BILL ANALYSIS
Bill No: SB
887
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2009-2010 Regular Session
Staff Analysis
SB 887 Author: Hollingsworth
As Amended: April 5, 2010
Hearing Date: April 13, 2010
Consultant: Chris Lindstrom
SUBJECT
Office of the California Inspector General.
DESCRIPTION
SB 887 enacts the Government Reform, Accountability, and
Sunset Review Act (Act). The Act establishes the Office of
the Chief Inspector General (OCIG) and grants OCIG
specified authority to review all state agencies,
departments and programs and to submit a proposed sunset
timeline for those agencies to the Legislature. The bill
requires the Chief Inspector General (CIG) to coordinate
with other state auditing entities to review each agency,
department, and program using prescribed criteria and to
publish a report recommending statutory changes and
internal operation improvements for agencies, departments,
and programs under review.
This bill would require the Milton Marks "Little Hoover"
Commission on California State Government Organization and
Economy (LHC) to hold a public hearing to review the CIG's
recommendation report, and act on the report, as specified.
The bill would also require LHC to submit its
recommendations, along with the CIG's report, to the
Legislature in the form of a bill that the Legislature
shall consider without modification.
This bill would require the CIG to monitor legislation
related to agencies, departments, and programs, as
SB 887 (Hollingsworth) continued
Page 2
specified.
Specifically, this bill :
1)Establishes the OCIG, headed by the CIG, who is appointed
by the Governor subject to confirmation by a 2/3rds vote
of each house of the Legislature.
2)Provides that the CIG shall serve a term of 12 years and
may be removed from office by a 2/3rds vote of each house
of the Legislature.
3)Provides that the annual salary of the CIG shall be
commensurate to that of agency secretaries of the
executive branch of government.
4)Requires the office to submit a proposed budget to the
Department of Finance each fiscal year. DOF shall
include the office's proposed budget, without
modification, in the Governor's Budget.
5)Authorizes the CIG hire or contract staff for services,
including, but not limited to, professional assistants,
technical assistants, clerical assistants, and deputy
inspectors, that he or she deems necessary to effectively
carry out the duties of the office. Employees of OCIO
shall not be included within the meaning of "state
employee" and are excluded from collective bargaining.
6)Requires the CIG, on or before July 1, 2011, to identify
and categorize, by policy subject area, each state
agency, department, and program. The CIG shall submit to
the Legislature, for purposes of adoption by statute, a
proposed timeline schedule for the sunset of each state
agency, department, and program. The CIG shall consider
organizing the sunset schedule by category policy area,
function, or other applicable criteria in order to
promote an efficient review process as established by the
bill.
7)Requires a review to occur at least once every 12 years,
in the manner prescribed by the bill, for each agency,
department, and program that is identified in a statute
adopted by the Legislature, pursuant to this bill, that
establishes a timeline schedule for the sunset of that
agency, department, and program. The first review shall
SB 887 (Hollingsworth) continued
Page 3
be completed within two years of the enactment of the
initial timeline schedule for the sunset of each state
agency, department, and program.
8)Requires any new agency, department, or program created
by the Legislature after the Legislature adopts a sunset
timeline schedule shall include a sunset provision that
is consistent with other agencies, departments, and
programs. If a new agency, department, or program is
created, the new agency, department, or program shall
also be reviewed after the fifth year. If a new agency,
department, or program, prior to its initial sunset
review, exceeds its estimated costs by more than 10
percent in a year, it shall be reviewed in the following
year.
9)Requires the CIG, after the Legislature adopts a sunset
timeline schedule, to coordinate with other state
auditing entities to review each agency, department, and
program. All state agencies, departments, and programs
shall cooperate with the Office of the Chief Inspector
General and provide access to its records, including, but
not limited to, any information, suggestions, estimates,
data, and statistics relating to the agency, department,
or program that it may have available.
10)Requires the CIG, in making the determinations and
recommendations for statutory changes and internal
operation improvements for agencies, departments, and
programs, to identify and consider all of the following
criteria:
a) The consistency of the efficient performance of
essential services, activities, and functions with
which the agency, department, or program operates.
b) An identification of the mission, goals, and objectives
intended for the agency, department, or program and
the problem or need that the agency, department, or
program was intended to address.
c) The extent to which the mission, goals, and objectives
have been achieved and the problem or need for its
function has been addressed.
d) An identification of any activities of the agency,
department, or program, in addition to those
authorized by statute, the authority for those
activities, and the extent to which those activities
SB 887 (Hollingsworth) continued
Page 4
are necessary.
e) Whether a function of the agency, department, or program
is currently being provided by another entity,
including, but not limited to, a local government,
nonprofit, or private entity.
f) Whether alternative methods of performing a function of
the agency, department, or program could more
adequately provide service to the public.
g) The extent to which the jurisdiction of the agency or
department and the programs administered by the agency
or department overlap or duplicate those of other
agencies or departments, and the extent to which the
programs administered by the agency or department can
be consolidated with the programs of other state
agencies or departments.
h) The promptness and effectiveness with which the agency,
department, or program addresses the complaints
concerning entities or other persons affected by the
agency, department, or program, including an
assessment of the agency, department, or program's
administrative hearing process.
i) An assessment of the agency, department, or program's
rulemaking process, the extent to which the agency or
department has encouraged participation by the public
in making rules and decisions, and the extent to which
the public participation has resulted in rules that
benefit the public.
j) Whether administrative and statutory changes are
necessary to improve agency, department, or program
operations to enhance the public interest.
aa) The effect of federal intervention or loss of federal
funds if the agency, department, or program is
abolished.
