with the IRS and Franchise Tax Board to correct the 5,431 forms that
contained errors.
The cost of reprinting and
remailing 1099s to correct the error reportedly was $2,500 plus staff time.
(Source: The Sacramento Bee, February 11.)
(Cal-Tax recommendation: The
Legislature should not pass an independent contractor withholding bill for many
reasons, including that it appears that the state would not be able to
administer withholding with respect to its own independent contractors.)
-
IRS Looking at Personal
Use of State Cars.
The Internal Revenue Service
has launched an investigation into the personal use of state cars by state
employees. To the extent that state cars are used for personal use, the benefit
must be included in the user's taxable income.
Federal auditors will focus
on 2008 tax reporting. If cars were used for personal use, the state and the
employee both will owe taxes. "It could be a huge number for the state," said
Perry Ghilarducci, a Sacramento accountant.
As of June, the state had
issued 8,812 permits to state workers to store vehicles at home. (Source: The
Sacramento Bee, February 9.)
(Cal-Tax recommendation: The
state, which doesn't hesitate to create tax reporting burdens and stiff
tax-avoidance penalties for private taxpayers, should pay attention to its own
reporting requirements. Judgment will be reserved until after the IRS completes
its investigation, but it appears that state employees and their managers may
have been contributing to the "tax gap" by failing to report taxable income.)
-
Dead People Received IHSS
Benefits, Controller Reports.
Lax state and county
oversight of In-Home Supportive Services (IHSS) program payments may have cost
the state more than $11 million in 2008, Controller John Chiang said, noting
that this money was distributed despite the providers or recipients of care
being deceased.
As samples, the controller
reviewed Fresno and San Diego counties, where questionable payments totaling
$464,000 and $538,700, respectively, were made in 2008 in cases involving IHSS
providers or recipients whose names and Social Security numbers were listed in
the Social Security Administration Death Master File or the California
Department of Public Health's Vital Statistics Death File.
The IHSS program is
administered by the California Department of Social Services. The program
provides services such as housecleaning, meal preparation, shopping and personal
care to keep eligible individuals in their homes instead of in nursing homes or
board-and-care facilities.
The controller's survey
showed that counties were slow to take action to stop payment or to recoup
overpayments, even when evidence suggested the payments were fraudulent.
In one case, Fresno County
referred a case involving a deceased recipient to the county fraud investigation
unit on February 9, 2009. As of June 2009, the county was continuing to submit
claims for services provided to this apparently dead recipient.
The controller's report
recommends that the Department of Social Services develop comprehensive policies
and procedures for counties to follow to determine the validity of payments, and
to improve case file tracking. In addition, the report recommends that the
department conduct periodic field visits to ensure county compliance. (Source:
State Controller John Chiang news release, February 1.)
(Cal-Tax recommendation: We
urge the state and local governments to implement the recommendations made by
the controller. We also recommend that the controller build upon his good work
by expanding the review of IHSS payments to additional counties.)
-
California May Lose $93
Million Due to Delays.
Delays within the Department of Community Services and Development could cost
California $93 million in federal money intended for home weatherization grants.
The federal government said it would allocate funding to the state if California
can show that it has effectively used $93 million already received for the same
purpose. That will prove to be difficult, as the state auditor recently reported
that as of December 1, no homes had been weatherized.
California State Auditor
Elaine Howle said the department's lack of progress is due to delays "both
beyond and within its control." She said the state should ask the federal
government to extend the program's deadline and improve efficiency.
The federal program, part of
the economic stimulus effort, originally allocated $186 million to California to
weatherize 50,080 homes an amount that equates to $3,714 per home. (Source:
The Sacramento Bee State Worker Blog, February 3; California State Auditor
Letter Report 2009-119.2, February 2.)
(Cal-Tax recommendation: At a
time when California's leaders are saying the state doesn't get its fair share
of federal spending and are asking for more federal dollars, examples like this
don't help the cause. The state should ensure that federal loans, grants and
other funds have proper oversight so the state will receive funds already
allocated by the federal government.)
-
Former Directors of El
Dorado Irrigation District Cite Waste and Mismanagement.
