CSA
Summary
Read the report at California State Auditor ↗
Office of the
Secretary of
State:
Clear and Appropriate Direction Is Lacking
in Its Implementation of the Federal Help
America Vote Act
December 2004
2004-139
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December 16, 2004 2004-139
The Governor of California
President pro Tempore of the Senate
Speaker of the Assembly
Sacramento, California 95814
Dear Governor and Legislative Leaders:
As requested by the Joint Legislative Audit Committee, the Bureau of State Audits presents its audit report
concerning the Office of the Secretary of State’s (office) administration of federal Help America Vote Act of 2002
(HAVA) funds.
This report concludes that the office’s insufficient planning and poor management practices hampered its
efforts to implement HAVA provisions in a timely way. Consequently, the office is at risk of failing to meet
certain requirements by the January 1, 2006, HAVA implementation date. Additionally, the office’s disregard
for proper controls and its poor oversight of staff and consultants led to questionable uses of HAVA funds. As a
result of these practices, the office runs the risk that the federal government may conduct an audit of the office’s
implementation of HAVA and its use of federal funds and may require repayment of some, if not all, of the HAVA
funds used to pay certain employees and consultants.
Furthermore, the office avoided competitive bidding for most of its purchases paid with HAVA funds. It obtained
and then inappropriately used a Department of General Services (General Services) exemption from competitive
bidding for some consultant services and did not follow the State’s procurement policies when purchasing other
goods and services. As a result, the State has less assurance that the office obtained the best value for purchases,
totaling $3.3 million, it made with HAVA funds. Moreover, the office bypassed the Legislature’s spending
approval authority by inappropriately executing voter outreach consultant contracts valued at $230,400 and then
charging the associated consultant costs of $84,600 to its fiscal year 2004–05 HAVA administration account.
Finally, the office failed to disburse federal HAVA funds to counties for the replacement of outdated voting
machines within the time frames outlined in its grant application package and county agreements, causing some
counties to lose interest income they could have used in replacing their voting systems.
Respectfully submitted,
ELAINE M. HOWLE
State Auditor
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CONTENTS
Summary 1
Introduction 5
Audit Results
The Office of the Secretary of State Did Not
Use Sound Management Practices That Would
Ensure the Successful Implementation of the
Federal Help America Vote Act 15
The Office’s Poor Administration of HAVA Led to
Questioned Costs 27
The Office Used Questionable Practices to
Procure Goods and Services Related to HAVA 35
The Office Unnecessarily Delayed
Grant Payments to Counties 44
Recommendations 46
Appendix
Status of the Office of the Secretary of
State’s Planned Uses of Federal Help America
Vote Act Funds 49
Response to the Audit
Office of the Secretary of State 61
California State Auditor’s
Comments on the Response
From the Office of the Secretary of State 69
SUMMARY
RESULTS IN BRIEF
Audit Highlights . . .
The federal Help America Vote Act of 2002 (HAVA) was
passed in October 2002 with overwhelming bipartisan
Our review of the Office of the
Secretary of State’s (office) support in response to the controversy and debate
administration of federal over the 2000 presidential election. Intended to make federal
Help America Vote Act (HAVA)
elections fairer and more accurate by addressing concerns
funds revealed the following:
over incomplete voter registration lists, inaccurate voting
þ The office’s insufficient machines, and inefficient election administration, HAVA
planning and poor
contains numerous requirements that every state must meet
management practices
when conducting federal elections. These requirements, most of
hampered its efforts
to implement HAVA which are to take effect between January 1, 2004, and January
provisions promptly. 1, 2006, include replacing punch card and lever-operated voting
machines, allowing voters to verify their votes before casting
þ The office’s disregard for
proper controls and its their ballots, providing voters with provisional ballots, providing
poor oversight of staff access for voters with disabilities, and creating a statewide voter
and consultants led to
registration list.
questionable uses of HAVA
funds.
To help states comply with its requirements, HAVA provides
þ The office avoided funds designated for various purposes, such as administering
competitive bidding for
federal elections (discretionary funds), replacing voting
many contracts paid with
HAVA funds by improperly machines (voting machine replacement funds), and
using a Department of complying with HAVA requirements mandating a uniform
General Services exemption
and nondiscriminatory election process (either discretionary
from competitive bidding
or mandatory requirements funds). In fiscal year 2003–04,
and by not following
the State’s procurement California received a total of $180.6 million in federal HAVA
policies. funds, and it expects to receive another $169.6 million in fiscal
year 2004–05.
þ The office bypassed the
Legislature’s spending
approval authority when As the State’s chief elections official, the secretary of state
it executed consultant
is responsible for implementing HAVA’s requirements
contracts and then charged
in California. However, insufficient planning and poor
the associated costs to
its HAVA administration management have hampered the efforts of the Office of the
account. Secretary of State (office) to implement these requirements in
a timely way. Before it can spend HAVA funds, the office must
þ The office failed to
disburse HAVA funds receive authorization from the Legislature and the Department
to counties for the of Finance (Finance). As of June 30, 2004, the office had
replacement of outdated
spent only $46.6 million of the $81.2 million in HAVA funds
voting machines within the
authorized by the Legislature for fiscal year 2003–04.
time frames outlined in its
grant application package
and county agreements.
California State Auditor Report 2004-139 11
Although the office developed a state plan describing how it
will meet HAVA’s mandatory requirements, it failed to develop
a detailed implementation plan for each of its HAVA-related
projects. In addition, it did not assign to someone within the
office overall responsibility for overseeing the implementation
of HAVA’s requirements. As a result of these and other failures
to apply widely accepted management principles, the office
is at risk of failing to meet certain HAVA requirements by
January 1, 2006. For example, according to its current schedule,
the office will not be able to provide a fully functioning
statewide voter registration database by the HAVA deadline.
Missing the deadline, the office risks having to undergo a special
audit by the federal government regarding its implementation of
HAVA and its use of HAVA funds.
Additionally, because the office disregarded controls and
exercised poor oversight of staff and consultants, its use of HAVA
discretionary funds to pay for activities unrelated to HAVA led
to questions about the improper use of these funds. Also, the
office failed to document the time spent by its staff members on
HAVA activities, as required when salaries and wages are charged
to a federal fund source. Staff activity reports submitted by two
of the employees we reviewed, as well as 62 of the 169 staff
activity reports submitted by regional outreach consultants,
reported attendance at events—some of which were partisan in
nature—that appear to be unrelated to HAVA purposes. Finally,
a law firm retained to provide legal advice on issues related to
HAVA performed unrelated work such as writing speeches for
the secretary of state that had little if anything to do with HAVA
and also invoiced and was paid for services that did not conform
with the terms of its contract. Partly as a result of these uses of
HAVA funds, the office has come under close scrutiny, and other
HAVA funds have been held up by Finance pending completion
of a detailed spending plan. Further, the office is at risk of having
the federal government require repayment of some, if not all, of
the HAVA funds it used to pay employees and contractors.
The office’s practice of using noncompetitive procurement
methods for services it paid for with HAVA funds does not
ensure that the State received the best value . The office avoided
competitive bidding for many HAVA expenditures by obtaining
and then inappropriately using a Department of General Services
(General Services) exemption from competitive bidding. It
justified this exemption due to the urgent need to meet the
deadlines for certain HAVA requirements. Most of the contracts
entered into under the exemption were for services that did
22 California State Auditor Report 2004-139 California State Auditor Report 2004-139 33
not relate to any specific HAVA deadline and could have been
competitively bid had the office planned better. For example,
the office entered into contracts with consultants to do voter
outreach activities without seeking competitive bids.
