BILL ANALYSIS Ó
AB 757
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Date of Hearing: April 30, 2013
ASSEMBLY COMMITTEE ON WATER, PARKS AND WILDLIFE
Anthony Rendon, Chair
AB 757 (Hernández, Roger) - As Introduced: February 21, 2013
SUBJECT : Department of Parks & Recreation; Regulations
SUMMARY : Requires the Department of Parks & Recreation (DPR) to
adopt emergency regulations by July 31, 2014 implementing
recommendations of the State Controller's Office regarding
violations of out-of-class (OOC) assignments by the DPR.
Specifically, this bill :
1)Requires DPR to adopt emergency regulations by July 1, 2014
implementing, to the extent practicable, policy recommendations
contained in an audit review report on DPR conducted by the
State Controller's Office (SCO) concerning compensation for
employees working OOC assignments.
2)Provides that adoption of the regulations shall be deemed an
emergency and necessary for the immediate preservation of the
public peace, health and safety, or general welfare, and
provides that the regulations shall be exempt from review and
approval by the Office of Administrative Law (OAL). Requires
DPR to transmit the regulations directly to the Secretary of
State for filing, and provides that the regulations shall take
effect immediately upon filing by the Secretary of State.
3)Reiterates the recommendations of the SCO contained in the
audit of DPR completed on December 18, 2012, including:
recommendations on procedures that should be followed for
obtaining proper approvals before OOC assignments are entered
into the payroll system; review of bargaining contracts before
approval of OOC assignments to ensure compensation is not paid
beyond the time periods authorized; documentation of rules for
approval of OOC assignments for managers; training to be
provided by DPR to staff on adjustment of OOC pay for employees
on nonindustrial disability insurance (NDI); tools and training
to be provided to staff to ensure payment calculations are
calculated and documented correctly; the need for regular
internal audit reviews of OOC assignments to determine
compliance with state law, bargaining unit agreements and DPR
policies; and that DPR should seek reimbursement from employees
who received OOC payments to which they were not lawfully
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entitled.
4)Requires DPR to report to the Legislature on the regulations
adopted on or before July 31, 2014.
5)Sunsets this bill on December 31, 2014.
EXISTING LAW :
1)Establishes the DPR and vests it with control of the state park
system and responsibility for administering, protecting,
developing and interpreting state parks for the use and
enjoyment of the public. Requires DPR to protect the state
park system from damage and to preserve the peace therein.
2)Establishes the SCO in the California State Constitution and
vests the SCO with responsibility for supervising the fiscal
concerns of the State. Requires the SCO to audit all claims
against the State and authorizes the SCO to audit the
disbursement of any state money for correctness, legality and
lawful payment.
3)Delegates to State departments the authority to approve
employee OOC assignments, subject to limitations, rules and
procedures set out in administrative regulations and various
Department of Personnel Administration and State Civil Service
manuals. Requires departments to refer to bargaining unit
contracts for represented employees.
4)Establishes a process, pursuant to the Administrative
Procedures Act (APA) for adoption of emergency regulations,
where necessary to address situations calling for immediate
action to avoid serious harm to the public peace, health,
safety or general welfare. Requires review and approval of
emergency regulations by the Office of Administrative Law
(OAL).
FISCAL EFFECT : Unknown
COMMENTS : On July 15, 2012 the Sacramento Bee reported that a
high-ranking official at DPR carried out a secret vacation
buy-out program during 2011 for himself and other headquarters
staff. The Bee reported that the buy-backs cost more than
$271,264 and that DPR participated in additional unauthorized
vacation buy-backs in 2004, 2005 and 2008. The vacation buy-outs
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were the subject of internal audits by DPR and the Attorney
General's Office, and are also being investigated by the Bureau
of State Audits. After the Bee article came out, the SCO
determined how the buy-back transactions were entered into the
State's payroll system. The SCO discovered that two DPR managers
keyed in the majority of the buy-back transactions, and that
these managers should not have been allowed keying input access
to the system due to their management status. As a result of the
circumstances surrounding the leave buy-back program and the
security protocol violations, the SCO determined it was necessary
to perform a broader review of DPR's payroll processes. The
review was released in December 2012 and identified internal
control weaknesses and/or violations of DPR and State policies
that created a risk of abuse, fraud and overpayments to employees
for OOC assignment pay. Specifically, the SCO found:
DPR management circumvented internal controls for authorizing
OOC assignments pay;
DPR lacked proper supporting documentation for OOC assignments;
OOC assignment periods exceeded limits set by bargaining unit
agreements and State regulations, resulting in overpayments to
employees;
DPR did not wait 91 days before paying managers OOC
compensation, as required by the State Civil Service Pay Scales
Manual;
OOC pay was not adjusted for employees receiving NDI, as
required by the State Civil Service Pay Scales Manual; and
OOC payment calculations were not properly calculated or
documented, as required by the SCO's Payroll Procedures Manual.
The SCO report made several recommendations, including but not
limited to the following:
All OOC assignments should be forwarded to DPR's Classification
and Pay Unit for approval, and the DPR Transactions Unit should
ensure all proper approvals are obtained before entering
assignments into the payroll system and before the assignment
start date;
DPR's Classification and Pay Unit should review bargaining unit
contracts before approval of OOC assignments to ensure that
compensation is not being paid beyond the end of the assignment
period and does not exceed the maximum number of days allowed
for the employee's classification;
Justification documentation should state that approval for
managers to receive OOC may occur only after the manager
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already has worked in an OOC assignment for 90 days;
The DPR Transactions Unit should provide training and tools to
staff to ensure they follow rules for employees on NDI, and to
ensure payment calculations are calculated correctly and are
adequately documented;
DPR's Internal Audit Unit should conduct regular reviews of OOC
assignments for compliance with state law, bargaining unit
agreements, and DPR policies; and
DPR should seek reimbursement from employees who received OOC
payments to which they were not lawfully entitled.