Six former directors of the
El Dorado Irrigation District, a public entity formed in 1925 under California
Irrigation District law and providing water to 100,000 customers, have charged
the district with frivolous spending.
In a column in The
Sacramento Bee, they wrote that the EID proceeded to "spend like there was
no tomorrow," and cited:
-
Expenses to water conferences
for friends of board members.
-
Four-figure restaurant bills.
-
Contracts to friends of board
members, such as $10,000 to research how other water districts get their legal
advice.
-
Two infomercials (costing
approximately $50,000) that aired late in the night to let insomniacs know what
a world-class utility EID is.
-
A $166 million five-year
capital improvement program in 2003 which they say is extravagant, and another
$133 million in new debt in 2009.
-
A dramatic increase in labor
costs, from $11 million to $34 million in just six years.
-
An increase in the CalPERS
retirement benefit formula from 2 percent at 55 to 2.7 percent at 55,
retroactive for all years of EID service.
-
An increase in staff from 180
to 305 employees in less than five years.
As a result, despite rate
increases for the last six years, another 35 percent rate increase has been
proposed.
The six former directors are
asking the Legislature's Joint Audit Committee to review the district's
finances.
The six former board members
making these charges are Al Vargas (1999-03), Eugene Larson (1969-95), Richard
Akin (1994-03), Howard Kastan (1991-93 and 1997-2001), William Bergmeister
(1989-91 and 1999-01) and Raymond Larson (1996-99). (Source: The Sacramento
Bee, January 29.)
(Cal-Tax recommendation: The
Legislature should take the former board members' advice and audit the water
district, and should consult with the former board members, since they are
familiar with the board's operations and finances.)
-
CHP Officers' Morbid
Misconduct Costs Taxpayers.
A deeply disturbing act committed by two California Highway Patrol officers has
caused major pain to an accident victim's family, and may cost taxpayers a great
deal of money.
The case involves an
18-year-old girl who was killed in an automobile accident. According to court
documents, two CHP officers in Orange County e-mailed gruesome photos of the
accident scene to friends and family members on Halloween, which led to the
photos being widely distributed. In a January 29 opinion, the Fourth District
Court of Appeal stated, "Those photographs were strewn about the Internet and
spit back at the family members, accompanied by hateful messages." The court
said it is not clear whether or not the e-mail address of the victim's father
was distributed by the officers, but somehow the address became known to the
public, leading to the family being "taunted
with the photographs, in
deplorable ways."
An Orange County Superior
Court judge initially ruled that the officers could not be sued for invasion of
privacy, negligence and other torts, and dismissed the case. But the Court of
Appeal overturned that ruling and said the family members have raised issues
that should be decided in a trial. It is not clear whether taxpayers or the
officers themselves would be liable for potential damages, but taxpayers already
have paid for lawyers from the CHP and Attorney General's Office to represent
the officers. (Cal-Tax: To avoid putting the victim's family through
additional trauma, we are omitting names and the graphic details of the
accident.) (Source: Court of Appeal opinion filed January 29.)
(Cal-Tax recommendation: This
case should be used to teach all incoming officers about the seriousness of
their duties. We concur with the Court of Appeal, which wrote: "It is a sad day,
to be sure, when those upon whom we rely to protect and serve do the opposite,
and make
a teenage girl the subject of international gossip and disrespect,
and inflict devastating emotional harm on the parents and siblings of that girl.
The CHP should know better. Every one of its officers should know better. The
CHP is in a position to ensure that this does not happen again.")
-
Error by the Department of
Corrections and Rehabilitations Costs Taxpayers $7 Million.
Last year, the Legislature
and the governor ordered the elimination of 800 state prison teaching positions.
When the Department of Corrections and Rehabilitations sent out notices to
inform the employees of their job loss, the envelopes delivering the news were
improperly dated. As a result, the notice sent to the employees violated the
30-day notice rule. The department is re-sending notices to the employees, but
the delay means that the laid-off workers will stay on the payroll for another
month, at a total cost of $7 million. (Source: The Sacramento Bee,
January 28.)