Further, the office did not follow best practices in making
California Multiple Award Schedule (CMAS) procurements. For
example, it did not obtain competitive offers for most of its
CMAS procurements, and rather than obtain competitive bids
and use one contract, the office used multiple CMAS contracts to
obtain information technology (IT) consulting services totaling
$631,000 from one vendor and $1,145,000 from another.
General Services prohibits the use of CMAS if the procurement
of IT consulting services exceeds $500,000. Also, the office
failed to follow state procurement policy requiring agencies
to obtain at least two informal responsive bids for commodity
purchases over $5,000.
Additionally, the office bypassed the Legislature’s spending
approval authority when it entered into 18 outreach consultant
contracts in fiscal year 2004–05 valued at $230,400 and paid
contractors $84,600 through its HAVA administration account
for services related to those contracts.
Finally, the office failed to disburse voting machine funds within
the time frames outlined in its grant application package, internal
procedures, and contracts with counties, delaying check delivery
by an average of 108 days and causing some to lose interest
income they could have used in replacing their voting systems.
In May 2004, in an attempt to address issues related to its HAVA
implementation, the office began corrective actions to ensure
the proper expenditure of HAVA funds, including terminating
its contracts with all regional outreach consultants in late
September 2004. Recognizing the need for project management
services, in June 2004 the office began soliciting proposals for
these services, and gave notice of its intent to award a contract
on December 1, 2004.
RECOMMENDATIONS
To ensure that it successfully implements the requirements
called for in HAVA, the office should take the following steps:
• Develop a comprehensive implementation plan that includes
all HAVA projects and activities.
22 California State Auditor Report 2004-139 California State Auditor Report 2004-139 33
• Designate the individuals responsible for coordinating and
assuring the overall implementation of the plan.
• Identify and dedicate the resources necessary to carry out the
plan and assign roles and responsibilities accordingly.
• Establish timelines and key milestones and monitor to ensure
that planned HAVA activities and projects are completed
when scheduled and meet expectations.
To establish or strengthen controls, comply with federal and
state laws, and reduce the risk that HAVA funds are spent
inappropriately, the office should take the following actions:
• Establish and enforce a policy prohibiting partisan activities
by employees and consultants hired by the office that
includes an annual certification that employees have read and
will abide by the policy.
• Standardize the language used in all consultant contracts
to include provisions regarding conflicts of interest and
incompatible activities such as partisan activities.
• Ensure that time charged to federal programs is supported
with appropriate time sheets and certifications.
• Follow competitive bidding requirements to award contracts
and restrict the use of exemptions to those occasions that
truly justify the need for them.
• Follow General Services policies when using CMAS for
contracting needs.
• Comply with state policy for procuring commodities.
• Prohibit fiscal year 2004–05 expenditures for non-
administrative HAVA activities until it receives spending
authority from Finance and the Legislature.
AGENCY COMMENTS
The office states that it appreciates the report and
recommendations and intends to implement as soon as
possible the recommendations not already implemented. It
also provides clarifications on certain issues that it believes need
to be included to make the report more accurate. Our comments
follow the office’s response. n
44 California State Auditor Report 2004-139 California State Auditor Report 2004-139 55
INTRODUCTION
BACKGROUND
The California secretary of state, a constitutionally
established elected position, is the chief elections offi cer of
the State. Among other duties, the Offi ce of the Secretary
of State (offi ce) is responsible for administering and enforcing
California’s election laws. In fulfi lling this responsibility,
offi ce executive staff determine policy associated with the
election process and administer programs to modernize voting
equipment, educate voters, and protect voters’ rights. The offi ce
also provides guidance and direction to county elections offi cials
in the administration of elections. Among its ongoing activities
are those associated with implementing the requirements of
the federal Help America Vote Act of 2002 (HAVA). Over the last
three fi scal years, the offi ce employed a total of 25 full- and part-
time employees, not including at least eight executive offi ce staff
and a number of consultants, to work on HAVA activities.
The offi ce is organized into the executive offi ce
and six divisions, three of which are relevant
Organization of the Offi ce of the
to this report. The executive offi ce and these
Secretary of State
three divisions, described in the box, administer
Executive offi ce—Develops and manages or provide support for the implementation of
overall offi ce policy and functions as
HAVA. The executive offi ce is responsible for
the liaison to other state agencies, the
Legislature, the federal government, and developing the state plan for implementing HAVA
other states’ secretaries of state.
requirements and uses HAVA funds to oversee
Elections division—Administers the State’s the voter outreach activities conducted through
election process, including providing four regional offi ces. These regional offi ces are
guidance and direction to county elections
located in San Francisco, Fresno, Los Angeles, and
offi cials in the administration of elections.
San Diego. The elections division is responsible
Information technology division—Oversees
for providing HAVA funds to counties for
and sets policy for all information technology
projects. Plans, develops, implements, and improving election administration, including
operates information systems.
replacing old punch card voting systems. The
Management services division—Provides information technology division is responsible for
administrative support services, including implementing the HAVA-mandated statewide voter
personnel, budgeting, and fi scal services.
registration list. Finally, the management services
division provides administrative support for
Source: Fiscal year 2004–05 Governor’s Budget.
implementing HAVA, including fi scal, personnel,
contract, and business services.
44 California State Auditor Report 2004-139 California State Auditor Report 2004-139 55
Of the $324.1 million appropriated to the office for its fiscal year
2004–05 overall budget, $26.7 million is from the General Fund,
$266.1 million is from federal HAVA funds, and $31.3 million is
from other funds.
PURPOSE OF HAVA AND ITS REQUIREMENTS
The outcome of the November 2000 presidential election
remained undecided for several weeks after election day in
the decisive state of Florida. Confusing ballots, computer
malfunctions, and misplaced ballot boxes made the presidential
election in Florida frustrating and controversial. The closeness
of the race also highlighted controversies over the treatment of
absentee ballots from military personnel serving overseas, as well
as voters who were turned away at the polls because their names
did not appear on voter registration lists. The U.S. Government
Accountability Office, among others, found that these problems
were not unique to Florida and were likely present in many
other states.
The controversy and debate over the 2000 presidential election
led Congress to seek legislation to make federal elections fairer
and more accurate. The result was HAVA, which both houses
of Congress passed with overwhelming bipartisan support and
the president signed into law in late October 2002. HAVA is
intended to address, among other things, incomplete voter
registration lists, inaccurate voting machines, inefficient
election administration, and the controversy over uncounted
military ballots. States must comply with HAVA’s requirements
mandating uniform voting systems and election administration,
including using voting systems that notify voters when they
“over-vote” and that give them the opportunity to correct their
errors before casting their ballots. Over-voting occurs when a
voter casts more votes than is allowed on a ballot (for example,
voting for two candidates running for the same office when
only one vote is allowed). States must also follow standards for
determining what constitutes a vote, standards for provisional
voting, and procedures for improved voting by absent military
personnel and overseas voters.
HAVA established, among other things, the federal Election
Assistance Commission (commission) to provide states with
information on federal elections, including information on
election equipment. HAVA requires the commission to adopt
voluntary guidance—guidelines states can choose not to follow
as long as they meet HAVA’s mandatory requirements—to assist
66 California State Auditor Report 2004-139 California State Auditor Report 2004-139 77
them in meeting the mandatory HAVA voting system standards.
