BILL ANALYSIS �
SENATE COMMITTEE ON PUBLIC SAFETY
Senator Loni Hancock, Chair S
2011-2012 Regular Session B
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SB 777 (Lieu)
As Amended April 25, 2011
Hearing date: May 3, 2011
Government Code
AA:dl
CORRECTIONS AUDIT PROGRAM:
STATE AUDITOR
HISTORY
Source: Author
Prior Legislation: None
Support: Unknown
Opposition:None known
KEY ISSUE
SHOULD THE STATE AUDITOR BE STATUTORILY AUTHORIZED TO ESTABLISH A
CORRECTIONS AUDIT PROGRAM FOR THE PURPOSE OF CONDUCTING, REPORTING
ON, AND TRACKING THE RESOLUTION OF FINANCIAL AND PERFORMANCE AUDITS
OF PROGRAMS AND FUNCTIONS OF THE DEPARTMENT OF CORRECTIONS AND
REHABILITATION, AS SPECIFIED?
PURPOSE
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The purpose of this bill is to authorize but not require the
State Auditor to establish a corrections audit program for the
purpose of conducting, reporting on, and tracking the resolution
of, financial and performance audits of the programs and
functions of the Department of Corrections and Rehabilitation,
as specified.
Current law creates the independent office of the Inspector
General which shall not be a subdivision of any other
governmental entity. The Governor shall appoint, subject to
confirmation by the Senate, the Inspector General to a six-year
term. (Penal Code � 6125.)
Current law charges the Inspector General with specified duties
concerning the Department of Corrections and Rehabilitation
("CDCR"). (Penal Code � 6126 et seq.) In summary these duties
and authorities include the following:
reviewing CDCR policy and procedures;
conducting audits of investigatory practices and other
audits;
responsibility for contemporaneous oversight of internal
affairs investigations and the disciplinary process;
conducting investigations of CDCR, as requested by
either the Secretary of CDCR or a Member of the
Legislature, pursuant to the approval of the Inspector
General under policies to be developed by the Inspector
General;
auditing each warden of an institution one year after
his or her appointment, and audit
each correctional institution at least once every four
years, as specified;
recommending corrective actions, including, but not
limited to, additional training with respect to
investigative policies, additional policies, or changes in
policy, as well as any other findings or recommendations
that the Inspector General deems appropriate;
reviewing the Governor's candidates for appointment to
serve as warden for the state's adult correctional
institutions and as superintendents for the state's
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juvenile facilities, as specified;
developing a methodology for producing a workload budget
to be used for annually adjusting the budget of the Office
of the Inspector General, as specified (Penal Code �
6126.);
initiating an investigation or an audit on the IG's own
accord (PC 6126(a).);
reporting annually to the Governor and the Legislature a
summary of his or her investigations and audits, as
specified (Penal Code � 6132);
conducting and administering the California
Rehabilitation Oversight Board (C-ROB), to "regularly
examine the various mental health, substance abuse,
educational, and employment programs for inmates and
parolees operated by" CDCR, as specified; (Penal Code �
6141); and
through its Bureau of Independent Review, doing the
following:
o conducting contemporaneous public oversight of CDCR
investigations conducted by the CDCR Office of Internal
Affairs;
o advising the public regarding the adequacy of each
investigation, and whether discipline of the subject of the
investigation is warranted;
o having discretion to provide public oversight of other
CDCR personnel investigations as needed; and
o issuing regular reports, no less than annually, as
specified (Penal Code � 6133).
Current law creates in "state government the Bureau of State
Audits under the direction of the Milton Marks "Little Hoover"
Commission on California State Government Organization and
Economy. In order to be free of organizational impairments to
independence, the bureau shall be independent of the executive
branch and legislative control." (Gov't Code � 8543.) The head
of the bureau is the State Auditor (Penal Code � 8543.2), and
its duties "are to examine and report annually upon the
financial statements prepared by the executive branch of the
state and to perform other related assignments, including
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performance audits, that are mandated by statute." (Gov't Code
� 8543.1.)