(Cal-Tax recommendation: More
oversight is needed to ensure that employees follow the letter of the law when
sending out legally required notices. With millions of dollars at stake, much
more attention to detail is needed.)
-
Indio Accused of
Misspending $500,000 in Housing Aid.
The U.S. Department of Housing and Urban Development alleges that the city of
Indio (in Riverside County) misspent $500,000 in federal funds intended for
housing-related programs. The city instead used the money to offset its general
fund to pay for code enforcement, the federal government says. In a letter to
the city, a HUD official said, "We can appreciate the challenges that cities are
facing with the state budget crisis, but using (Community Development Block
Grant) funds to solve its budget problem is not the purpose of the program."
Indio will not have to repay
the money as long as it develops an "action plan" for future spending, and will
not lose out on future federal funds because of the misuse of the block grants,
a city official said. Mark Wasserman, assistant to the city manager, said, "We
take responsibility for the error and will fix it." (Source: The Desert Sun,
January 27.)
(Cal-Tax recommendation: It
is good that the federal government discovered the misspending and that the city
has taken responsibility for it, but the fact remains that money intended for
housing development was spent for other purposes, and there is no penalty for
the transgression. Some sort of punishment is needed to keep this sort of abuse
of tax dollars from happening again, lest taxpayers become even more
disillusioned with their government.)
-
La Quinta Spends Big on
Sculpture, Then Spends Again to Have It Removed.
In 1996, the La Quinta City Council authorized spending $93,000 in tax dollars
for a sculpture that was placed at a busy intersection as an attempt at public
art. In 2001, the city spent an additional $34,900 for improvements. Now,
responding to public complaints that the sculpture is an eyesore, the city is
going to spend another $15,000 to remove and dispose of the piece.
The sculpture, titled "Oasis
One Eleven," is described as an "art piece-turned-blight" by The
Desert Sun. The artist contends that city officials have failed to polish
and maintain the bronze piece, but city officials say the now-dingy artwork "was
not what was originally envisioned" and was "not in keeping with community
design standards." (Source: The Desert Sun, January 20.)
(Cal-Tax recommendation:
Public art is a constant source of debate should government stay away from art
entirely, or does taxpayer-funded art sometimes provide a public benefit by
making an area more enjoyable and more attractive to tourists? The jury is still
out, but this example illustrates that government officials would be wise to err
on the side of caution, lest they follow in La Quinta's footsteps by spending
almost $143,000 to install and then remove a hunk of bronze that has the look of
a bunker for defending against Nazi attacks on the Maginot Line.)
-
Unused City Phone Lines Cost
Los Angeles Taxpayers $3 Million a Year.
Nearly 12,000 municipal phone
lines sit unused at a cost of $3 million per year, according to an audit
released January 14.
"With the city facing a
massive budget deficit, we must look at every way we can save money," Los
Angeles City Controller Wendy Greuel said. "While the policies are strong,
oversight is severely lacking."
In addition to unused phone
lines, the controller found that city employees had placed unauthorized calls to
Mexico, Canada and the Philippines.
In response to the audit, the
city has revised its telephone procedures. Randi Levin, general manager of the
Information Technology Agency, which oversees the city's telephone system, said
all long-distance and international calls now must be placed through a city
operator.
Telephone problems in Los
Angeles are not new. Former City Controller Rick Tuttle reported in the 1990s
that the city had failed to pay a number of its phone bills and may be required
to pay penalties of $800,000 per year.
(Cal-Tax recommendation:
Having oversight procedures in place is not enough. Officials should ensure that
procedures are followed, and that oversight continues so that further taxpayer
dollars are not wasted. Also, Los Angeles may not be alone. Other cities should
examine their phone systems to see where savings might be found.)
-
Audit Finds $200 Million
Payroll Mess in Los Angeles Unified.
Auditors in Los Angeles reported that school officials paid out $200 million
more in salaries in 2009 than the district had originally budgeted. Despite
large layoffs and unfilled positions, Los Angeles Unified spent $4.9 billion in
2009. City Auditor Wendy Greul said there was no evidence of wrongdoing, but
auditors were unable to determine how $200 million of the money was spent.