It was to adopt this voluntary guidance by January 1, 2004,
and was to adopt guidance for the provisional voting and voting
information requirements, implementation of a computerized voter
registration list, and requirements for voters who register by mail by
October 1, 2003. This guidance, however, has thus far been limited
because the commission was not appointed until December 2003
and did not hold its first public meeting until March 2004, even
though the act became law in late October 2002.
HAVA also established a federal program to provide funds to
states for activities to improve the administration of federal
elections and for the replacement of punch card or lever-
operated voting machines. It allows states to use certain HAVA
funds to improve the administration of federal elections
(discretionary funds). States may use these discretionary funds
for activities such as complying with the HAVA requirements
mandating uniform and nondiscriminatory election technology
and administration (mandatory requirements); improving
the administration of federal elections; educating voters; and
training election officials, poll workers, and volunteers. HAVA
also requires states to use certain designated HAVA funds in
qualifying precincts to replace punch card or lever-operated
voting systems with voting systems that meet HAVA standards
(voting machine replacement funds). States are not required
to apply for HAVA discretionary funds or for voting machine
replacement funds. However, because this money can be used to
meet HAVA’s mandatory requirements, states are likely to accept
these program funds and their associated federal administrative
requirements. California is one such state.
In addition to providing discretionary funds and voting machine
replacement funds, HAVA provides states with money to assist
them in implementing its mandatory requirements. States that
submit an approved plan receive these federal funds, which
must be used in meeting the HAVA’s mandatory requirements or,
if the State certifies that it has met the mandatory requirements,
for other activities that improve the administration of federal
elections. Table 1 on the following page summarizes the HAVA
mandatory requirements and their required implementation dates.
66 California State Auditor Report 2004-139 California State Auditor Report 2004-139 77
TABLE 1
HAVA Mandatory Requirements and When They Must Be Implemented
HAVA Mandatory Requirements Effective Date
State voting systems must meet certain requirements, including the following: January 1, 2006
• Permit voters to verify their votes before their ballots are cast.
• Allow voters to change their ballot or correct any error before their ballots are cast.
• Produce a permanent paper record for audit and recount.
• Be accessible for individuals with disabilities.
• Provide alternate language accessibility.
• Comply with Federal Election Commission error rate standards.
States must implement a single, uniform, official, centralized, interactive, and computerized January 1, 2006*
statewide voter registration list that is defined, maintained, and administered at the State level.
States or local elections officials must do the following: January 1, 2004
• Permit eligible individuals to cast provisional ballots and have free access to a system that will
inform them whether their votes were counted and, if not counted, the reasons why.
• Require individuals to meet certain identification requirements if they register to vote for the
first time in a state or jurisdiction by mail.
• Ensure the public posting of certain voting information at each polling place on the day of
each federal election.
Source: Help America Vote Act of 2002.
*This deadline applies only to states that seek and are granted a waiver to extend HAVA’s January 1, 2004, implementation date.
California requested and received such a waiver.
In addition to the mandatory requirements shown in Table 1,
HAVA requires states to establish and implement certain other
voting procedures by January 1, 2004. These include establishing
and maintaining uniform, nondiscriminatory state-based
administrative complaint procedures to remedy grievances
and designating a single office that is responsible for providing
information on voter registration and absentee ballot procedures
for absent voters serving in the military and for overseas voters.
THE SECRETARY OF STATE’S APPROVED STATE PLAN
To receive federal funds for use in meeting HAVA’s mandatory
requirements, the office developed and submitted its state
plan, as required by HAVA. The office appointed a 24-member
advisory committee made up of individuals representing
different interests in the State to assist in preparing the plan and
considered public input in developing the final version. The
office submitted the plan titled My Vote Counts: California’s Plan
for Voting in the 21st Century, to the commission in August 2003.
88 California State Auditor Report 2004-139 California State Auditor Report 2004-139 99
The plan responded to each of the 13 areas that HAVA required
the State to address, ranging from describing how it will use the
funds to meet HAVA’s mandatory requirements to indicating
how it intends to adopt performance goals and measures
to determine its success in carrying out the plan, including
timetables for meeting each plan element, the criteria to be
used to measure performance, and the official responsible for
ensuring that each performance goal is met.
The August 2003 state plan also provided a proposed budget
for each of the activities that the office planned to undertake
to meet HAVA mandatory requirements and for other activities.
In September 2004, the office updated this proposed budget to
include more detailed information and to set aside a reserve of
25 percent. Table 2 lists the office’s proposed use of the funds it
received in fiscal year 2003–04 and expects to receive in fiscal
year 2004–05 to meet HAVA’s mandatory requirements and for
other activities, as outlined in its September 2004 update.
TABLE 2
Planned Allocation of HAVA Mandatory Requirements Funds
(In Millions)
Planned Use Proposed HAVA Funds*
Activities to meet mandatory requirements $120.6
Other activities 77.6
Reserve of 25 percent 66.0
Total $264.2
Source: Secretary of state’s September 2004 update to the state plan titled My Vote
Counts: California’s Plan for Voting in the 21st Century.
* The total mandatory requirements funds shown in the secretary of state’s
September 2004 update to the state plan include $94.6 million received in
fiscal year 2003–04 and $169.6 million expected in fiscal year 2004–05.
FEDERAL HAVA FUNDS AWARDED AND SPENT
In fiscal year 2003–04, federal agencies awarded or granted HAVA
funds to the office totaling $180.6 million. The office received
a $1.4 million grant from the U.S. Department of Health and
Human Services for making voting machines and facilities
88 California State Auditor Report 2004-139 California State Auditor Report 2004-139 99
accessible to individuals with disabilities, but it has yet to spend
any of these funds. It also received and deposited in the state
treasury HAVA funds consisting of $27.3 million for discretionary
activities, $57.3 million for required voting machine replacement,
and $94.6 million to meet mandatory requirements.
In August 2003 the office used the process set forth in the
Budget Act of 2003, Section 28, to obtain state authorization to
spend the discretionary and voting machine replacement funds.
This process allows state agencies to apply for authorization
to spend federal funds outside the regular state budget process
when the amount and timing of federal funds cannot be
anticipated. The office spent some of the HAVA discretionary
and voting machine replacement funds in fiscal year 2003–04
but has not spent any of the $94.6 million in mandatory
requirements funds it received in June 2004.
Table 3 shows the HAVA funds awarded to the office, the amounts
the Department of Finance (Finance) and the Legislature
authorized the office to spend, the amounts the office
spent or obligated, and the amounts remaining unspent or
unobligated as of June 30, 2004.
TABLE 3
HAVA Funds Awarded, Authorized, Spent or Obligated, and Unspent or
Unobligated as of June 30, 2004
(In Millions)
Amount
Awarded but
Federal HAVA Authorized Amount Spent Unspent and
HAVA Funds Funds Awarded Spending Amount or Obligated Unobligated
Discretionary funds $ 27.3 $23.9 $ 6.9 $ 20.4
Voting machine replacement funds 57.3 57.3 39.7 17.6
Mandatory requirements funds 94.6 0.0 0.0 94.6
Funds to provide access for individuals
with disabilities 1.4 0.0 0.0 1.4
Totals $180.6 $81.2 $46.6 $134.0
Source: Federal award documents and Office of the Secretary of State budget and accounting records.
