BILL ANALYSIS Ó
AB 757
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 757 (Roger Hernández)
As Amended June 26, 2013
Majority vote
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|ASSEMBLY: |72-0 |(May 23, 2013) |SENATE: |37-0 |(August 19, |
| | | | | |2013) |
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Original Committee Reference: W.,P.& W.
SUMMARY : Requires the Department of Parks and Recreation (DPR)
to report to the Legislature by July 31, 2014, on its
implementation of recommendations contained in the State
Controller's Payroll Review Report of the Department of Parks
and Recreation dated December 18, 2012.
The Senate amendments delete language contained in the Assembly
version requiring DPR, by July 1, 2014, to implement, to the
extent practicable, policy recommendations contained in the
State Controller's Payroll Review Report of the Department of
Parks and Recreation, and articulate what some of the State
Controller's recommendations were regarding compensation of
employees working in out-of-class (OOC) assignments.
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 State Controller's Office (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
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manuals. Requires departments to refer to bargaining unit
contracts for represented employees.
FISCAL EFFECT : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS : This bill as amended in the Senate requires DPR to
report to the Legislature on its implementation of
recommendations contained in an SCO audit of DPR's payroll
processes. The Assembly version of this bill, in addition to
requiring the report to the Legislature, also contained language
requiring DPR to implement the recommendations by July 1, 2014,
and describing the SCO's recommendations. The Senate amendments
abbreviated the language by simply requiring DPR to report to
the Legislature on its implementation of the SCO's
recommendations contained in the report by July 31, 2014.
Background : On July 15, 2012, the Sacramento Bee reported that
a high-ranking official at DPR carried out an unauthorized
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 were the subject of internal audits by DPR and
the Attorney General's Office, and also were investigated by the
Bureau of State Audits. After the Bee article was published,
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 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: 1) DPR management circumvented internal controls
for authorizing OOC assignments pay; 2) DPR lacked proper
supporting documentation for OOC assignments; 3) OOC assignment
periods exceeded limits set by bargaining unit agreements and
state regulations, resulting in overpayments to employees; 4)
DPR did not wait 91 days before paying managers OOC
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compensation, as required by the State Civil Service Pay Scales
Manual; 5) OOC pay was not adjusted for certain employees, as
required by the State Civil Service Pay Scales Manual; and 6)
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: 1) 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; 2) 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; 3) Justification documentation should state that
approval for managers to receive OOC pay may occur only after
the manager already has worked in an OOC assignment for 90 days;
4) The DPR Transactions Unit should provide training and tools
to staff to ensure they follow rules, and to ensure payment
calculations are calculated correctly and are adequately
documented; 5) DPR's Internal Audit Unit should conduct regular
reviews of OOC assignments for compliance with state law,
bargaining unit agreements, and DPR policies; and 6) 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 and noted that many of the improvements and
safeguards suggested had 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,
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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 would 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
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. Since that time, the Governor
appointed a new Director, and the Legislature and Administration
have taken several actions through budget trailer bills designed
to prevent similar 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.
Analysis Prepared by : Diane Colborn / W., P. & W. / (916)
319-2096
FN: 0001467