(Source: Los Angeles Daily News, January 14.)
(Cal-Tax recommendation:
Obviously, more oversight is required. In the meantime, further investigation is
needed to determine how $200 million went missing.)
-
Community College Trustee
Spends Almost $30,000 on Travel.
John Williams, a trustee of the South Orange County Community College District,
is a travelin' man. Mr. Williams spent $29,578 in tax dollars traveling to
conferences and meetings from July 2007 through December 2009, the OC
Watchdog blog reports. The blog notes: "That's more than four times as much
as any of the other trustees. Four of the six trustees have spent less than
$1,000 over the same period."
Mr. Williams said the travel
is necessary to represent the district's interests such as by trying to keep
the state from raiding the district's budget and to keep up on changes that
impact the colleges' technology courses.
In addition to paying for
travel, the district spent $12,184 on catering during board meetings over the
past 2 ½ years, and spends nearly $18,000 per trustee for health benefits (even
though the positions are part-time posts with stipends of $4,800 per year).
(Source: OC Watchdog, January 20.)
(Cal-Tax recommendation:
While it's possible that Mr. Williams has brought some useful information back
to the community colleges after his voyages, we wonder if any economic analysis
has been done to determine the cost-benefit ratio. Also, it does not make sense
to continue spending tax dollars on conferences while community colleges are
struggling to offer courses.)
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City's Plan for Low-Cost
Housing Includes No Money to Build Homes.
The Coachella City Council is in the midst of a plan to use $6 million in
redevelopment money for low-cost housing. But The Desert Sun reports that
"all the money was spent to buy property and no money was set aside to build
houses." Since the sale of low-cost housing units was supposed to generate money
to pay back a $6 million loan, this puts a big hole in the plan.
"Going forward with the
projects at this point may not make much sense, because the recession has given
the city a large stock of low-income housing," the newspaper said in an
editorial. However, the paper noted: "Low-income housing is not just an
altruistic goal for the city. The California Redevelopment Act requires that at
least 20 percent of the profits from tax-increment financing be spent on
low-income housing." (Source: The Desert Sun, January 15.)
(Cal-Tax recommendation: The
city already has taken a good step by commissioning an independent investigation
into several problems that led the project to go off track. In the bigger
picture, state officials need to re-examine the law that requires the city to
spend tax dollars on low-income housing even when there is an oversupply of such
housing.)
-
Tribal Welfare Program
Uses Tax Money to Pay Employee's Parking Tickets.
Reporter Keith Matheny of The Desert Sun recently completed a lengthy
investigation of the finances of the Torres-Martinez Temporary Assistance for
Needy Families Program, a taxpayer-funded program to assist the Torres-Martinez
Desert Cahuilla Indians in Los Angeles and Riverside counties. Among the many
irregularities he discovered:
-
Tax dollars were used to pay
for multiple parking tickets received by one of the welfare program's
caseworkers. The program's former director said the spending was legitimate
because the employee "was at risk of losing her job due to missing work because
of transportation problems." Cal-Tax Vice President of Communications and
Research David Kline, quoted in the news story, said, "When taxpayers pay for
programs to help out the less fortunate, they expect that money to go for
necessities like food, clothing, shelter." Mr. Kline said that if parking
tickets are simply shifted to the taxpayers, "there's no real effect of the
penalty."
-
More than $50,000 in credit
card expenditures were not documented.
-
The tribe purchased 45 cars
for use by 90 employees, but failed to track how the vehicles were used.
-
Every audit of the program
since 2002 has found serious, negative findings.
-
The program is serving
thousands fewer families than anticipated when it was formed in 2001, but that
has not appeared to affect its annual funding. The annual funding was based on
an estimated average monthly caseload of more than 5,200 families, the program
actually serves fewer than 400 families per month.
-
In some cases, the same
problems have persisted for years despite assurances from the tribe that it is
implementing solutions.
A forensic government auditor
and fraud investigator who reviewed the program's financial reports for the
newspaper said, "The federal government, tribal families and taxpayers in
general should be outraged at the degree of mismanagement and waste highlighted
in these reports."
