BILL ANALYSIS Ó Bill No: SB 486 SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION Senator Roderick D. Wright, Chair 2013-2014 Regular Session Staff Analysis SB 486 Author: DeSaulnier As Introduced: February 21, 2013 Hearing Date: April 9, 2013 Consultant: Paul Donahue SUBJECT Caltrans: Office of Legal Compliance and Ethics DESCRIPTION 1)Creates the Office of Legal Compliance and Ethics within the Transportation Agency, with responsibility for preventing and detecting serious breaches of Department of Transportation (Caltrans) policy, fraud, waste, abuse, including any acts of criminal conduct within Caltrans. 2)Requires the director of the office to report quarterly, at a noticed public hearing of the California Transportation Commission, regarding performance of and activities related to investigations. 3)Requires the director of the office to report annually to the Governor and the Legislature with a summary of investigations. The bill would require the summary to be posted on the Agency's Internet website. 4)The bill would require the director of the office to provide information and evidence relating to criminal acts to the State Auditor's office and appropriate law enforcement officials, and to refer matters for civil, criminal, and administrative action to appropriate prosecutorial agencies, including the Attorney General. EXISTING LAW SB 486 (DeSaulnier) continued PageB Existing law establishes the Transportation Agency in state government with various duties and responsibilities. BACKGROUND 1)Purpose of the bill : The author states that SB 486 seeks to increase accountability within Caltrans by removing the audits and investigations responsibilities from the department and requiring them to report to the CTC and Legislature on a regular basis. According to the author, "[i]n such a large organization, it is nearly impossible to keep track of every employee or ensure that each dollar is spent efficiently and effectively. Recent media investigations and state audit reports have created a picture of questionable practices and mismanagement within Caltrans, such as failure to comply with department inspection protocols, inability to track staff time by project, and inappropriate use of state resources. "While Caltrans has a Division of Audits and Investigations, it reports only to department management and has had little effect on improving Caltrans performance. An entity outside of Caltrans conducting audits and investigations and reporting its findings to the administration, the Legislature, and the public should instill some discipline and improve Caltrans' management of the state transportation system and funding." In November, 2011, the Senate Transportation and Housing Committee held a Caltrans oversight hearing to investigate allegations of improprieties within Caltrans' program to inspect construction of new structures, including the new Bay Bridge. 2)Recent report on Caltrans by State Auditor : On March 28, 2013, the Bureau of State Audits released a report concerning its investigation of Caltrans. Among other things, the report found that several Caltrans workers falsified test data on transportation projects, claimed hundreds of hours of overtime they didn't work and engaged in an "inexcusable neglect of duty," according to the report. SB 486 (DeSaulnier) continued PageC Specifically, the investigation discovered that from 2004 to 2009, a technician falsified 10 test results on bridges and retaining walls, and an engineer was involved in an additional incident. The technicians' supervisor failed to properly oversee his subordinates' time sheets or detect the testing lapses. The same manager improperly instructed workers in 2008 to take state-owned steel beams and other material to his property in Susanville. Some of the scrap steel was used for a large gate. The falsified test data involved, in part, the new Benicia Bridge, the Lake Hodges Bridge in San Diego, the La Sierra Avenue Bridge in Riverside, an overhead sign on Interstate 580 in Oakland and a retaining wall in Los Angeles. Caltrans in 2011 examined the subject projects and declared them structurally sound, although the state auditor questioned the state agency's delay. "Despite identifying these additional data falsifications, Caltrans did not at that time take any action to determine whether the structures affected were indeed sound," according to the report.<1> ------------------------- <1> The auditor's report also noted that 2 Caltrans technicians were paid more than $13,000 for 267 hours of overtime in 2008 they did not work. In addition, they falsely listed time conducting tests for which they received a higher pay rate. SB 486 (DeSaulnier) continued PageD PRIOR/RELATED LEGISLATION SB 878 (DeSaulnier) 2011-2012 Session. Would have created the independent Office of the Transportation Inspector General within state government to ensure that CalTrans, the High-Speed Rail Authority, and all other state, regional, and local agencies expending state transportation funds are operating efficiently, effectively, and in compliance with applicable federal and state laws. (Vetoed) AB 471 (Lowenthal) 2011-2012 Session. Would have created an independent Office of Inspector General to oversee the HSRA. (Held in Assembly Appropriations Committee.) SB 835 (Strickland) 2009-2010 Session. Would have established the Bureaucracy Realignment and Closure Commission of 2011 and provides for the creation of an independent commission charged with examining state bureaucracies in California with the goal to eliminate or consolidate duplicative agencies and bureaucracies. (Held in Senate Appropriations Committee) SB 887 (Hollingsworth) 2009-2010 Session. Would have created the Government Reform, Accountability, and Sunset Review Act, establishing the Office of Inspector General with the mandate to deter, detect, and disclose waste, fraud, and abuse in state government. (Failed passage in Senate Governmental Organization Committee) SUPPORT: None on file OPPOSE: None on file DUAL REFERRAL: Senate Transportation and Housing Committee FISCAL COMMITTEE: Senate Appropriations Committee ********** SB 486 (DeSaulnier) continued PageE