BILL ANALYSIS AB 1820 Page 1 Date of Hearing: April 14, 2010 ASSEMBLY COMMITTEE ON APPROPRIATIONS Felipe Fuentes, Chair AB 1820 (Portantino) - As Introduced: February 11, 2010 Policy Committee: Business and Professions Vote: 9 - 0 Urgency: No State Mandated Local Program: No Reimbursable: SUMMARY This bill establishes the Office of the California Inspector General (OCIG). Specifically, this bill: 1)Establishes the OCIG, headed by the California Inspector General who is appointed by the governor with the consent of the Senate. 2)Specifies that the Inspector General shall serve for a term of four years and shall be removed from office by a majority vote of the Senate and the Assembly. 3)Authorizes the Inspector General to appoint a Chief Deputy Inspector General and employ officers and employees he or she deems necessary. 4)Specifies that the annual salary of the Inspector General shall be equal to that of agency secretaries of the executive branch of government. 5)Authorizes the OCIG to investigate all state entities that are headed up by governor's appointees. FISCAL EFFECT Based on the duties outlined in the bill and the current budget for the Bureau of State Audits - with 147 PYs and a budget of $18 million - which has similar duties, annual costs for the new inspector general's office would likely exceed $10 million (GF). AB 1820 Page 2 COMMENTS 1)Rationale . The author is concerned that there are no state agencies currently tasked with identifying and investigating fraud and waste. He asserts that "there is no single agency that can act completely and independently to do these functions." According to the author, creating the OCIG in California will create a watch dog that can look everywhere and will ensure that government money, assets and effort are used in a manner that supports the publics' trust in government. 2)Bureau of State Audits (BSA) . The BSA is a non-partisan office headed by the State Auditor (SA), which is tasked with independently examining records, administering oaths, issuing subpoenas, and conducting and reporting on financial and performance audits of every state agency, constitutional office, and local governmental agency. In addition, the BSA administers the California Whistleblower Protection Act; has the authority to identify, audit, and report on state issues that the SA recognizes as being at high risk for waste, fraud, abuse, and mismanagement, or that have major challenges related to efficiency or effectiveness; and issues a high risk list every two years that identifies, audits, and issues reports with recommendations for improvement in areas detected. The State Auditor has raised concerns about this legislation. Primarily, she notes that the duties outlined in this legislation substantially overlap and directly duplicate the activities of the BSA. The auditor cautions, "When the State Auditor's Office was created, the Legislature was clear in its intent to establish an independent office free from executive and legislative control." Under this legislation, the Inspector General would not be an independent office, it would be a position appointed by the governor and approved by the Senate, similar to other executive positions within the administration. 3)Existing Office of the California Inspector General . The state currently has an inspector general's office - with 147 PYs and a $26 million budget. The mission of that office is to help maintain the integrity of the state's correctional system - in effect, to act as the eyes and ears of the public in overseeing the state's prisons and correctional programs. The AB 1820 Page 3 Office of the Inspector General carries out that mission by investigating and auditing the California Department of Corrections and Rehabilitation to uncover criminal conduct, administrative wrongdoing, poor management practices, waste, fraud, and other abuses by staff, supervisors, and management. The inspector general posts the findings of every audit and special report on its website, along with quarterly summary reports describing the number of audits and special reviews completed, the types of misconduct uncovered, and the disciplinary actions taken. 4)The Whistleblower Protection Act . This legislation directly duplicates the language in the existing Whistleblower Protection Act. That Act authorizes BSA to conduct investigations in response to complaints received from state employees, state agencies, and members of the public, or initiated by the SA, into any potential improper governmental activity by a state agency or employee, including gubernatorial appointees, the California State University, the University of California, and the State Compensation Fund. 5)Related Legislation . SB 887 (Hollingsworth) would create the Office of the Chief Inspector General and would require him or her to submit a proposed sunset date for all state programs, departments and agencies to the Legislature. The Chief Inspector General would be appointed by the governor and would need to be confirmed by a two-thirds vote of both houses. The term for the Chief Inspector General would be 12 years. That bill is currently pending in the Senate Governmental Organization committee. Analysis Prepared by : Julie Salley-Gray / APPR. / (916) 319-2081