DPR in its response to the SCO's audit agreed with the
recommendations made and noted that many of the improvements and
safeguards suggested have already been implemented. They also
noted that DPR has in place an entirely new executive management
team. With regard to the specific recommendations, DPR stated
that a majority were implemented prior to completion of the
audit. The Classification and Pay Unit at DPR is following a
newly updated OOC Procedural Guide that includes several control
measures, including: requirements for bargaining unit contract
review; approval of OOC assignments by the DPR Budget Chief,
Division Chief, Classification and Pay Unit Manager, and
Administrative Division Chief; and other measures to ensure
approvals are received before the OOC effective date and rules
for management employee OOC pay are followed. DPR indicated
other SCO recommendations would be implemented by December 31,
2012, including employee trainings, tools for ensuring proper
calculations, an internal audit review schedule (the first of
which are to be implemented in 2013), and plans to seek
reimbursement from employees who received OOC payments they were
not entitled to. With regard to the latter, DPR indicated an
accounts receivable will be established within 60 days of
notification of the impacted employees. DPR also noted that
managerial employees responsible for circumventing the OOC
approval process have been replaced or are no longer employed by
DPR.
The OOC issues reviewed by the SCO audit were just one of several
problems at DPR revealed through multiple audits and
investigations last year, some of which are ongoing. At least
four audits were conducted, including audits by the Department of
Finance, the Attorney General's Office, the Bureau of State
Audits, and the SCO audit which is the subject of this bill. The
Bureau of State Audits is also in the midst of conducting a
second phase of their audit which is also looking closer at the
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vacation buy-out issue. The Attorney General's investigation
found that certain management level employees at DPR
intentionally concealed the true balance of funds available in
the State Park and Recreation Fund from the Department of Finance
and the Legislature. That revelation, coming closely on the
heels of the disclosure of the unauthorized vacation buy-outs,
led to the resignation of the DPR director and the termination of
several other management level employees. Since that time, the
Governor appointed a new Director, and the Legislature and
Administration have taken several actions through budget trailer
bills to prevent these problems from happening again in the
future. For example, a requirement has now been imposed that SCO
fund condition statements, and the budget balances reported by
departments to the Department of Finance, must be reconciled so
that the Legislature and Administration are relying on correct
information in developing and approving the state budget.
Issues for Committee Consideration : In light of these
revelations, it is understandable that the author of this bill is
proposing legislation to ensure that the recommendations of the
SCO concerning OOC payments are implemented. However, while the
goal of this bill is laudable, the use of the emergency
regulatory process as proposed may not be the best tool for
achieving this objective for several reasons.
First, regulations already exist governing the process for OOC
assignments for excluded employees such as managers (see Title 2,
California Code of Regulations, Section 599.810), and for
represented employees, procedures are contained in bargaining
unit agreements. The problem in DPR's case was not a lack of
rules and regulations governing OOC payments, but that DPR staff
was not following them. Therefore, adoption of additional
regulations as proposed in this bill could be either duplicative
of existing rules, or potentially in conflict with the criteria
set out in bargaining unit contracts, which are renegotiated from
time to time.
Secondly, as defined in the Government Code, emergency
regulations are regulations that are necessary to address a
situation that calls for immediate action to avoid serious harm
to the public peace, health, safety or general welfare.
Emergency regulations are limited to such emergencies because the
adoption of emergency regulations involves a very truncated
public review process (normally just 5 days). The APA also
requires all regulations, including emergency regulations, to be
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reviewed and approved by the OAL. The purpose of the OAL review
is to ensure that regulations meet the standards of necessity,
authority, clarity, consistency, reference and non-duplication
required by the APA. OAL also reviews emergency regulations to
ensure that the regulations meet the statutory standard for an
emergency, which is a factual determination. This bill would
"deem" the regulations to have met the emergency test. However,
it is unclear that the situation in this case actually
constitutes the type of emergency that would meet the statutory
standard in the sense of being necessary to avoid immediate and
serious public harm. The fact that DPR has already begun to
implement the recommendations would seem to indicate that
regulations - whether emergency or otherwise - are not necessary
in this case for DPR to comply with the audit recommendations.
This bill would also exempt the emergency regulations from OAL
review. The Legislature has generally been reluctant to exempt
regulations from OAL review because the purpose of the review is
to ensure that regulations are necessary and consistent and not
in conflict with other provisions of law. Exemptions can create
precedents for other exemptions, which cumulatively can begin to
erode the purpose of the APA.
Suggested Amendments : Recognizing the important public policy
goals served by ensuring that DPR complies with the
recommendations of the SCO audit on OOC assignments, and also
recognizing, for all the reasons stated above, that the emergency
regulatory process may not be the best tool for achieving that
goal, staff recommends committee amendments be adopted to delete
the provisions of this bill requiring adoption of emergency
regulations, and instead require in statute that DPR comply with
the SCO recommendations and report back to the Legislature
regarding its compliance by no later than July 1, 2014.
REGISTERED SUPPORT / OPPOSITION :
Support Opposition
None on file. None on file.
Analysis Prepared by : Diane Colborn / W., P. & W. / (916)
319-2096
AB 757
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