Waste, Fraud, & Mismanagement

State Employees Wasted More Than $1.6 Million, Auditor Reports

Burning 100 feature e1587156917915

The state wasted more than $1.6 million in tax dollars because of lax management of employees – including two California State University employees who spent up to 16 hours each week teaching at community colleges while also being paid to perform their state university work – State Auditor Elaine Howle reported May 25.

During a three-year period, the Cal State Los Angeles lab workers spent an estimated 2,800 hours – valued at more than $103,000 – teaching classes at local community colleges during their regular university work schedules.

“This report details nine substantiated allegations involving several state agencies, and it identifies more than $1.6 million of inappropriate expenditures and millions more that the State will wastefully spend if it fails to take appropriate corrective action,” Howle wrote in her latest report on investigations into improper activities by state agencies and employees.

“In one example, the California Department of Transportation (Caltrans) wasted as much as $1.5 million by failing to provide notice to employees of its intent to collect overpayments as a result of salary advances made to them,” the auditor stated.

The balance that Caltrans forfeited might have grown to $2.9 million if the auditor’s investigation had not prompted the agency to take action, Howle said.

The auditor also found:

  • An administrator at the California Department of Tax and Fee Administration improperly advertised his current and past state experience for his private tax preparation and consultation business, and improperly prepared tax returns for clients with CDTFA sellers’ permits.

  • A Department of General Services (DGS) employee spent 60 percent of his work time on personal activities. “Investigators saw Employee A frequently walking around a public park, dining at local restaurants, and visiting private residences for hours,” the auditor wrote. The misuse of state time for personal purposes cost the taxpayers an estimated $3,000, but Howle said the estimate “likely represents only a fraction of the state time Employee A may have misused over the past several years,” and noted that his personnel records “show a history of his engaging in similar behavior for more than 10 years.” If the employee’s pattern of behavior was consistent over the entire period, “Employee A may have cost the State as much as $31,700 in unearned wages it paid him during that time,” the auditor wrote.

  • Another DGS employee spent 44 percent of his work time on personal activities, including attending to his private business. “Investigators observed Employee B at the private business location; shopping at Home Depot and Target; and visiting various locations, including a local zoo, a community college, and several private businesses and residences where vehicles displaying his private business name were present,” the auditor reported. “During this period, Employee B should have been at various state buildings completing his assigned projects. … During this limited time period when Employee B was under surveillance, his misuse of state time for personal purposes cost the State nearly $2,000. However, similar to Employee A, this estimate likely represents only a fraction of the state time Employee B may have misused over the past several years. … If Employee B’s pattern of behavior over the past three years was consistent with General Services’ recent observations, Employee B may have cost the State as much as $21,500 in unearned wages it paid him during that time.”

Only recently did the state finally serve the DGS employees with termination notices, but they resigned before the terminations took effect. The state placed a letter in their personnel files noting that the resignations occurred under unfavorable circumstances. The state also initiated action to collect $3,495 from Employee A – a fraction of the unearned pay he is believed to have received during the decade of abusing lax supervision and ineffective disciplinary measures – and reduced Employee B’s leave balance by 60 hours.