BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 486|
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THIRD READING
Bill No: SB 486
Author: DeSaulnier (D), et al.
Amended: 4/15/13
Vote: 21
SENATE GOVERNMENTAL ORGANIZATION COMMITTEE : 9-2, 4/9/13
AYES: Wright, Calderon, Cannella, Correa, De León, Galgiani,
Hernandez, Lieu, Padilla
NOES: Nielsen, Berryhill
SENATE TRANSPORTATION & HOUSING COMMITTEE : 11-0, 4/30/13
AYES: DeSaulnier, Gaines, Beall, Cannella, Galgiani, Hueso,
Lara, Liu, Pavley, Roth, Wyland
SENATE APPROPRIATIONS COMMITTEE : 7-0, 5/23/13
AYES: De León, Walters, Gaines, Hill, Lara, Padilla, Steinberg
SUBJECT : Caltrans: Office of Legal Compliance and Ethics
SOURCE : Author
DIGEST : This bill creates the Office of Legal Compliance and
Ethics (OLCE) within the California Transportation Agency (CTA)
to oversee the Department of Transportation (Caltrans) and
report its findings periodically to the California
Transportation Commission (CTC), the Governor, and the
Legislature.
ANALYSIS : Existing law creates the CTA within state
government. Among other departments, the CTA oversees Caltrans
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and CTC. The Secretary of the CTA is generally responsible for
the sound fiscal management of each department, office, or other
unit within the CTA. 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:
1. Redirects a portion of the staff from Caltrans' A&I Division
and with that staff creates the OLCE within the CTA to
oversee Caltrans and report its findings periodically to the
CTC, the Governor, and the Legislature. Specifically, OLCE
responsibilities include:
A. Independently and objectively investigating Caltrans
to detect serious breaches of departmental policy,
including fraud, waste, abuse, and any criminal acts.
B. Conducting internal audits of Caltrans to identify
potential improvements in efficiency and performance.
C. Recommending ethics policies for both Caltrans and the
CTC and tracking the status of ethics training programs.
D. Other duties as assigned.
1. 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.
2. 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.
3. Requires the OLCE Director to report quarterly on OLCE
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activities at a public hearing of the CTC.
4. 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 Web site.
Background
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.
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 did not work and engaged in an "inexcusable
neglect of duty," according to the report. 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 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. In 2011, Caltrans 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.
Federally-recommended audit safeguards . According to the United
States 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
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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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Shift of approximately $2.2 million and 22 PY (personnel
year) of staff from Caltrans' A&I to the new OLCE (State
Highway Account).
Additional staff costs of $658,000 to backfill six PY of
staff to retain necessary functions and responsibilities at
Caltrans (State Highway Account).
Caltrans currently has 70 positions in A&I. This bill is
expected to result in the transfer of 22 existing audit staff,
supported by $2.2 million to the new OLCE, which will leave 48
staff and $4.6 million in funding at A&I. Caltrans indicates
they will need to add six additional staff to backfill
transferred positions in order to retain mandated functions and
responsibilities, at a cost of $658,000.
SUPPORT : (Verified 5/23/13)
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Automobile Club of Southern California
ARGUMENTS IN SUPPORT : According to the author's office, 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's
office 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's office
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.
MW:k 5/23/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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