11)Requires the CIG, as part of the review process, to
publish a report recommending statutory changes and
internal operation improvements for the agencies,
departments, and programs under review. The report shall
include, but not be limited to, all of the following:
a) The findings and determinations regarding the review
criteria.
b) Recommendations to abolish, continue, or reorganize each
agency, department, and program under review.
c) Recommendations to consolidate, transfer, or reorganize
a program that is not under review if it duplicates
SB 887 (Hollingsworth) continued
Page 5
functions of an agency, department, or program that is
under review.
d) Recommendations, including regulations that do not
require a change in statute, to improve the operations
of an agency, department, or program that is under
review. If the CIG recommends improvements, the
Bureau of State Audits shall conduct a follow-up audit
of the agency, department, or program to determine if
the recommendations have been implemented.
e) The estimated fiscal impact of the recommendations.
12)The CIG shall submit a copy of the report to the Milton
Marks "Little Hoover" Commission on California State
Government Organization and Economy (LHC). LHC shall
conduct a public hearing to review the report, and shall
either approve, modify, or reject the report's findings.
LHC shall submit its recommendations, along with the
Chief Inspector General's report, to the Legislature, so
that the recommendations and the report may be considered
by the Legislature in the form of a bill.
13)The Legislature shall consider the bill proposed by LHC
without modification.
14)Provides that if an agency, department, or program is
abolished, all of the following shall apply:
a) All appropriations to the agency, department, or program
shall lapse, and remaining funds dedicated to the
agency, department, or program shall revert to the
General Fund.
b) All remaining contractual obligations, including bonded
indebtedness, of an abolished agency or department
shall remain valid and enforceable. The Governor
shall designate an agency or department to administer
payments and fulfill contracts until all obligations
are satisfied.
c) Property and records of the abolished agency,
department, or program shall be transferred to an
agency, department, or program as designated by the
Governor.
15)Requires the CIG, during each legislative session, to
monitor legislation affecting an agency, department, or
program that has been reviewed pursuant to the sunset
timeline schedule, and periodically report to the
SB 887 (Hollingsworth) continued
Page 6
Legislature when proposed changes would modify previous
recommendations adopted by the Legislature. The CIG
shall also review any bill the Legislature introduces
that would create a new state agency, department, or
program.
16)States legislative findings and declarations.
EXISTING LAW
Existing law establishes the Milton Marks "Little Hoover"
Commission on California State Government Organization and
Economy. The LHC reviews reports and submits
recommendations to increase the efficiency and
accountability of agencies, departments, and programs to
the Governor and the Legislature.
Existing law establishes the Bureau of State Audits, headed
by the State Auditor, to independently examine records,
administer oaths, issue subpoenas, and use other discovery
tools to conduct and report upon, financial and performance
audits of every state agency, constitutional office, and
local governmental agency.
BACKGROUND
Purpose of this bill . According to the author's office,
"California currently has a number of existing auditing
entities, including the Bureau of State Audits, the
Department of Finance, the State Controller's Office, the
Little Hoover Commission, and the Legislative Analyst's
Office, all with various oversight roles. State agencies
and departments also have their own auditors, inspectors,
and investigators that analyze internal operations.
While the state already has a wealth of ongoing entities
that gather and analyze information and make efficiency
recommendations, there is no statewide office exclusively
charged with executing a top-to-bottom independent
performance audit. Often problems found within an agency
or department are shared problems among many agencies and
departments. Audit findings are frequently ignored and
agencies continue to operate in a dysfunctional manner,
never addressing or resolving the identified issues and
inefficiencies. As the state continues to face record
budget shortfalls, it is imperative that we not only
identify any waste, fraud and inefficiencies that exist
SB 887 (Hollingsworth) continued
Page 7
within state government, but ensure that they are
addressed and corrected in a manner deserving of the
public's trust.
"Utilizing an independent auditing entity to routinely
examine all state agencies and departments would raise
the bar within state government and bring new meaning to
taxpayer accountability. The sunset process would create
a unique opportunity to look under the hood of all state
agencies and departments and make fundamental changes to
their mission and operations if necessary. Establishing
the independent office of the Chief Inspector General
coupled with the implementation of sunset review would be
a crucial step towards overhauling any duplicative and
inefficient establishments within state government and
would ensure that all functions meet the fundamental
standards of efficiency, accountability, and
transparency."
