Waste - Environmental

Recent Examples of Government Waste, Fraud and Mismanagement

Environmental Programs

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- Its forecasting process is outdated and not able to reliably project revenues and expenditures.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.
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.
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.
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.)
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.)