Through the Budget Act of 2004 (budget act), the State
appropriated $324.1 million to the office for fiscal year 2004–05,
of which $266.1 million represents HAVA funds. The majority
of these federal funds consists of $94.6 million in mandatory
requirements funds that were received in fiscal year 2003–04
1100 California State Auditor Report 2004-139 California State Auditor Report 2004-139 1111
and $169.6 million in additional HAVA mandatory requirements
funds that the office expects to receive from the commission in
fiscal year 2004–05. Provisions in the budget act require the
office to submit a detailed spending plan to Finance before it
receives authorization to spend these HAVA funds.
However, the office also did not spend or obligate $17 million
of its discretionary and $17.6 million of its voting machine
replacement funds that it had authority to spend in fiscal
year 2003–04 and did not include these unspent federal funds
in its budget request for fiscal year 2004–05. In July 2004 it
requested from Finance but was denied the authority to spend
these funds in fiscal year 2004–05. After various attempts
by the office to obtain authority to spend both fiscal years
2003–04 and 2004–05 HAVA funds, in early September 2004,
Finance and the Legislature authorized the office to spend
$15.2 million of the $94.6 million mandatory requirements
funds on certain activities. They considered these activities
as essential for the November 2004 federal election. In the
meantime, according to staff at Finance, the office provided in
mid-July a general overview of the HAVA spending plan for its
fiscal year 2004–05 budget in response to the requirement in
the budget act, but in late August it withdrew and replaced that
plan with a second spending plan. Staff at Finance did not
consider the August plan detailed enough to meet the budget
act’s requirements. According to the chief assistant secretary of
state, the office revised its spending plan to include additional
information and resubmitted the plan on December 2, 2004.
APPLICABLE STATE AND FEDERAL LAWS
AND REGULATIONS
A whole body of law exists regarding the use of public resources,
including federal funds. For example, both federal and state
laws generally prohibit the use of public funds for partisan
political activities for the purpose of affecting the outcome of a
campaign. HAVA does not specifically address the use of federal
funds for the purpose of partisan political activities, except
with regard to an aspect relating exclusively to college voter
registration. However, that omission is not uncommon with
federal programs. Instead, the use of federal funds to support
partisan political activities is addressed by the Hatch Act, which
prohibits federally funded employees, including state employees
who work primarily on federal programs, from engaging in
partisan political activity for the purpose of interfering with or
affecting the results of an election or a nomination for office.
1100 California State Auditor Report 2004-139 California State Auditor Report 2004-139 1111
Similarly, under California law the general rule is that state
funds may not be used for those purposes. Moreover, other
federal regulations—such as Office of Management and Budget
circulars A-87, A-102, and A-133—establish principles and
provide guidance for determining whether various costs are
allowable and how they are to be charged to federal programs,
and establish uniform rules used for administering federally
funded grants and awards made to state and local governments.
They also provide standards for ensuring consistency and
uniformity in the federal audit requirements used when auditing
state and local governments’ expenditures of federal funds.
SCOPE AND METHODOLOGY
The Joint Legislative Audit Committee (audit committee)
requested that the Bureau of State Audits (bureau) review the
office’s fiscal year 2003–04 budget request and verify that all
components of the HAVA grants were implemented within the
spirit and letter of the law. Specifically, the audit committee
asked the bureau to review and evaluate relevant laws, rules, and
regulations; to determine whether the office used HAVA funds
only for allowable purposes and in accordance with Section 28
of the Budget Act of 2003; and to determine whether the office
implemented HAVA in compliance with federal requirements. It
also asked the bureau to review and evaluate the office’s policies
and procedures for administering HAVA funds, including the
process of awarding and disbursing those funds, and to determine
whether it effectively oversees the use of the funds it awards to
ensure that recipients use them only for allowable purposes.
We reviewed and evaluated relevant state and federal laws, rules,
and regulations and identified those that were applicable and
significant to the audit.
To determine whether the office used HAVA funds appropriately,
we selected a sample of expenditure transactions paid for with
HAVA funds and evaluated whether the activities and costs
were allowable under HAVA, the state plan, and Section 28
of the Budget Act of 2003. In testing HAVA expenditures, we
selected 10 personal services, 25 operating expenses, and five
grant payment transactions that the office paid in fiscal year
2003–04, and reviewed certain fiscal year 2004–05 charges
to HAVA funds. We also interviewed management staff and
reviewed accounting and other records to determine if the costs
charged to HAVA were allowable and appropriate.
1122 California State Auditor Report 2004-139 California State Auditor Report 2004-139 1133
To determine whether the office implemented HAVA in
compliance with federal requirements, we interviewed key
management and staff to understand the office’s policies
and procedures for administering HAVA funds, including
requesting any plans and timetables for implementing HAVA
requirements. We also evaluated the process the office uses
to award and disburse HAVA funds. Further, we interviewed
key management and staff and reviewed any relevant records
or documented procedures to understand the process the
office uses to oversee the allowable uses of HAVA funds by
grant recipients. Additionally, we contacted the U.S. Election
Assistance Commission to obtain clarification on HAVA
requirements. Finally, we sent registered letters to selected
former staff and consultants that worked on HAVA projects and
interviewed those that agreed to talk to us in an attempt to learn
more about how HAVA-funded activities were carried out and
administered. n
1122 California State Auditor Report 2004-139 California State Auditor Report 2004-139 1133
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1144 California State Auditor Report 2004-139 California State Auditor Report 2004-139 1155
AUDIT RESULTS
THE OFFICE OF THE SECRETARY OF STATE DID NOT
USE SOUND MANAGEMENT PRACTICES THAT WOULD
ENSURE THE SUCCESSFUL IMPLEMENTATION OF THE
FEDERAL HELP AMERICA VOTE ACT
The Office of the Secretary of State (office) is in danger
of failing to meet one future requirement and other
important implementation milestones of the federal
Help America Vote Act of 2002 (HAVA). This risk is the result
of the office’s poor management of the HAVA implementation.
Although the office developed and prepared a high-level
state plan that identifies several HAVA activities it planned
to undertake, it did not sufficiently plan the implementation
of each activity, nor did it use all the HAVA funds it was
authorized to support its efforts. Additionally, the office did not
designate anyone to be responsible for overseeing the overall
implementation of HAVA, nor did it designate the individuals
responsible for implementing each HAVA activity. Further,
the office did not provide clear direction to staff regarding
their HAVA responsibilities. These and other shortcomings
came about because the office did not sufficiently plan for the
new responsibilities called for by HAVA using widely accepted
management principles and practices.
These principles include effective planning, organizing,
directing, monitoring, and control. Good management starts
with good planning. Good planning helps ensure successful
results. Planning includes establishing goals and objectives,
determining the best course of action to achieve those goals
and objectives, determining the resources needed to implement
the plan, considering and planning for contingencies, and
developing a plan of action that includes all of these elements.
The next step is to organize the resources necessary to effectively
execute the plan. This step includes ensuring that the required
materials and equipment are procured and ready for use when
scheduled, any needed training or instruction is provided, and
everyone understands their respective roles and responsibilities
and how they relate to the overall success of the plan. To
mobilize resources toward executing the plan, clear direction
must be given to ensure success. Staff must receive instructions
on what activities each is expected to perform and a schedule
showing when planned activities must be completed. To ensure
1144 California State Auditor Report 2004-139 California State Auditor Report 2004-139 1155
that mobilized resources are executing activities according to the
plan and that necessary adjustments are made promptly, regular
and consistent monitoring must take place, including a method
to measure whether results are meeting the plan’s targeted
goals and objectives. When problems arise or activities are not
achieving expected results, prompt adjustments must be made
to correct the situation and get activities back on track with the
plan’s goals and objectives.