This bill would expressly authorize the State Auditor to
"establish a corrections audit program for the purpose of
conducting, reporting on, and tracking the resolution of,
financial and performance audits of the programs and functions
of the Department of Corrections and Rehabilitation," as
follows:
Financial audits shall examine financial
statements and financially related activities and
monitor expenditures made under the department's
contracts, grants, and other agreements.
Performance audits shall review the
practices and programs of the department to
determine whether the department is managing its
resources in an effective, economical, and
efficient manner consistent with the
evidence-based correctional practices and public
safety.
This bill would require that financial and performance
audits conducted pursuant to its provisions "be conducted
in accordance with professional auditing standards and
shall include recommended actions to correct deficiencies."
This bill would require that, "upon the completion of any
audit conducted pursuant to (its provisions), the State
Auditor shall prepare a written report which shall be
disclosed, along with any underlying materials that the
State Auditor deems appropriate, to the Governor, the
Legislature, the Secretary of the Department of Corrections
and Rehabilitation, and the appropriate director, chair, or
law enforcement agency. Copies of all written reports shall
be posted on the State Auditor's Internet Web site within
10 days of being disclosed as described in this
subdivision." The bill contains additional technical
language regarding reports submitted pursuant to its
provisions.
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RECEIVERSHIP/OVERCROWDING CRISIS AGGRAVATION
For the last several years, severe overcrowding in California's
prisons has been the focus of evolving and expensive litigation.
As these cases have progressed, prison conditions have
continued to be assailed, and the scrutiny of the federal courts
over California's prisons has intensified.
On June 30, 2005, in a class action lawsuit filed four years
earlier, the United States District Court for the Northern
District of California established a Receivership to take
control of the delivery of medical services to all California
state prisoners confined by the California Department of
Corrections and Rehabilitation ("CDCR"). In December of 2006,
plaintiffs in two federal lawsuits against CDCR sought a
court-ordered limit on the prison population pursuant to the
federal Prison Litigation Reform Act. On January 12, 2010, a
three-judge federal panel issued an order requiring California
to reduce its inmate population to 137.5 percent of design
capacity -- a reduction at that time of roughly 40,000 inmates
-- within two years. The court stayed implementation of its
ruling pending the state's appeal to the U.S. Supreme Court.
On Monday, June 14, 2010, the U.S. Supreme Court agreed to hear
the state's appeal of this order and, on Tuesday, November 30,
2010, the Court heard oral arguments. A decision is expected as
early as this spring.
In response to the unresolved prison capacity crisis, in early
2007 the Senate Committee on Public Safety began holding
legislative proposals which could further exacerbate prison
overcrowding through new or expanded felony prosecutions.
This bill does not aggravate the prison overcrowding crisis
described above.
COMMENTS
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1. Stated Need for This Bill
The author states:
As California continues to address billions of dollars
in budget deficits, the Legislature must find ways for
state agencies to become more efficient and effective.
As recently reported by the California Senate Office
of Oversight and Outcomes, California's taxpayers are
not getting their money's worth from the Office of the
Inspector General (OIG). The report revealed that the
OIG had spent significant taxpayer money on
categorizing their lawyers and auditors as peace
officers and providing them with state-owned cars.
The Office of the Inspector General is an independent
agency within the California Department of Corrections
and Rehabilitation. The OIG was established in 1998
to oversee, monitor and investigate alleged wrongdoing
in the state's correctional system. Among the OIG's
duties is to conduct audits and investigations of the
California Department of Corrections and
Rehabilitation, oversees the department's internal
affairs investigations, collects complaints and tips
about the correctional system, and inspects
facilities.
SB 777 simply consolidates the auditing function of
the Office of the Inspector General and places that
auditing function within the Bureau of State Audits.
