BILL ANALYSIS
SENATE JUDICIARY COMMITTEE
Senator Ellen M. Corbett, Chair
2009-2010 Regular Session
AB 567
Assemblymember Villines
As Amended June 25, 2009
Hearing Date: July 7, 2009
Government Code
GMO:jd
SUBJECT
Government Practices: Clearinghouse Program and
Protected Disclosure of Improper Governmental Activity
DESCRIPTION
This bill would create the Clearinghouse for Government
Innovation and Improvement Program, whereby members of the
public may submit recommendations to the State Auditor for
improving operations of the state via mail or other carrier and
electronic submissions.
This bill also would make numerous changes to the California
Whistleblower Protection Act (CWPA) to broaden the class of
employees covered by the CWPA, expand the definition of
"improper governmental activity" that could be reported by a
whistleblower, and permit the State Auditor (SA) to publicly
report on recommendations made to heads of state agencies that
have not been fully implemented after one year, among others.
This bill would be implemented at no cost to the state and using
only existing resources.
BACKGROUND
Senate Bill 37 (Maddy, Ch. 12, Stats. 1993) (Gov. Code Sec.
8543), created the Bureau of State Audits (BSA) as part of the
Executive Branch. To assure its independence, the BSA is free
from the control of the Executive and Legislative branches, and
the Milton Marks "Little Hoover" Commission oversees its
administrative operations. The BSA, under the direction of the
State Auditor, performs an annual examination (single audit) of
(more)
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the State's general-purpose financial statements as prepared by
the State Controller's Office. The federal government, as a
condition of receiving federal funds, requires this audit. The
single audit also includes a review of major federal programs
for compliance with federal laws and regulations, and
recommendations to improve the State's financial systems and
internal controls.
The BSA also conducts financial and performance audits as
directed by statute, and other government audits requested by
the Joint Legislative Audit Committee (JLAC). The BSA has the
explicit authority to audit any entity that receives state
funds. Consequently, it sometimes audits at the local government
level.
In addition, the BSA administers the "California Whistleblower
Protection Act," which includes a hotline for anonymous
reporting. Under the Act, the State Auditor is authorized to
conduct an investigative audit upon receiving confirmation that
an employee or state agency has engaged in an improper
governmental activity. The Act prohibits an employee from using
his or her official authority or influence to intimidate,
threaten, coerce, or command any person in order to interfere
with that person's right to
make a disclosure under the Act.
The Act protects employees who, among other things, make
disclosures to anyone of information that may evidence an
improper governmental activity, refusal to obey an illegal
order, or any condition that may significantly threaten the
health or safety of employees or the public if the disclosure is
made for the purpose of remedying the condition.
Furthermore, the Act provides that a state employee who files a
written complaint with his or her supervisor, manager, or the
appointing power alleging actual or attempted acts of reprisal,
retaliation, threats, coercion, or similar impropriety because
he or she has made a protected disclosure, may also file a copy
of the written complaint with the State Personnel Board. Any
person who engages in the above-specified acts of reprisal is
guilty of a misdemeanor and subject to a $10,000 fine, and is
also subject to civil liability, as specified, except for any
action or inaction that is justified on the basis of evidence
separate and apart from the fact that the person has made a
protected disclosure.
AB 567 is a new version of AB 2852 (Villines, 2008), also
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relating to the California Whistleblower Protection Act and the
proposed clearinghouse for the public reporting on improper
governmental activities. AB 2852 died on the Assembly
Appropriations suspense file. This bill, AB 567, contains a
provision stating it is to be implemented at no cost and only
using existing resources.
CHANGES TO EXISTING LAW
Existing law sets forth the duties and powers of the Bureau of
State Audits and makes reference to audits and investigative
audits. Existing law also prohibits the State Auditor or his or
her employees from releasing to the public, among other things,
any papers, correspondence, or any substantive information
pertaining to any audit not completed. (Gov. Code Sec. 8543 et
seq.)
This bill would require the State Auditor, when resources become
available, to establish the Clearinghouse for Government
Innovation and Improvement Program, for the purpose of creating
the means for the public to submit recommendations for improving
the operations of state government via mail or other electronic
submissions through an Internet Web site portal. The bill would
require the State Auditor to select recommendations and forward
those to the Governor, the Director of Finance, and majority and
minority party leaders in both houses of the Legislature.
Existing law, the California Whistleblower Protection Act, sets
forth the circumstances and procedures under which a state
employee, as defined, may report improper governmental
activities, as defined, or make protected disclosures, as
defined, to the State Auditor, and prohibits retaliation or
reprisal against a state employee for these acts. (Gov. Code
Sec. 8547 et seq.)