Because the office did not use many of these management
principles and practices in its implementation of HAVA,
some required activities are behind schedule and in danger
of failing to meet a mandated deadline and others do not
appear to be appropriate. As a result, the office risks having to
undergo a special audit by the Election Assistance Commission
(commission) regarding implementation of HAVA and its use of
federal funds for improving its federal election administration.
In the sections that follow we describe some of the problems
that resulted from the office’s poor management practices in
implementing HAVA.
The Office’s Lack of Planning Is Delaying Its Implementation
of Some HAVA Requirements
The office is in danger of failing to meet the deadline for
at least one HAVA requirement and other important future
The office may not fully implementation milestones. It may not fully implement by the
implement a computerized January 1, 2006, HAVA deadline a computerized statewide voter
statewide voter registration registration list that is maintained and administered at the state
list by the January 1, 2006, level.1 An October 2004 feasibility study of the development of
deadline imposed by HAVA. the office’s statewide voter registration database reported a target
completion date of January 1, 2006. However, the final phase
of the project, which includes providing training to office staff
and county elections staff, is not expected to be complete until
June 30, 2006, six months after the HAVA deadline. According
to the commission, the January 1, 2006, deadline is intended to
apply to a fully functioning system that is in use by all counties
of a state. According to its current schedule, the office will
miss the HAVA deadline because its statewide voter registration
database will not be in full use until after January 1, 2006.
Further, the office could have been more proactive in assisting
counties in achieving the successful statewide implementation
of other HAVA requirements. HAVA requires states to implement
1 HAVA requires states to comply by January 1, 2004, unless they seek and are granted a
waiver to comply by January 1, 2006. California sought and received such a waiver.
1166 California State Auditor Report 2004-139 California State Auditor Report 2004-139 1177
by January 1, 2004, provisional voting procedures and a free
access system, certain voter information posting requirements,
and specified voter identification requirements. Provisional
voting procedures allow a voter to cast a provisional ballot if
his or her name is not listed on the official list of eligible voters
for the precinct in which the voter lives, as long as the voter is
able to provide certain information. A free access system, such
as a toll-free telephone number or Web site, is required to allow
voters who cast a provisional ballot to determine whether their
vote was counted and, if not counted, determine the reason
why. Election officials must also provide written information
to voters who cast a provisional ballot, describing how to
determine whether their vote was counted. HAVA requires that
certain voter information also be publicly posted at each polling
place, including a sample version of the ballot, information
about the date and hours the polling place will be open,
instructions on how to vote and how to cast a provisional ballot,
instructions for mail-in registrants and first-time voters, and
general information on voting rights under applicable federal
and state laws. Finally, HAVA requires that first-time voters who
register by mail meet certain identification requirements.
However, in a June 2004 letter to the office, the U.S. Department
The U.S. Department of Justice (Justice) reported that in its monitoring of the
of Justice reported March 2, 2004, primary election, it had observed numerous
numerous instances of instances of noncompliance with HAVA requirements at several
noncompliance with local election polling locations in various counties. For example,
HAVA requirements Justice noted that the free access system used in one county
at California polling did not allow voters to determine why their vote was not
locations during the counted, as required by HAVA, and found no evidence of a free
March 2004 election access system in another county. Justice also observed multiple
and concluded that examples of inconsistent identification procedures for voters
the instances of who register by mail. Further, Justice observed polling places
noncompliance were that did not post all the information required by HAVA. Overall,
caused by inadequate Justice concluded that its observations did not indicate that
training of elections these instances of county noncompliance were willful. Rather,
officials and poll workers Justice attributed such noncompliance to a lack of adequate
about the new HAVA training of elections officials and poll workers about the new
requirements. HAVA requirements. In closing, Justice stated that although it
might be necessary for county officials to undertake the bulk of
this training, the office has the primary responsibility to ensure
that HAVA’s provisions are implemented statewide. Therefore,
Justice requested that the office provide a description of the
steps it had taken to provide information and resources to
1166 California State Auditor Report 2004-139 California State Auditor Report 2004-139 1177
counties to ensure proper instruction and implementation of
HAVA’s terms, and what further steps it was prepared to take to
make full compliance with HAVA a reality statewide.
The secretary of state responded to Justice in a July 20, 2004,
letter stating that California was committed to the full and
effective implementation of HAVA and would take whatever
steps appropriate to ensure timely compliance with all
provisions of federal voting rights laws. The secretary of state
listed a number of actions he stated the office planned to take
or was in the process of taking, including providing information
and training regarding provisional voting, the posting of voting
rights, and identification requirements for certain voters who
registered by mail. He stated that as part of this effort, the office
Although the office took was working with elections officials to educate and train poll
various steps in an effort workers and officials through making grants available for that
to ensure local elections purpose. Although the office took various steps in an effort to
officials complied with ensure local elections officials complied with the requirements
the requirements that that were to take effect on January 1, 2004, most occurred too
were to take effect on late to be of assistance or had not yet occurred, such as the
January 1, 2004, most education and training grants that still had not been disbursed
occurred too late to be of to counties as of November 22, 2004.
assistance.
According to the elections division chief, the office
communicated HAVA requirements to local elections officials
and did what it could with its available resources to ensure
compliance with these requirements. For example, in
March 2003 the office surveyed counties to determine whether
a toll-free number existed for voters to obtain election-related
information, and it found that of the 58 counties, 37 did not
have a toll-free number, although two counties indicated
that they accepted collect calls. This survey, however, did not
address whether counties had met the HAVA requirement
of allowing voters to determine why their vote was not
counted. On August 12, 2003, and January 21, 2004, the office
provided guidelines to local election officials for implementing
provisional ballot requirements, identification procedures, and
the minimum standards of a free access system for voters who
cast a provisional ballot. The office surveyed counties again
following the March 2004 primary election to determine how
they were implementing the free access system requirement.
According to the survey results, as of May 2004, three counties
still had not implemented a free access system for voters who
cast a provisional ballot. The results of a third office survey taken
in September 2004 indicated that 45 counties had implemented
1188 California State Auditor Report 2004-139 California State Auditor Report 2004-139 1199
a free access system, 10 would accept collect calls, and three
counties did not offer free access, nine months after the HAVA
deadline of January 1, 2004, for having these systems in place.
Further, in its effort to ensure compliance with HAVA posting
requirements, the office provided local elections officials the
opportunity to order a poster listing voting rights that contained
some of the information required by HAVA, and the rest of
the information was to be posted by local elections officials.
However, it was only after Justice reported noncompliance with
this requirement on June 30, 2004, that the office sent a letter
to local elections officials on July 22, 2004, directing them
In August 2003, the to post all required information. Moreover, even though the
office received authority office had received authority to spend $4.4 million to train poll
to spend $4.4 million to workers and elections officials in meeting HAVA’s requirements
train local poll workers in August 2003, these funds did not get allocated to the counties
and elections officials for that purpose. According to a letter sent to the commission on
in meeting HAVA’s September 23, 2004, by a person who chaired a subcommittee of
requirements, but as of the statewide association of county elections officials, the office
September 23, 2004, had had not provided any funding or guidance to train poll workers
yet to provide these funds or elections officials.
to counties.