The newspaper's review of
more than 40 tribal welfare programs nationwide found that more than one-third
has serious, negative audit findings in each of their past three audits, and
nearly half had such findings in at least two of the past three years. (Source:
The Desert Sun, January 17.)
(Cal-Tax recommendation:
There are plenty of government agencies that are supposed to be monitoring this
spending someone needs to take charge and solve the lingering problems that
have been identified. The current system is not only wasting tax dollars, but is
depriving truly needy tribal members of benefits they are supposed to be
receiving.)
-
Investigation Finds
Sacramento In-Home Care Fraud.
An investigation of
Sacramento County's In-Home Supportive Services program has found 19 cases of
fraud in the first four months, according to the county district attorney. The
Governor's Office estimates that similar abuses of in-home services may amount
to 25 percent of the program's cost statewide.
In Sacramento County, the 19
cases account for $315,000 in overpayments by 42,000 caregivers and clients.
The state approved $10
million in 2009 for counties to develop IHSS investigative units, such as the
one in Sacramento County. Other counties that have developed such task forces
include Fresno, San Diego and Riverside.
Assistant Chief Deputy
District Attorney Laura Green said: "We believe as long as In-Home Supportive
Services is in existence, there will always be fraud." Ms. Green's office is in
charge of Sacramento County's fraud prevention task force. (Source: The
Sacramento Bee, January 22.)
(Cal-Tax recommendation: At a
time when local government funds are slim, counties must continue to provide
oversight to ensure that every dollar and cent goes to programs that operate
efficiently. Californians who rely on these programs need quality services, and
taxpayers need assurance that their money is not being wasted. When looters
steal from the public treasury, local governments and Californians lose.)
-
Despite Budget Problems, San
Diego Assessor and Treasurer Accept Raises.
The San Diego Union-Tribune reports: "Budget problems led to layoffs in
San Diego County government last year, but pay is still rising for two elected
officials. Assessor-Recorder-Clerk David Butler accepted a 4.5 percent raise in
his annual salary this month, to $199,139. Treasurer-Tax Collector Dan
McAllister received a 3 percent increase, to an annual salary of $155,480."
Mr. McAllister told the
newspaper, "I realize these are difficult economic times and it's awkward out
there, but I really hadn't considered (waiving the raise)."
Two of the county's elected
officials did waive raises at least for the time being. District Attorney
Bonnie Dumanis waived an $11,000 increase and Sheriff William Gore waived a
$10,000 increase, with both saying they reserved the right to begin accepting
the salary increase beginning in July. Both are up for re-election in June.
The pay hikes were part of a
series of scheduled increases approved by the Board of Supervisors in 2007.
(Source: San Diego Union-Tribune, January 11.)
(Cal-Tax recommendation:
Elected officials should act as if every year is an election year, and should
remember that they are public servants, and their top priority should be making
the government work efficiently for the taxpayers. Accepting a pay raise while
services are being cut is a sign of misplaced priorities. Also, times are not
"awkward," they are downright tough, with California's unemployment rate at 12.3
percent even as a variety of taxes and fees are taking more money out of
Californians' family budgets.)
-
Santa Clara Transportation
Authority Plans Expansion Despite Massive Budget Problem.
The Santa Clara Valley Transportation Authority recently cut bus and rail
service 8 percent in order to address a projected deficit pegged at $98 million
but that hasn't stopped the agency from moving forward with expansion plans.
The agency is working on
extending Bay Area Rapid Transit to San Jose (a project that might receive
federal funding) and is conducting studies on extending light rail from
Eastridge Mall to Los Gatos. The San Jose Mercury News notes that the
latter plan is going forward "despite high costs and modest ridership
projections."
Tom Rubin, the former chief
financial officer of the Southern California Rapid Transit District, has studied
agencies across the United States and calls the Santa Clara VTA the "worst
transit agency in the country."
One example of the agency's
problems: When the county began its push 30 years ago to expand bus service and
establish light rail, proponents said tickets would cover 85 percent of the cost
of a train trip. Today, under the agency's leadership, tickets cover just 14
percent of the cost one of the worst margins in the nation.
