BILL ANALYSIS �
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: SB 486
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: desaulnier
VERSION: 4/15/13
Analysis by: Eric Thronson FISCAL: yes
Hearing date: April 30, 2013
SUBJECT:
Transportation Agency: Office of Legal Compliance and Ethics
DESCRIPTION:
This bill creates the Office of Legal Compliance and Ethics
within the Transportation Agency to oversee the California
Department of Transportation and report its findings
periodically to the California Transportation Commission, the
governor, and the Legislature.
ANALYSIS:
Existing law creates the Transportation Agency within state
government. Among other departments, the agency oversees the
Department of Transportation (Caltrans) and California
Transportation Commission (CTC). The Secretary of the agency is
generally responsible for the sound fiscal management of each
department, office, or other unit within the agency.
Within Caltrans is the Division of Audits and Investigations
(A&I), which is responsible for internal audits of Caltrans
programs and policies, external audits of third party contracts,
and investigations of administrative complaints, such as
incidences of ethics policy violations, conflicts of interest,
incompatible or criminal activities, fraudulent or corrupt
practices, and other employee misconduct. The Director of A&I
is a member of Caltrans' executive management team and reports
directly to the Chief Deputy Director and Director of Caltrans.
This bill redirects a portion of the staff from Caltrans' A&I
division and with that staff creates the Office of Legal
Compliance and Ethics (OLCE) within the Transportation Agency to
oversee Caltrans and report its findings periodically to the
CTC, the governor, and the Legislature.
Specifically, OLCE responsibilities include:
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Independently and objectively investigating Caltrans to detect
serious breaches of departmental policy, including fraud,
waste, abuse, and any criminal acts.
Conducting internal audits of Caltrans to identify potential
improvements in efficiency and performance.
Recommending ethics policies for both Caltrans and the CTC and
tracking the status of ethics training programs.
Other duties as assigned.
Further, this bill requires the governor to appoint the director
of OLCE for a six-year term, subject to Senate confirmation.
The governor may not remove the director from office except for
good cause. The bill requires the director to develop the
budget for OLCE from the savings realized through the reduction
of staff in Caltrans' A&I Division due to the division's
transferred workload to OLCE.
Finally, this bill requires the OLCE director to report
quarterly on OLCE activities at a public hearing of the CTC. In
addition, the bill requires OLCE to report annually a summary of
its findings to the governor and the Legislature, as well as
post the summary to OLCE's website.
COMMENTS:
1.Purpose . According to the author, this bill will instill some
discipline and improve Caltrans' management of the state
transportation system by creating an entity outside of
Caltrans to conduct audits and investigations and report its
findings to the CTC, the Legislature, and the public. In an
organization as large as Caltrans, the author suggests, 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. Studies show that, in
general, people perform better if they believe their actions
may be reviewed and evaluated and that there will be
consequences for poor performance. The author contends that
this bill introduces accountability to Caltrans, and brings
sunlight to the audits and investigations conducted within
Caltrans by requiring reports be made publically in CTC
hearings.
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2.Federally-recommended audit safeguards . According to the US
Government Accountability Office (GAO), audits provide
essential accountability and transparency over government
programs. Government auditing should provide an independent,
objective, nonpartisan assessment of the stewardship,
performance, and cost of government policies, programs, and
operations. The GAO's Government Auditing Standards state
that the ability of audit organizations within government to
perform work and report the results objectively can be
affected by the placement of the audit function within
government. The GAO recommends a number of statutory
safeguards to mitigate this potential threat to the
independence of an auditing entity, including:
Requiring the audit organization to report to a
legislative body or other independent governing body on a
recurring basis.
Preventing the audited entity from abolishing the audit
organization, removing the head of the audit organization,
or interfering with the scope, timing, and completion of
the audit.
Giving the audit organization sole authority over the
selection, retention, advancement, and dismissal of its
staff.
Providing statutory access to records and documents
related to the agency, program, or function being audited
and access to individuals as needed to conduct the audit.
This bill implements the GAO-recommended safeguards above.
One GAO recommendation not included in this bill, however,
involves non-audit services. As noted above, this bill
requires OLCE to perform other duties as assigned. The GAO
recommends that, before an auditor agrees to provide a
non-audit service, the auditor should determine whether
providing such a service would create a threat to the office's
independence. The committee may wish to amend the bill to
clarify that OLCE shall perform other duties assigned as long
as the director determines such duties do not pose a threat to
OLCE's independence.
3. Committee of second referral . The Rules Committee referred
this bill to the Governmental Organization Committee and to
the Transportation and Housing Committee. This bill passed
the Governmental Organization Committee on April 9 by a 9 to 2
vote.
POSITIONS: (Communicated to the committee before noon on
Wednesday, April 24,
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2013.)
SUPPORT: Automobile Club of Southern California
OPPOSED: None received.