This bill would make the following changes to the California
Whistleblower Protection Act:
(1) expand the definition of covered "employee" to include any
person appointed by the Legislature who is not an employee of
the Legislature;
(2)cover all activity that occurs inside a state office or, if
the activity occurs outside a state office, it directly
relates to state government, whether or not that action is
within the employee's scope of employment;
(3) clarify that "protected disclosure," includes not only any
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good faith communication to the Bureau of State Audits
alleging an improper governmental activity but also any
evidence delivered to the BSA in support of the allegation;
(4) pursuant to an investigation and a finding that an employee
may have engaged or participated in improper governmental
activities, require the State Auditor to prepare an
investigative report for submittal to the employee's
appointing power and provide evidence, subject to certain
limitations, necessary to support an adverse action or other
specified action to prevent the continuation or recurrence of
the improper activity;
(5) require the employee's appointing power that receives the
State Auditor's investigative report to take adverse action
within 60 days of receiving the report, or else submit
written reasons for not doing so to the State Auditor and the
State Personnel Board;
(6) require the State Auditor to establish the means for
submissions of allegations of improper governmental activity
via mail or other carrier or electronic submission through an
Internet Web site portal;
(7) authorize the State Auditor to request, not require, a
person submitting allegations of improper governmental
activity to provide his or her name and contact information
and to provide the names and contact information for any
person who could help to substantiate the claim;
(8) prohibit the disclosure of the identity of the person who
provided the information that initiated an investigation, or
the person providing information in confidence to further the
investigation;
(9) authorize the State Auditor, if he or she determines that
there is reasonable cause to believe that an employee of a
state agency has engaged in improper governmental activity,
to include, in the report given to the head of the employing
agency, recommendations to prevent the continuation or
recurrence of the activity;
(10) require the State Auditor to keep confidential every
investigation, including all investigative files and work
product, but may release, as part of a report issued after an
investigation has been substantiated, evidence supporting any
findings; and
(11) require the State Auditor to report, on January 15th of
each year, to the Joint Legislative Budget Committee, the
Joint Legislative Audit Committee, and the Department of
Finance, on each recommendation made based on an audit or
investigation conducted more than one year prior, and that
has not been fully implemented by the affected agency.
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This bill would delete the term "investigative audit" from the
CWPA and replace it with "investigation."
This bill provides that it shall be implemented at no cost to
the state and using only existing resources.
COMMENT
1. Need for the bill
The author contends that California's citizens need to know that
their government is acting responsibly and running efficiently,
especially during our current budget climate. The author's
office points out that although the California Whistleblower
Protection Act provides the means for state employees and
members of the public to speak out if they witness any
government fraud, waste, or abuse, more can be done to encourage
state employees to come forward without fear of retaliation and
auditor recommendations to correct issues can be taken more
seriously. The author states, "[i]t is important that no person
feels threatened when providing information on how our
government can run more effectively and efficiently and
corrective actions are taken when necessary."
The State Auditor, although not a sponsor of the bill, supports
the changes being made to the California Whistleblower
Protection Act. In fact, many of the bill's provisions were
drafted to clarify the State Auditor's function as the
administrator of the CWPA and to strengthen the impact of the
investigations conducted by the SA and the recommendations made
to state agencies as a result of those investigations.
2. No deficiency in implementation of the CWPA has been
demonstrated but expansion of State Auditor role would be
effected by AB 567
The CWPA authorizes the California State Auditor (SA) to receive
complaints from state employees and members of the public who
wish to report improper governmental activity. According to the
SA, the bureau's staff conducts careful examination of each
complaint to determine whether an improper governmental activity
has occurred, and if the complaint has merit, the SA may conduct
a formal investigation.
This bill would create a new "clearinghouse" for reports of
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improper governmental activity via mail or electronic
submissions. However, under current law and according to the
State Auditor's office, an individual wishing to make a report
to the SA can already do so via mail, email (through the State
Auditor's Web site portal), or telephone under the SA's current
program. The SA manages a telephone hotline where many reports
are called in. The author's office has not provided specific
examples of deficiencies with the BSA's system of receiving and
investigating complaints or instances of any disclosures of
improper governmental activity.
IS THIS CLEARINGHOUSE PROGRAM NECESSARY?
The bill does provide that the clearinghouse program would be
established only "as resources become available."
What the bill would do, however, is to expand the authority of
the State Auditor to pursue recommendations made by the public
for "improving the operations of the state or for directing the
focus of the activities of the state toward the essential
functions of government." Thus, while under existing law the SA
is limited to conducting investigative audits when complaints of
improper governmental activity (see definition below) are made,
under AB 567 if enacted, the SA "shall review, in good faith,
submissions [from the public] that recommend improvements to the
efficiency of government operations or that recommend an
approach that the state can take relative to an essential
function of government." The State Auditor may then select
recommendations to forward to the Governor, the Director of
Finance, and the majority and minority party leaders in both
houses of the Legislature for review.
This expansion of authority, the State Auditor states, will
allow the office "to help prevent the reoccurrence of any
improper governmental activity by making appropriate
recommendations in a report to the head of the agency involved."
3. Changes to the California Whistleblower Protection Act
a. Employee definition expanded
Among the changes that AB 567 would make to the CWPA is to
expand its coverage to include individuals that are appointed,
but not employed, by the Legislature.