Last year, the transportation
authority had projected its deficit at $22 million, but that figure jumped to
$98 million after the agency's sales tax revenue fell more than expected.
(Source: San Jose Mercury News, January 11.)
(Cal-Tax recommendation: An
agency that cannot afford to meet its current responsibilities should not be
taking on more responsibility and more financial obligations. The agency should
put expansion projects on hold and focus on getting its house in order,
especially considering that rail projects often cost much more than initially
estimated.)
-
High-Speed Rail Plan on the
Fast Track to Fiscal Failure, Analyst Finds.
The Legislative Analyst's Office released a report January 11 stating that the
state High-Speed Rail Authority's business plan is badly flawed and possibly
illegal. Voters approved Proposition 1A in November 2008 to provide almost $10
billion in bond funding for a high-speed rail system linking the northern and
southern parts of the state.
Things are not proceeding
well, according to the analyst's report on the rail authority's business plan,
which was released several months late so it appeared after the election
rather than prior to it. The LAO stated: "The Proposition 1A bond measure
explicitly prohibits any public operating subsidy. However, the plan
assumes
some form of revenue guarantee from the public sector to attract private
investment. This generally means some public entity promises to pay the
contractor the difference between projected and realized revenues if necessary.
The plan does not explain how the guarantee could be structured so as not to
violate the law."
In an editorial, the San
Diego Union-Tribune noted that the business plan also assumes that 41
million passengers would ride the trains each year. "That's far more than the 26
million passengers a year carried by the entire Amtrak system nationwide, which
has 500-plus destinations in 46 states," the editorial noted. (Source: San
Diego Union-Tribune, January 13.)
(Cal-Tax recommendation: If
the High-Speed Rail Authority does not change course to use realistic
assumptions and adhere to the provisions of Proposition 1A, Californians should
consider following the advice of the Union-Tribune's editorial to repeal
the initiative before things get worse.)
-
Sacramento Pays Massive Legal
Fees Instead of Making Minor Change to Building.
The city of Sacramento owns
and operates the Sacramento Community Center Theater, which recently was the
subject of a complaint by a disabled theater patron who couldn't get to the most
desirable seats in her wheelchair. Rather than spending an estimated $80,000 to
make the theater more accessible to disabled patrons, the city ignored the
patron's requests, which led to litigation. Now, the city has settled the
litigation by agreeing to make the changes, and a judge ordered the city to pay
$140,000 in legal fees to the patron's attorneys.
In an editorial, The
Sacramento Bee stated: "Those fees might have been substantially reduced or
avoided altogether had the city treated (the theatergoer's) initial complaint
seriously." The paper added, "Governments have a higher duty to protect the
rights of the disabled than private businesses." (Source: The Sacramento Bee,
January 8.)
(Cal-Tax recommendation:
Government workers at all levels should learn from this example, and should try
to work out problems right away, before they escalate. Ignoring complaints or
adopting an imperious attitude will only lead to costly litigation. Also, since
the government has mandated that all buildings be accessible to the disabled,
government agencies should be especially attentive to complaints about lack of
accessibility.)
-
CalTrans Buys New Vehicles
That Sit Idle.
"It's insanity. It's all cost and no benefit." That is how Assemblyman Bob
Blumenfield reacted to the news that more than 12 percent of the vehicles
purchased by the California Department of Transportation since 2007 sit unused.
The Sacramento Bee reported that CalTrans spent more than $4
million on vehicles parked and unused for months and years. CalTrans said it
takes up to three years to assemble add-on features to various trucks.
Observers also pointed out
that letting a vehicle sit for years is the worst thing for the vehicle, as
belts rot, rubber cracks, batteries die, etc.
At a legislative hearing on
the subject, CalTrans Director Randell Iwasaki was asked about another issue
recently in the news: why the agency spent $82,000 to send 52 staff members to a
transportation conference at a desert resort. Mr. Iwasaki defended the
expenditure, saying CalTrans agreed to host the event three years ago, and
claiming that state workers learn much and make good contacts at the event. He
added, however: "Would we do it again? Probably not." (Source: The Sacramento
Bee, December 19.)