The office also told us that it conducted election-day poll
monitoring to determine whether election laws and voter
rights were being enforced. According to the office, the poll
monitoring conducted in March 2004 was not focused on HAVA,
but poll monitors reported multiple instances of noncompliance
with the posting of voters’ rights information. Our review of
the training manual that the office provided to its poll monitors
for the March 2004 primary election, however, did not indicate
how monitors would ensure that local elections officials
complied with HAVA requirements. According to the office, it
provided verbal instruction to poll monitors to observe for HAVA
compliance. The office supplied its poll monitors with a checklist
to use in the November 2, 2004, election that was designed, in
part, to measure compliance with certain HAVA requirements.
These shortcomings in meeting HAVA deadlines can be traced
to the office’s incomplete planning for each of the activities it
intended to undertake. Although the office listed these HAVA
requirements in its August 2003 state plan, it failed to include
how and when it would implement them. In fact, the office’s
state plan neglected to include implementation plans for any
of its planned activities. Specifically, though HAVA requires that
it include such information, the state plan did not detail the
goals and objectives or the measures that it would use to gauge
1188 California State Auditor Report 2004-139 California State Auditor Report 2004-139 1199
whether the planned activities were successful, the timetables
and milestones for tracking its progress, and the individuals
it assigned to be responsible for ensuring that each goal and
objective is met. Despite these defi ciencies, the state plan was
approved at the federal level.
The Offi ce Has Not Used All the HAVA Funds It Was
Authorized to Spend
The offi ce has failed to use all its resources to meet HAVA
implementation deadlines. Due to its incomplete planning,
although it received authorization to spend $81.2 million in
federal HAVA funds in fi scal year 2003–04, as of June 30, 2004,
it had spent or obligated only $6.9 million of the
$23.9 million in discretionary funds earmarked
for improving the administration of federal
Fiscal Year 2003–04 Section 28
elections and $39.7 million of the $57.3 million in
Authorized Spending
voting machine replacement funds. In approving
(In Millions)
the offi ce’s August 2003 Section 28 spending
Election offi cial and authorization application for fi scal year 2003–04,
poll worker training $ 4.4
the Department of Finance (Finance) authorized it
Election support and training 11.55
to spend HAVA discretionary funds in the fi ve areas
Disability and language access 3.55
shown in the box. In addition, Finance authorized
Administrative costs 1.7
the office to spend $57.3 million in voting
Electoral system mandate: 2.7
machine replacement funds to pay counties for
their replacement of punch card or lever-operated
Source: Offi ce of the Secretary of State’s August 2003
Section 28 application. voting machines. According to its executive staff,
all the spending for the HAVA activities the offi ce
outlined in its Section 28 application did not
occur because of its uncertainty about the cost
of complying with various mandatory components of HAVA,
such as the statewide voter registration database, and the fact
that most of its resources in fi scal year 2003–04 were focused on
addressing various other election issues.
Executive staff stated that the October 2003 special recall
election, the March 2004 primary election, and the controversy
over the problems with certain electronic voting equipment
that surfaced in the primary election consumed offi ce resources.
As a result, the offi ce was unable to spend all the HAVA funds
authorized in fi scal year 2003–04. Although we acknowledge
that it had a busy schedule, the offi ce was aware of HAVA’s
requirements since it became law in October 2002 but did not
begin planning at that time. Moreover, as of August 2003 the
offi ce had the authority to spend HAVA funds for the purposes
called for in HAVA. Had the offi ce implemented some of the
2200 California State Auditor Report 2004-139 California State Auditor Report 2004-139 2211
proposed projects outlined in its Section 28 application, such
as the training for elections officials and poll workers, it could
have been in a better position to assist the counties in meeting
the requirements by January 1, 2004. Further, the office could
have chosen to use some of its HAVA discretionary funds to hire
consultants to help in developing the detailed plans the office
needs for implementing its proposed projects to comply with
HAVA’s requirements.
As of the end of October 2004, the office had yet to spend any
of the $94.6 million in federal funds that California received
in June 2004 for achieving compliance with HAVA’s mandatory
requirements. Although it submitted in August 2003 a state
The office did not plan that outlined, in broad terms, its proposed uses of these
develop detailed plans funds to meet HAVA’s mandatory requirements, the office did
for implementing the not follow up this high-level plan with more detailed plans for
projects it proposed in its implementing each of those proposed uses or projects. Moreover,
August 2003 HAVA state the office has not made significant progress in implementing its
plan and has not made state plan. The Appendix provides a list of the office’s planned
significant progress in uses of HAVA funds, as outlined by its Section 28 applications
implementing the plan. and its 2004 update to the state plan, and their status as of
November 2004. The planned uses are categorized by the source
of HAVA funding available to the office to pay for them.
According to the office, beginning in August 2004 it prepared
and submitted spending plans to Finance for approval. Although
these plans provide a general overview of the scope for each
project, they do not address specifics such as how and when
the office plans to implement the projects, establish measures
to be used in assessing the performance of each project, or
identify a person responsible for the overall success of each
project. Thus, although the office had authority to spend HAVA
funds beginning in August 2003 and should have developed
implementation plans even earlier, it has yet to provide detailed
plans for implementing all its HAVA projects.
Partly because it did not fully plan its activities for
implementing HAVA, the office has recently come under
close scrutiny and is being held to account for its activities.
Although the office received a fiscal year 2004–05 federal fund
appropriation for HAVA funds in the Budget Act of 2004 (budget
act), a provision of this budget act requires the office to submit
a detailed spending plan to Finance and the Legislature before
it can use these funds. In addition, the commission has recently
expressed concerns about the office’s implementation of HAVA
requirements and has indicated that it may withhold any
2200 California State Auditor Report 2004-139 California State Auditor Report 2004-139 2211
additional HAVA funds that the State may be entitled to receive
until it is assured that the office has used federal HAVA funds
appropriately in accordance with its state plan and federal law.
The Responsibilities for Administering the Activities Required
by HAVA Are Not Clearly Assigned
The lack of implementation plans for various HAVA projects
could be due in part to a lack of project management oversight.
According to the office’s executive staff, no one individual
was assigned the overall responsibility for implementing the
HAVA requirements. Instead, direction for administering HAVA
The office did not activities came from many staff in the executive office. In its
assign anyone the Section 28 applications for requesting spending authorization,
overall responsibility for the executive office provided its budget staff with the list of
implementing the HAVA HAVA projects and estimated costs but gave no details regarding
requirements. the implementation of the projects. In addition, various
executive office staff requested contracts for HAVA consultants
but did not complete the normal contract request paperwork
that would have required them to justify in detail the HAVA
work to be performed. Executive office staff also frequently
directed the accounting office staff to expedite payments to
HAVA consultants. In contrast, as we discuss in more detail later
in the report, executive office staff caused delays in the release of
checks to counties for replacing punch card and lever-operated
voting machines. Moreover, no one performed the management
tasks of specifying who would manage each proposed HAVA
project, defining the scope of each project, defining and
estimating the duration of project activities, assigning the
activities and creating a project schedule, determining resource
needs and costs, and developing a project implementation plan.
In fact, members of the California Association of Clerks
and Election Officials (association), an organization of local
government officials representing all 58 counties, have
complained about a lack of information sharing by the office in
regards to HAVA. In late December 2003 the association wrote
to the office complaining about the lack of communication
regarding guidelines for implementing HAVA provisions, its
HAVA funding allocation decisions, and its decision to require
that voting machines be capable of printing voting results
without first discussing the decision with the association. For
example, according to an association member, although the
office had drafted HAVA guidelines in early December 2003, it
waited until January 21, 2004, to send these guidelines to county
elections officials for use in the March 2, 2004, primary election.