The Legislature and its employees are not subject to the CWPA
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because the CWPA is directed at the executive branch of
government. Appointees of the Legislature who are not
employees of the Legislature, include, for example, Senate or
Assembly appointments to the Boards and Commissions that
regulate certain professions or areas of government. Many
commissions are comprised of appointments by the Senate, the
Assembly, the Governor; some are nominated by the Governor and
confirmed by the Legislature. Sometimes those commission
members are paid full-time (but they would be exempt state
employees), sometimes they are paid for travel only to attend
meetings, and sometimes they are paid travel plus a per diem
for every meeting day. The State Auditor, in a letter dated
June 15, 2009, describes this change to the CWPA as "modifying
the definition of 'employee' to include legislative appointees
that are not members of the Legislature, so they will be
covered by the Whistleblower Act."
Suggested amendment: Since the State Auditor has used a more
precise description of the persons who should be covered by
the CWPA, AB 567 should be amended to use that description.
b. Improper governmental activity redefined
This bill would change the definition of "improper
governmental activity" from activity that is undertaken "in
the performance of the employee's official duties, whether or
not that action is within the scope of his or her employment,"
to activity that is undertaken "inside a state office or, if
undertaken outside a state office, that directly relates to
state government, whether or not that action is within the
scope of his or her employment," and that violates state or
federal law or regulation.
This is a significant expansion of the activities covered by
the CWPA because the language broadens the range of employee
activity that could be reported. In its broadest sense, the
definition of "improper governmental activity" under this bill
could be "any activity of a state employee undertaken
anywhere, that is related to any state function, whether or
not the action or activity is within the scope of the
employee's employment duties" that is improper or unlawful.
Thus it could include personal and private activity of a state
employee that has nothing to do with the employee's duties or
office, but that could be interpreted by another employee who
witnesses the activity as violating some state or federal law.
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Suggested amendment: The definition of "improper governmental
activity" should retain the phrase "in the performance of the
employee's official duties" in addition to the expansion made
by the bill to include activities "inside a state office or,
if undertaken outside a state office, that directly relates to
state government."
c. Protected disclosure would include any good faith
communication and evidence delivered in support of an
allegation
Current law defines "protected disclosure" as any good faith
communication that discloses or demonstrates an intention to
disclose information that may evidence an improper
governmental activity or any condition that may significantly
threaten the health or safety of employees or the public if
the disclosure was made for the purpose of remedying that
condition.
This bill would provide that protected disclosure
"specifically includes any good faith communication to the
Bureau of State Audits alleging an improper governmental
activity and any evidence delivered ? in support of the
allegation." This language in the bill would add nothing new
to Section 8547.2(d), but according to the State Auditor, the
clarification that protected disclosure includes any evidence
that may be delivered to their offices would help tremendously
in encouraging people to blow the whistle on waste and fraud.
d. Protection for the whistleblower and others providing in
confidence information to further the investigation
Under existing law, the identity of the whistleblower, i.e.,
the person who provided the information that initiated the
SA's investigative audit, cannot be disclosed without the
written permission of that person, unless the disclosure is to
be made to a law enforcement agency conducting a criminal
investigation.
This bill would protect the identity not only of the
whistleblower himself or herself, but also any other person
who in confidence provides information that is necessary to
further the investigation. An exception would be disclosure
to a law enforcement agency conducting a criminal
investigation.
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e. Investigations, files, work product to be kept
confidential
Under existing law every investigative audit is required to be
kept confidential, except that the State Auditor may issue a
report of an investigation that has been substantiated,
keeping confidential the identity of the persons involved.
The SA may also release findings resulting from an
investigation, when that is deemed necessary to serve the
interests of the state.
This bill would allow the SA to not only issue a report when
an investigation proves that allegations are substantiated,
but also to release evidence supporting any findings resulting
from the SA's investigation, subject only to confidentiality
of the whistleblower and confidential informants. Release of
the supporting evidence itself could be premature at this
stage, because of any ensuing administrative or court action
that may result from the investigation. In fact, legal
representatives of the state may not want the evidence itself
released until they have had the chance to review it and
determine for themselves what exposure to liability the state
may have or whether or what action will be taken against
responsible parties.
Support : California Bureau of State Audits (State Auditor)
Opposition : None Known
HISTORY
Source : Author
Related Pending Legislation : None Known
Prior Legislation : AB 2852 (Villines, 2008) was almost identical
to AB 567. AB 2852 died in the Assembly Appropriations
Committee.
Prior Vote :
Assembly Business and Professions Committee (Ayes 9, Noes 0)
Assembly Public Employees, Retirement and Social Security
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Committee (Ayes 6, Noes 0)
Assembly Appropriations Committee (Ayes 16, Noes 0) (Consent)
Assembly Floor (Ayes 73, Noes 0) (Consent)
Senate Committee on Governmental Organization Committee (Ayes 9,
Noes 0)
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