(Cal-Tax recommendation: The
state should put a moratorium on the purchase of new vehicles, and should try to
get many more years out of its current fleet. Since it is doubtful that the
vehicle-purchasing system is the only state spending system that has been
wasting money due to lax oversight, state officials should investigate whether
similar problems are plaguing other areas of government.)
-
Government Workers in San
Jose Get Huge Pension Boosts Due to Errors.
The San Jose Mercury News reports: "San Jose's employee pension
fund, already bleeding money, may be handing out millions of dollars in
overpayments, according to a recent audit that calls for a massive review."
The audit reviewed pensions
for 133 of the 486 employees who retired in 2007 and 2008. In 10 percent of the
cases, retirees were receiving pensions higher than they were entitled to. The
overpayments stemmed from errors in calculating the pay that can be credited
toward retirement.
The audit also found a single
retiree who was being shortchanged by the city.
Major errors involved pay
beyond the base salary that should not have been counted toward retirement, but
was, and retroactive raises that artificially boosted pensions. One retiree's
pension was overstated by $630 a month, the audit found.
The Mercury News noted
that this problem is not unique. In Contra Costa County, former public workers
were overpaid for more than a decade because unused vacation time had been
counted toward their retirement. San Jose and the local firefighters' union are
currently in litigation over a software glitch that incorrectly credited some
unscheduled overtime toward firefighters' pensions. (Source: San Jose Mercury
News, December 27.)
(Cal-Tax recommendation: All
government pension officials should learn from these cases, and should
investigate their own systems to ensure that proper payments are being made.
Government pension systems already are creating major financial problems due to
the generous benefits that taxpayers provide to retirees, and overpayments just
compound the problem and make it more difficult for government to pay its
current workforce to provide services.)
-
Pension Spiking Is Rampant
in Contra Costa Sanitary District.
Columnist Daniel Borenstein of the Contra Costa Times reports that former
employees of the Central Contra Costa Sanitary District are getting filthy rich
thanks to rampant pension spiking.
For example, the departing
general manager boosted his pension by 37 percent, to $217,216 per year, by
cashing out nearly 17 weeks of unused vacation and sick leave time. In
retirement, he will receive nearly as much as the $234,163 per year that he took
home while working.
Mr. Borenstein analyzed the
records of 32 sanitary district employees who retired in the past five years,
and found that more than two-thirds had increased their retirement pay by 25
percent to 41 percent by taking advantage of spiking provisions.
Methods used:
-
Selling back vacation time
and adding the money to the final year's salary;
-
Selling back vacation time at
strategic times to increase the pay (vacation time can be sold back once per
calendar year, but the pension is based on the final 12 months of pay, so it is
possible to use a "straddling" technique to, for example, sell back four weeks
in December, four more weeks in January, and then retire in February with all
eight weeks added to the final salary);
-
Cashing out sick leave upon
termination (up to three weeks' worth);
-
Cashing out holiday pay (up
to 13 days of pay for holidays they worked);
-
Adding time to the number of
years of service by counting unused sick leave, with no limit on the amount that
can be accrued some workers had more than a year's worth of sick leave when
they retired, and they could apply this to their years of service, including the
three weeks that they sold back to boost their final pay!
Mr. Borenstein writes:
"Vacation time should be for workers to take time off and refresh themselves.
Sick leave should be available for illness.
The way the system works now,
employees in retirement collect the value of the unused vacation and sick leave
over and over again, approximately every year and a half, for the rest of their
lives." (Source: Contra Costa Times, December 27.)
(Cal-Tax recommendation: All
government pension plans should be corrected to eliminate pension spiking.
Government pension systems already are unsustainable, and workers who use
loopholes to spike their pensions are only adding to the problem.)
-
Prison Receiver Spending
Out of Control?
The Sacramento Bee
has published several news stories in recent weeks calling into question the
spending practices of the federally appointed prison health care receiver. Some
examples:
-
The receiver issued a
$400,000 contract for five employees of a law firm to build support for a
proposed facility in San Joaquin County. The five include former state Senator
Mike Machado and the son of Congressman John Garamendi. Mr. Machado is being
paid $300 an hour for "community outreach" efforts.
