BILL ANALYSIS
AB 2521
Page 1
ASSEMBLY THIRD READING
AB 2521 (Torrico)
As Amended May 28, 2010
Majority vote
JUDICIARY 10-0 APPROPRIATIONS 12-5
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|Ayes:|Feuer, Tran, Brownley, |Ayes:|Fuentes, Ammiano, |
| |Evans, Hagman, Jones, | |Bradford, |
| |Knight, Swanson, Monning, | |Charles Calderon, Coto, |
| |Nava | |Davis, Monning, Ruskin, |
| | | |Skinner, Solorio, |
| | | |Torlakson, Torrico |
| | | | |
|-----+--------------------------+-----+--------------------------|
| | |Nays:|Conway, Harkey, Miller, |
| | | |Nielsen, Norby |
| | | | |
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SUMMARY : Requires the State Controller (Controller) to audit
the finances of the trial courts and the Administrative Office
of the Courts (AOC). Specifically, this bill :
1)Requires, the Controller, on or before December 15, 2012, to
perform a pilot audit of six trial courts. Requires the
Controller to select the trial courts using specified
criteria. Requires the audits to be performed in accordance
with generally accepted government auditing standards and must
include a review of revenues, expenditures and fund balances
of specified funds.
2)Requires, in addition to any other audits regularly conducted
by the Controller, the Controller, on or before December 15,
2013, and every four years thereafter, to audit each trial
court, in a manner the Controller deems appropriate and in
accordance with generally accepted government auditing
standards. Requires the audit to include a review of
revenues, expenditures and fund balances of specified funds.
3)Requires the Controller to compile all the trial court audit
findings and report these results to the Legislature, the
Judicial Council and the Department of Finance as specified.
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4)Requires the Controller, beginning December 15, 2013, and
biennially thereafter, to perform an audit of the AOC in
accordance with generally accepted government auditing
standards, including a review of all funds under the
jurisdiction and control of the AOC and the Judicial Council
(JC). Requires the AOC to reimburse the Controller for any
costs incurred by the audit.
5)Requires the Controller to provide a final copy of the AOC
audit to the Legislature, the Judicial Council and the
Department of Finance upon issuance.
6)Allows the JC to inspect, review and perform comprehensive
oversight and analysis of all court financial records,
wherever they may be located, and investigate allegations of
financial impropriety or mismanagement. Provides that this
authority shall not substitute for, or conflict with, the
authority of the Controller to conduct financial audits of the
trial courts.
EXISTING LAW :
1)Allows the JC to regulate the budget and fiscal management of
the trial courts. Requires the JC, in consultation with the
Controller, to maintain appropriate regulations for
recordkeeping and accounting by the courts to ensure the
fiscal affairs of the court are managed efficiently,
effectively and responsibly; and all funds collected by the
courts and all revenues and expenditures of court operations
are known. Allows JC to delegate this authority to the AOC.
2)Allows the Controller, at the request of the Legislature, to
perform financial and fiscal compliance audits of the reports
of court revenues and expenditures. Requires the Controller
to report the results of these audits to the Legislature and
the JC.
3)Allows the JC, or its representative, to perform audits and
reviews of all court financial records.
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4)Provides that all salaries and expenses incurred by the JC
shall be paid by funds appropriated for use by the JC.
Provides that the salary and expenses of the JC shall be
approved in a manner the JC directs and shall be audited by
the Controller, as provided.
5)Provides the JC with the ultimate responsibility to adopt a
budget and allocate funding for the trial courts to, among
other things, promote implementation of statewide policies and
promote immediate implementation of efficiencies in order to
guarantee equal access to the courts.
6)Requires the State Auditor to examine and report annually upon
the financial statements otherwise prepared by the executive
branch of the state so that the Legislature and the public
will be informed of the adequacy of those financial statements
in compliance with generally accepted accounting principles.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, the SCO will incur first year costs of around
$700,000 for the pilot audits, ongoing costs of around $2.4
million for 20 audit staff and support positions and one-time
costs of $200,000 for equipment and furnishings. These costs
will be reimbursed from the Trial Court Trust Fund (TCTF).
(About one-half of TCTF resources come from the General Fund.)
COMMENTS : This bill, sponsored by the Service Employees
International Union (SEIU), seeks to establish regular,
independent audits of the trial courts and the AOC. The author
writes that this bill is necessary to "increase good government
transparency and independent oversight of taxpayer funds which
support the judiciary. . . . In this time of severe cutback,
maximum transparency is paramount to maintain the public's trust
in government services."
Originally, trial courts were county entities. Before state
funding was instituted, trial courts were required to seek
appropriations from both the board of supervisors in their
counties and the state. Frequently, the state and the county
operated on different fiscal-year systems and used different
budgeting systems. Courts usually had to compete for scarce
dollars, and the economic health of their particular communities
affected their success. The Trial Court Realignment and
Efficiency Act of 1991 and later the Lockyer-Isenberg Trial
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Court Funding Act of 1997, AB 233 (Escutia/Pringle), Chapter
850, Statutes 1997, creates a more stable funding base for the
state's trial courts by requiring the state to assume the full
responsibility for funding the courts. In transferring
responsibility for funding the courts from the counties to the
state, the Legislature recognized that such funding is necessary
to provide stable and adequate funding, uniform standards and
procedures, economies of scale, and structural efficiency. It
also enhanced equal access to justice by removing disparities
resulting from the varying ability of individual counties to
meet the operating needs of the courts.
As a result of the state budget crisis, all government entities
have been struggling to provide critical services in the wake of
reduced funding, and the courts are no exception. To contend
with dramatic funding cuts, courts have reduced staff, reduced
service levels and even closed one day a month. In the midst of
these dramatic and unprecedented reductions, it is more
important than ever to ensure that pertinent government
entities, affected employees and of course the public have
accurate financial information on which to base difficult budget
decisions.
Existing law gives the AOC the authority to audit all the trial
courts. According to the Judicial Council, the AOC currently
performs a comprehensive audit of all trial courts every four
years. These comprehensive audits, reports the Judicial
Council, are more in-depth than the financial audits
contemplated by this bill, testing financial components at a
highly detailed level and also reviewing each court's compliance
with required rules and standards. These comprehensive audits
are labor intensive and can take months to complete, but the
Judicial Council believes they are important to the fiscal and
operational integrity of the courts.
In addition to these audits, the Bureau of State Audits also
does an annual financial audit of all state entities, including
the courts. This audit includes a review of financial
statements, internal controls over financial reporting and
compliance with federal program requirements. However, since
the courts are a comparatively small part of the overall state
budget, the courts make up only a very small part of the
Auditor's full statewide audit.
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The Controller also, at the request of the Legislature, may
perform financial and fiscal compliance audits of the reports of
court revenues and expenditures. Currently, the Controller
audits the fees, fines and forfeitures collected by each trial
court on a four to five year cycle.
This bill seeks to increase accountability and transparency of
the judiciary by requiring the Controller to conduct regular
financial audits of all funds and accounts under the
jurisdiction and control of each of the trial courts and the
AOC.
Analysis Prepared by : Leora Gershenzon / JUD. / (916) 319-2334
FN: 0004582