2222 California State Auditor Report 2004-139 California State Auditor Report 2004-139 2233
Further, this association member expressed frustration that the
office did not provide clear reasons for its delay in disbursing
HAVA voting machine replacement funds, even though it had
the check for this association member’s county ready to be sent
for nearly a month. Other examples of problems in the office’s
communications with association members include asking
for comments and feedback regarding the feasibility study
report for the statewide voter registration database one week
before the November 2, 2004, presidential election, when local
elections officials serving as association members were swamped
with work preparing for the election, and not posting current
uniform procedures prior to the November election to assist
counties in making consistent decisions regarding counting
provisional ballots.
In November 2004, the office told the association by letter that
it was forming a task force to assist in implementing HAVA
voting system provisions. The office indicated that much of the
funding to meet voting system requirements will come from
HAVA and state funds. The office’s letter also stated that methods
and criteria for allocating these funds needed to be established
as soon as possible.
The office eventually recognized its need for project
management services to implement HAVA successfully. In late
June 2004, it solicited proposals from vendors for consulting
services, including project management, fiscal analysis, general
The office eventually auditing and reporting, and other administrative tasks to ensure
recognized its need for the successful implementation of HAVA. In early October 2004, the
project management office announced its intent to award a contract to a consulting
services to successfully firm for these services, but shortly afterward the award was
implement HAVA and protested for various reasons, including a math error in the
gave notice of its intent overall scoring of the proposals, and the office then rejected all
to award a contract the proposals. It reissued its request for proposals for project
for such services on management services on October 18, 2004, and gave notice of
December 1, 2004. its intent to award a contract on December 1, 2004.
The State’s Chief Elections Officer Lacks a Policy That Strictly
Prohibits Partisan Activities
Although the office has a conflict-of-interest code and an
incompatible activities policy, they do not prohibit the real or
perceived participation in partisan activities by employees or
consultants that could have prevented some of the questionable
uses of HAVA funds that we discuss later in the report. The
secretary of state is the chief elections officer of the State, and
2222 California State Auditor Report 2004-139 California State Auditor Report 2004-139 2233
his office is responsible for the administration and enforcement
of state election laws. Inherent in this responsibility is the
need to assure fair and impartial elections and, thus, the need
to ensure that the office’s employees and consultants remain
strictly nonpartisan, both in appearance and in their conduct.
We found that neither the office’s conflict-of-interest code nor
its statement of incompatible activities specifically prohibits
partisan activities by its employees or contract consultants.
The office’s conflict-of-interest code prohibits employees
Neither the office’s from participating in governmental decisions that may have
conflict-of-interest code a beneficial financial effect on their economic interests and
nor its statement of requires certain designated employees and consultants to report
incompatible activities their financial interests. The office also provides its officers
specifically prohibits and employees with a statement informing them of activities
office employees or its that are inconsistent, incompatible, or in conflict with their
contract consultants duties. However, both the conflict-of-interest code and the
from participating, or statement of incompatible activities are silent in regards to
appearing to participate, specifically prohibiting employees and contract consultants from
in partisan activities. participating in, or appearing to participate in, partisan activities.
As we discuss in the Introduction, both federal and state laws
generally prohibit the use of public funds for partisan political
activities. The Hatch Act prohibits state employees who
primarily work on federally funded programs from engaging
in partisan political activity for the purpose of affecting the
results of an election or nomination for office. Similarly, state
law prohibits any elected state or local officer, including any
state or local appointee, employee, or consultant, from using
or permitting others to use public funds for campaign activities
or other purposes not authorized by law. The Federal Elections
Commission (FEC), the federal agency charged with administering
and enforcing laws that govern the financing of federal elections,
specifically addresses partisan political activities by its employees.
Regulations of the FEC require that its employees be informed
at least annually about standards of conduct, including
avoiding any action that affects adversely the confidence of
the public in the integrity of government, or that might result
in or create the appearance of giving favorable or unfavorable
treatment to a person due to any partisan, political, or other
consideration. Because of its role in the political process, these
regulations require the FEC to impose additional restrictions on
its employees beyond those in the Hatch Act. For example, federal
regulations prohibit FEC employees from publicly supporting
2244 California State Auditor Report 2004-139 California State Auditor Report 2004-139 2255
a candidate, political party, or political committee subject to
its jurisdiction and do not allow employees to display partisan
buttons, badges, or other insignia on FEC premises.
Without a policy that prohibits real or perceived partisan
activity, the office runs the risk that its employees or consultants
Without a policy that will participate or appear to participate in activities that create
prohibits real or perceived the appearance of bias, thus potentially undermining the public
partisan activity by trust in the State’s election process. As the State’s chief elections
its employees and officer, upholding the public’s trust in the election process is an
consultants, the office inherent responsibility of the secretary of state, as it is of the
risks undermining the employees and consultants that work for the office.
public trust in the State’s
election process. Furthermore, although the office includes provisions regarding
incompatible activities and potential conflicts in some of its
consultant contracts, its practice is inconsistent. Many of the
HAVA consultant contracts we reviewed failed to include any
incompatible activities and conflict-of-interest provisions.
Moreover, when the office did include such provisions, it did
so inconsistently. For example, one HAVA consultant contract
that covered the period from March 2004 through June 2004
included provisions for both incompatible activities and for
potential conflicts. The incompatible activities provision
notified the consultant of the state law that prohibits the use of
public resources for campaign activities or other purposes not
authorized by law. The provision for potential conflicts required
the consultant to advise the office of any employment or
consulting relationships that may constitute a potential conflict
with the interests of the office. However, other consultant
contracts the office executed subsequent to the March 2004
contract that had such provisions did not include one or both
of these provisions. As a result of its inconsistent application of
these key provisions in its HAVA consultant contracts, the office
cannot be sure that all consultants will know not to use public
resources to participate in partisan activities that are prohibited
by state laws or to advise the office when they encounter a
potential conflict of interest.
The Office Did Not Provide Job Descriptions to Employees
Working on HAVA Activities
In our review of personal service costs, we found that the office
did not provide many employees with job descriptions that
explained their HAVA responsibilities. Job descriptions are
important to ensure that employees understand each of their
2244 California State Auditor Report 2004-139 California State Auditor Report 2004-139 2255
HAVA roles and responsibilities, especially considering that the
office has had no past experience with administering federally
funded activities. Additionally, these job descriptions could
be a valuable aid in making employees aware of Hatch Act
requirements, conflicts of interest, incompatible activities, and
other requirements important in administering federal funds.
However, only two of the employees we reviewed could
demonstrate that they had received job descriptions. Because
the office no longer employs three of the 10 employees we
selected to review, we were able to interview only seven
to understand the extent to which they worked on HAVA
activities. Five of the seven employees indicated that they
never received a job description covering their HAVA duties.
One of the employees who did receive a description of his
duties as an elections specialist provided a job description
that indicated 25 percent of his time should be dedicated to
HAVA activities. However, according to a survey this employee
prepared to document his work, 46 percent of his time was
spent on HAVA activities during fiscal year 2003–04. The
second employee who received a job description was hired as a
regional director. However, this employee originally provided
us with a job description that did not specifically refer to any
HAVA duties, even though 100 percent of this employee’s
time was charged to HAVA. The job description included
general outreach activities; coordinating the implementation
of new technologies developed by the office; acting as the
point of contact and protocol officer on behalf of the office
Without job descriptions to foreign consulates and trade offices located in the region;
that explain employee and recommending, developing, and implementing customer
roles and responsibilities, services and policy oversight of certain customer services in the
the office cannot be region. None of these described duties directly relate to HAVA
sure that employees activities. When we asked the employee to confirm that the
adequately perform those duty statement he provided was, in fact, for his position, he
activities and comply gave us an updated August 2004 duty statement that included
with HAVA and other activities that correspond with HAVA requirements and indicated
legal requirements. that his activities had been specific to HAVA since October 2003.