-
Overtime pay accounts for
nearly 20 percent of all wages for prison nursing care. In 2008, California's
prisons spent $60 million on overtime for prison health care workers. While
prison officials blamed a staff shortage, The Bee noted that "only 62 of
the state's more than 400 vacant prison nurse positions are posted on the
receiver's career Web site." On top of that, the hiring process can take more
than a year.
-
Thanks to overtime pay, 52
nurses and three physician assistants earned more than the $187,535 salary of
the corrections secretary who oversees the prison system. Nurses who sit and
observe inmates on suicide watch receive $84 an hour.
-
The state paid a medical
assistant in a Tracy facility for working an average of 26.5 hours a day. A
certified nursing assistant in Delano was paid for working an average of 24.7
hours per day (based on a five-day week).
-
The state paid a temporary
agency $393 per hour for a nurse practitioner in Vacaville more than six times
the average paid to state employees for the same work. Overall, the state spent
$152 million from July 2008 to May 2009 on temporary workers about $22 million
more than the jobs would have cost if state employees did the work. (Source:
The Sacramento Bee, December 11, 13 and 14.)
(Cal-Tax recommendation: The
federal judge who appointed the receiver should become involved to increase the
receiver's respect for the state taxpayers who are paying his bills.
Californians are unlikely to favor massive spending to help convicted felons at
a time when budget problems are having a negative impact on services for
law-abiding residents.)
-
Indio Employees Live High
on the Hog. The
city of Indio (Riverside County) is facing a multimillion-dollar deficit. Yet,
since 2008, city employees have used city credit cards to charge $805,000 for
pricy meals, out-of-state trips, tickets to sporting events and even a trip to
Quebec for the city manager's wife.
The Palm Springs Desert
Sun reviewed 1,000 pages of credit card statements, for cards held by 20
percent of the city's employees, and found that spending increased substantially
this year over last.
Indio Mayor Gene Gilbert said
he was "blindsided" by the news, and he acted to pull all the credit cards
except those issued to department heads.
The Desert Sun
revealed that $9,200 was charged to the card issued to Mark Wasserman, the
assistant to the city manager, for two trips to see the Los Angeles Angels play
baseball and one trip to see the Minnesota Vikings play football.
Mr. Wasserman said the
$805,000 is less than 1 percent of total city expenditures. (Source: Palm
Springs Desert Sun, January 4 and January 5.)
(Cal-Tax recommendation: Cut
up the credit cards! For employees who absolutely need them, put tighter
controls on their use, and require quick repayment of any questionable spending,
like international travel expenses for spouses.)
-
Lathrop City Council Uses
Tax Dollars to Send Holiday Cards.
Dennis Wyatt, managing editor
of the Manteca Bulletin, reports that the Lathrop City Council recently
used scarce tax dollars to send out hundreds of cards with a color photo of the
five-member council and a "season's greetings" message.
Mr. Wyatt writes: "This, of
course, cost money and staff time. There's the card itself, the envelope, the
postage, and the time it took to stuff the envelopes and mail them. Forget the
fact that Lathrop is bleeding red ink all over the place, may face a reduction
in police manpower plus other municipal workers, and its civic leaders are
seriously pondering a sales tax for fire protection due to financial woes that
are threatening the fire district's ability to protect property and lives.
There's always money to stroke the collective ego of politicians."
The writer then says: "It
would be interesting to know what the California Taxpayers' Association and the
Fair Political Practices Commission would think about the card mailed at
taxpayers' expense. It is so blatant that it defies justification." (Cal-Tax:
Since he asked We love holiday cards, but we agree that elected officials
should use their own money and time to send out holiday greetings. 'Tis the
season to be jolly, yes, but 'tis always the season to use tax dollars wisely,
and only for legitimate government purposes.) (Source: Manteca Bulletin,
December 29.)
(Cal-Tax recommendation: The
Lathrop City Council members should reimburse the city for the money spent on
this card, and all elected officials should remember that every penny saved is
like another penny of new revenue.)