The Bureau of State Audits is known throughout
California as truly an independent external auditor,
who provides the taxpayers with non-partisan,
accurate, and timely assessment of state agencies. By
having the auditing duties of the Office of the
Inspector General under the authority of the State
Audit, this bill will help to reduce immediate and
long-term state cost as well as ensuring professional
standards for the auditing duties.
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2. What This Bill Would Do
As explained above, this bill would authorize but not require
the State Auditor to establish a corrections audit program for
the purpose of conducting, reporting on, and tracking the
resolution of, financial and performance audits of the programs
and functions of the Department of Corrections and
Rehabilitation ("CDCR"). Financial audits shall examine
financial statements and financially related activities and
monitor expenditures made under the CDCR's contracts, grants,
and other agreements. Performance audits shall review the
practices and programs of CDCR to determine whether CDCR is
managing its resources in an effective, economical, and
efficient manner consistent with the evidence-based correctional
practices and public safety. The bill requires that the audits
conducted pursuant to its provisions be conducted in accordance
with professional auditing standards and include recommended
actions to correct deficiencies.
3. Recent Senate Office of Oversight and Outcomes Report
In November of 2010, the Senate Office of Oversight and Outcomes
issued a report entitled, "Gun-Toting Auditors and Attorneys:
Does the Inspector General Need 105 Armed Peace Officers?" The
summary for this report includes the following:
The Office of the Inspector General is an independent
state agency
established in 1998 to oversee and investigate alleged
wrongdoing within
the state corrections department. Among its duties,
OIG conducts audits
and investigations of the California Department of
Corrections and
Rehabilitation, oversees the department's internal
affairs investigations,
collects complaints and tips about the correctional
system, evaluates
candidates for warden, and inspects facilities.
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The OIG workforce has tripled in the last six years,
from 48 to 150. At the
same time, the proportion of peace officers has also
grown: from 44%
in 2003 to 70% today. Much of the growth at OIG was
the result of the
creation in 2004 of a Bureau of Independent Review.
The new bureau was
part of the state's response to the well-publicized
federal court oversight
of the prison system in the ongoing Madrid litigation,
which found that
state corrections officials were plagued by inadequate
internal policing and
insufficient investigation of wrongful behavior,
including excessive force.
As currently configured, 105 of the 150 positions in
the Office of the
Inspector General are sworn peace officers. Their
titles are spelled out in
Penal Code Section 830.2 (j), a statute amended in
2009 specifically to
include the 27 lawyers in the Bureau of Independent
Review. The office's
auditors have been peace officers since the OIG was
established, along
with the Inspector General himself.
. . .
Among our findings:
OIG staffers from the Inspector General on down are
expected to
carry a gun and ammunition at all times theyre on
duty: at the office,
on the road, in the air. But one place they always go
unarmed is
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inside a prison. At California correctional
facilities, OIG staff must
check their weapons at the gate or leave them locked
in their cars.
Those weapons have price tags: $430 for a Glock
semi-automatic
pistol, $35 for a holster, $75 for ammunition. All
told, outfitting each
OIG peace officer costs taxpayers $2,050. Add the
take-home state
car, and the grand total exceeds $20,000.
In the past five years no OIG peace officer has
fired a gun on duty,
except at the firing range. That itself can be
dangerous one
Deputy Inspector General accidentally shot himself
while putting
in his required hours at the range.
70% of the mileage OIG peace officers put on their
take-home
state cars is for their daily commute to the office.
The Senate
oversight office asked for all vehicle home-storage
permits and was
given permits for 71 OIG peace officers. Based on
these permits,
their home-to-office commutes total 3,230 miles per
workday (an
average of 45 miles for each worker). Overall, of the
1 million miles
logged by the OIG fleet in 2009/10, more than 700,000
miles were
for employees' commute to work.
During 2007, 2008 and 2009, OIG fielded more than
10,000
separate complaints and tips but only eight cases
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were referred to
a law enforcement agency for possible criminal
prosecution during
those three years. Another six criminal
investigations were closed by
the OIG for lack of evidence, for a total of 14 cases,
according to
quarterly reports. Despite the low number of criminal
cases, in
2009 the OIG created a separate Bureau of Criminal
Investigation.