Background . The State Auditor (SA) is the state's
independent external auditor that provides independent,
nonpartisan assessments of California government's
financial and operational activities in compliance with
generally accepted government auditing standards. The
Bureau of State Audits (BSA) reports its findings to the
Legislature and recommends corrective actions. Arguably,
this bill establishes the OCIG with similar oversight
functions as the SA.
For example, existing law authorizes the SA to, among other
things:
Establish an audit program for so-called high-risk
government agencies, for the purpose of identifying,
auditing, and issuing reports on any state agency it
identifies as being at high risk for the potential of
waste, fraud, abuse, and mismanagement, or that have
major challenges associated with their economy,
efficiency, or effectiveness..
Consult with the Legislative Analyst, the Milton Marks
"Little Hoover" Commission on California State Government
Organization and Economy, the Office of Inspector General
within the State Department of Corrections and
Rehabilitation, the State Department of Finance, and
other agencies having described oversight
SB 887 (Hollingsworth) continued
Page 8
responsibilities in identifying state agencies that are
at high risk.
Notify the Joint Legislative Audit Committee whenever it
identifies a state agency as at high risk.
Issue audit reports with recommendations for improvement
in high-risk agencies, and require these high-risk state
agencies to periodically report to the SA regarding the
status of recommendations for improvement made by the
Auditor or other oversight agencies.
In addition, the SA:
Is independent, nonpartisan, and viewed as the state's
external auditor.
Is the only state entity that is given full access to all
records of state and local agencies, special districts,
and school districts.
Complies with generally accepted government audit
standards.
Possesses the authority to perform financial, compliance,
performance and contract audits as directed by statute or
as approved by the Joint Legislative Audit Committee.
Administers the California Whistleblower Protection Act.
May identify, audit, and report on state issues that the
SA recognizes as being at high risk for waste, fraud,
abuse, and mismanagement or that have major challenges
related to efficiency or effectiveness.
Issues a high risk list every two years that identifies,
audits, and issues reports with recommendations for
improvement in areas detected.
Follows up on recent audits and reports of any corrective
action taken.
Requires agencies that have not implemented BSA's
recommendations within one year to either report why they
have not implemented them or to state when they will
implement the recommendations.
PRIOR/RELATED LEGISLATION
AB 1820 (Portantino and Jeffries), 2009-2010 Legislative
Session . Establishes the Office of the California
Inspector General (OCIG), headed by the California
Inspector General (IG) who is appointed by the Governor
with the consent of the Senate. Authorizes the OCIG to
SB 887 (Hollingsworth) continued
Page 9
investigate all covered agencies. Requires the OCIG to,
among other things: (1) prevent and detect fraud,
corruption, waste, mismanagement, misconduct, and abuse in
the expenditure of public funds, (2) investigate
allegations of corruption, fraud, criminal activity, waste
of government assets, failure to comply with federal or
state law, conflicts of interest, or abuse in any covered
agency upon the discretion of the IG or upon receipt of a
complaint, (3) inform the heads of covered agencies of
allegations of wrongdoing and the progress of
investigations, unless special circumstances require
confidentiality, (4) determine with respect to allegation
of wrongdoing whether disciplinary action, civil action,
criminal prosecution, or further investigation by an
appropriate federal, state or local agency is warranted,
and to assist in those investigations, (5) prepare and
release to the public written reports of investigations, as
appropriate and to the extent permitted by law, subject to
redactions to protect the confidentiality of witnesses, (6)
review and examine periodically the policies and procedures
of any covered agency with regard to the prevention and
detection of corruption, fraud, criminal activity,
conflicts of interest, or abuse, and (7) recommend remedial
action to prevent or eliminate corruption, fraud, criminal
activity, conflicts of interest, or abuse in any covered
agency. (Pending in Assembly Appropriations Committee)
SB 1452 (Speier), Chapter 452, Statutes of 2005 . Requires
the State Auditor to request that any state agency that is
the subject of an audit, to provide updates on its progress
in implementing the recommendations made by the State
Auditor, at intervals prescribed by the State Auditor.
Enacts the "Omnibus Audit Accountability Act of 2006" for
the purpose of establishing a mechanism for the State
Auditor to identify recommendations that have not been
implemented after the passage of at least one year.
SB 1437 (Speier), Chapter 251, Statutes of 2004 .
Authorizes the State Auditor to establish a high-risk
government agency audit program for the purpose of
identifying, auditing, and issuing reports on any state
agency that the State Auditor identifies as a high risk for
the potential of waste, fraud, abuse, and mismanagement, as
specified.
SUPPORT / OPPOSE (None on file as of April 9, 2010)
SB 887 (Hollingsworth) continued
Page 10
FISCAL COMMITTEE: Senate Appropriations Committee
**********