The career paths leading to these peace officer
positions indicate how
unusual the Office of the Inspector General is in this
area. In the two
OIG bureaus that house the attorneys and auditors, 98%
were
not peace officers before signing on with the
Inspector General.
The OIGs Bureau of Independent Review was modeled on
Los
Angeles County's Office of Independent Review, a team
of lawyers
who monitor the L.A. Sheriff's Department, including
county jails.
The Los Angeles operation, however, is emphatically a
civilian group.
"We don't feel we need peace officer status - we never
asked for it,
we never needed it, we don't want it," its chief
attorney said.
Californias Attorney General employs 1,150 lawyers.
They dont
have take-home cars and only a handful fewer than 5
are sworn
peace officers. Just one carries a gun. None of the
AGs 80 auditors
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are peace officers or get state cars.
4. State Auditor
The Web Site for the State Auditor provides the following
information about the Auditor's mission and philosophy:
Mission
The California State Auditor promotes the efficient
and effective management of public funds and programs
by providing to citizens and government independent,
objective, accurate, and timely evaluations of state
and local governments' activities.
Purpose
The purpose of the California State Auditor's office
is to improve California government by assuring the
performance, accountability, and transparency that its
citizens deserve.
Philosophy
The staff of the California State Auditor, who are
under the direction of the State Auditor, understand
and respect the importance of their position as the
State's independent auditors. The staff of the
California State Auditor's Office conducts their
reviews in a nonpartisan manner, free from outside
influence, including that of the Legislature,
Governor, and the subjects of their audits and
investigations. California State Auditor staff base
their findings, conclusions, and recommendations upon
reliable evidence and will not allow preconceived
notions or personal opinions to influence their work.
The staff strictly adheres to the standards of the
auditing profession and exercises the highest
standards of ethics. The California State Auditor's
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Office and the staff lead by example, holding the
organization and themselves to the same or higher
standards that they use to evaluate others.<1>
With respect to audits conducted by the State Auditor, the
office explains:
The California State Auditor conducts performance
audits that are either mandated by statute or
requested by the Legislature. Performance auditing is
the systematic and objective examination of evidence
to provide an independent assessment of the
performance and management of an organization or
activity against objective criteria as well as
assessments that provide a prospective focus or create
best practices. Performance audits provide information
to improve operations and facilitate decision making
by parties with responsibility to oversee or initiate
corrective action and improve public accountability.
These audits cover a wide variety of objectives,
including objectives related to providing perspective,
analysis, guidance, or summary information or in
assessing:
Program effectiveness and results, and economy and
efficiency
Examples of these audits include:
� The extent to which legislative, regulatory, or
organizational goals and objectives are being
achieved.
� The extent to which programs duplicate, overlap, or
conflict with other related programs.
� The relative cost and benefits or cost
effectiveness of program performance.
� The reliability, validity, and relevance of
financial information related to the performance of a
program.
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<1> http://www.bsa.ca.gov/aboutus/mission.
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Internal control
These assessments relate to management's plans,
methods, and procedures used to meet its mission,
goals, and objectives. Examples of these audits
include providing reasonable assurance that:
� Organizational mission, goals, and objectives are
achieved effectively and efficiently.
� Resources are used in compliance with laws,
regulations, or other requirements.
� Resources are safeguarded against unauthorized
acquisition, use, or disposition.
� Management information and public reports are
complete, accurate, and consistent to measure
performance and support decision making.
� Security over computerized information systems will
prevent or timely detect unauthorized access.
� Contingency planning for information systems
provides essential backup and recovery.
Compliance with legal or other requirements
These assessments relate to compliance criteria
established by laws, regulations, contract provisions,
leases, and grant agreements.
Other types of reviews
These assessments pertain to work that provides a
prospective focus, guidance, or best practices
including:
� Assessing advantages or disadvantages of
legislative proposals.
� Analyzing budget proposals or budget requests and
identifying best practices in program or management
system approaches.
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� Producing high-level summaries or reports that
affect multiple programs or entities on issues
studied.<2>
With respect to financial and compliance audits the office
states:
In general, financial audits are primarily concerned
with providing reasonable assurance about whether the
financial statements of an organization, project,
individual, or entity are presented fairly in all
material respects in accordance with Generally
Accepted Accounting Principles (GAAP) and whether the
organization, project, individual, or entity has
complied with laws and regulations for those
transactions and events that may have a material
effect on the financial statements. State statutes
mandate that the California State Auditor annually
conduct California's Single Audit and that it comply
with government and industry auditing standards.
The Single Audit encompasses an audit of California's
financial statements, review of internal controls over
financial reporting and compliance with federal
program requirements, and additional tests of
compliance with federal and state laws and regulations
at the entity level and at the major federal program
level. California's single audit is performed in
accordance with the Single Audit Act, provisions of
OMB Circular A-133, the Government Accountability
Office's (GAO's) Generally Accepted Government
Auditing Standards (GAGAS), and the AICPA's Statements
on Auditing Standards. The Single Audit satisfies the
federal requirements for an independent financial
audit and compliance audits of federal programs which
is a condition for the state to receive over $76
billion in federal funds each year.
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<2> http://www.bsa.ca.gov/aboutus/performance_audits.
Also, contracts involving the expenditure of public
funds greater than $10,000, entered into by any state,
local, or public entity, are subject to audit by the
bureau for a period of three years after final
contract payment per Government Code, Section 8546.7.
Every public contract must contain a provision stating
that the contracting parties shall be subject to
examination and audit; however, failing to include
such a provision does not preclude the California
State Auditor from conducting the audit.
In addition, the Legislature may direct the California
State Auditor, through statute or by request from the
Joint Legislative Audit Committee, to conduct other
financial related audits of state, local, or other
public entities that may provide different levels of
assurance and scopes of work.<3>
The State Auditor has issued numerous reports concerning
CDCR.<4> Many of these were prompted by a request from the
Joint Legislative Audit Committee.<5> This bill would provide
the statutory authority for the State Auditor to conduct
performance and financial audits of CDCR.
ARE THERE REDUNDANCIES BETWEEN AUDIT OPERATIONS OF THE OIG AND
THE STATE AUDITOR?
SHOULD THE STATE AUDITOR BE AUTHORIZED TO CONDUCT PERFORMANCE
AND FINANCIAL AUDITS OF CDCR?
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<3>
http://www.bsa.ca.gov/aboutus/financial_and_compliance_audits.
<4> See http://www.bsa.ca.gov/reports/agency/22.
<5> See California Department of Corrections and
Rehabilitation: Inmates Sentenced Under the Three Strikes Law
and a Small Number of Inmates Receiving Specialty Health Care
Represent Significant Costs (May 2010), California State
Auditor.
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5. Related Legislation
This bill is scheduled to be heard on the same date as SB 490
(Hancock). That bill would restructure the Office of the
Inspector General to 1) narrow its duties and authorities, as
specified; 2) repeal the statutory authority giving its
personnel peace officer status and instead provide them with
non-peace officer authority relating to powers of arrest,
serving warrants, and access to summary criminal history
information, as specified; and 3) rename the office as the
"Office of Independent Correctional Oversight," with a director
instead of an Inspector General, with related changes. In
addition to maintaining existing, mandated duties, SB 490 would
authorize the reformed office to conduct "oversight reviews"
pertaining to the following significant correctional issues
relating to the Department of Corrections and Rehabilitation:
(1) Security procedures, including contraband interdiction. (2)
Inmate, ward, and parolee administrative appeals and
grievances. (3) Employee use of force. (4) Prison Rape
Elimination Act procedures. (5) Inmate-patient health care
delivery. The authors of these bills may wish to consider
refining the scope of their respective bills to ensure that any
redundancies between the State Auditor and the OIG are
eliminated, to the extent possible.
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