Nevertheless, as we discuss later in the report, we identified several
instances where this employee reported attending events that
appear to have no relation to HAVA activities.
Without job descriptions that explain employee roles and
responsibilities, the office cannot be sure that employees hired
to perform HAVA activities adequately perform those activities
and comply with HAVA and other legal requirements.
2266 California State Auditor Report 2004-139 California State Auditor Report 2004-139 2277
THE OFFICE’S POOR ADMINISTRATION OF HAVA LED
TO QUESTIONED COSTS
The office overrode and, in many cases, lacked controls in its
administration of the HAVA funds. In our review of the personal
service costs charged to HAVA funds, we found that the office
did not use time sheets or the certifications required by federal
cost principles to support the time employees spent working on
HAVA activities and the $1,025,695 in personal service costs it
charged to HAVA in fiscal year 2003–04. Additionally, we found
that the office failed to properly and adequately account for
the activities of some of its HAVA consultants. In many cases,
consultants reported performing activities that had no relationship
to HAVA requirements. As a result of the office’s apparent lack
of controls and poor oversight in the administration of HAVA
projects, we question some of the costs charged and paid with
HAVA funds.
In May 2004 the office began taking various measures in an attempt
to correct some of these problems. However, a September 2004
memorandum from the secretary of state indicated problems with
managing contract consultants were continuing.
The Executive Office Did Not Follow Many Established
Control Processes in Its Administration of the HAVA Program
Our review found many examples in which executive staff of the
office overrode internal controls. For example, although in fiscal
year 2002–03 the office required staff to complete time sheets
to support the time they spent working on HAVA activities, for
fiscal year 2003–04 it discontinued the use of these time sheets.
We discuss this issue further in the next section. Additionally,
although it had a process for requesting and authorizing the
expenditure of funds, including for consultant contracts,
the office’s executive staff did not always follow its process
when requesting contracts. Usually, the requestor completes
a form that provides a justification for the requested contract
Because many HAVA services. This form is routed through the budget office within
contract requests came management services and then to the executive office for review
directly from the executive and approval. However, because many HAVA contract requests
office, established controls came directly from the executive office, established controls for
for the independent the independent review and approval of these requests by the
review and approval other offices were frequently bypassed. As a result, the nature
of these requests were of the work for many of these contracts was not justified as
frequently bypassed. to its relationship to HAVA. For example, no explanation was
provided on how the scope of the contract related to HAVA,
nor was there a process established for selecting the consultants
2266 California State Auditor Report 2004-139 California State Auditor Report 2004-139 2277
who received the contracts. Further, as we discuss in more
detail later, although checks issued by the State Controller’s
Office are usually sent directly to the payee, executive staff had
checks payable to counties for replacing their punch card voting
machines sent to the office. The executive staff would then
decide when to release the checks to the counties, causing delays
in the delivery of these funds. However, no reasonable business
need was provided to justify this additional step in the process.
Partly because the office overrode existing processes and
controls, in several instances it used HAVA funds to pay for
activities that are not supported or are questionable because they
do not appear to relate to HAVA. We discuss these activities and
their associated questioned costs in the following subsections.
The Office Could Not Support the Personal Service Costs It
Charged to HAVA
To support the salaries and wages charged to federal awards,
federal cost principles require state agencies to document
the time spent by their employees working on federally
funded programs. These principles mandate that, to support
the amount of salaries and wages charged to a federal fund
source, certifications must be prepared at least semiannually
for all those employees who work full-time on a single federal
award. These cost principles also require that an employee or
supervisory official having firsthand knowledge of the work
performed sign such certifications. Further, these cost principles
require that the allocation of all salaries or wages for employees
who work less than full-time on a single federal award be
supported by monthly personnel activity reports or equivalent
documentation, such as monthly time sheets.
However, the office neither prepared the required certifications
for its employees who worked full-time on HAVA activities
The office charged nor instructed its employees who worked part-time on HAVA
$1,025,695 in personal activities to complete monthly time sheets or other personnel
service costs to HAVA activity reports to support the $1,025,695 in personal service
funds in fiscal year costs charged to HAVA funds in fiscal year 2003–04. Of the
2003–04 without 10 employees we reviewed, five charged 100 percent of
supporting these their salaries and benefits, totaling over $497,000, to HAVA.
costs with employee However, according to management staff and the employees
certifications or time we interviewed, the office has never prepared certifications
sheets as federal cost for its employees who work full-time on HAVA activities.
principles require. The five remaining employees we reviewed charged less than
100 percent of their time to HAVA-funded activities. The total
2288 California State Auditor Report 2004-139 California State Auditor Report 2004-139 2299
amount the office charged to HAVA funds for these employees
during fiscal year 2003–04 was more than $146,000. The office
did require these employees to submit, at the end of fiscal
year 2003–04, a document estimating the percentage of time
that each worked on HAVA and non-HAVA activities during
the fiscal year—a method that is not permitted by federal cost
principles. According to four of these five employees, they based
the percentages they reported on their best estimates; they
could provide no other documentation to support their basis
for arriving at those percentages. The other employee kept a
personal log of his time.
The office could Although staff completed monthly time sheets in fiscal year
not explain why it 2002–03 to support the time worked on HAVA, this practice was
discontinued the use of discontinued at the beginning of fiscal year 2003–04. According
monthly time sheets to to the chief assistant secretary of state, executive management
support the time worked did not know who directed HAVA staff to discontinue the
on HAVA in fiscal year use of these time sheets. Office accounting personnel gave
2003–04. one executive management staff member a HAVA time sheet
template to review in June 2003 for use beginning in fiscal year
2003–04; it was designed to track the time employees spent on
various HAVA activities during each month. According to the
chief assistant secretary of state, although a time sheet process
was developed, it was not implemented. The office asserts it is
developing a time reporting system retroactive to July 2004 that
will meet federal requirements and expects to implement it by
December 2004. Nevertheless, the office did not use time sheets
in fiscal year 2003-04; thus, it cannot be sure it charged the
correct amount of personal service costs to HAVA funds during
that fiscal year.
Moreover, of the five full-time employees we reviewed whose
entire salaries the office charged to HAVA in fiscal year 2003–04,
two submitted staff activity reports for attending certain events
that did not appear related to HAVA. One of these employees
reported that she attended events such as a legislator’s reception
to “spread the word” about the office, a governor’s rally to get
a firsthand sense of the governor’s message, and a Chicano
Federation annual unity luncheon to network and represent the
office. Furthermore, even though the office charged 100 percent
of this employee’s salary to HAVA in fiscal year 2003–04, she
indicated that only about 80 percent of her time was spent on
HAVA activities.
2288 California State Auditor Report 2004-139 California State Auditor Report 2004-139 2299
The second employee’s staff activity reports indicate that
he attended various events such as a Black Women Lawyers
Association annual holiday mixer and a celebration of Canada
Day to commemorate the events that created the Canadian
government, issued resolutions on behalf of the office to
the honorees at a Los Angeles Equality Awards Dinner, and
marched in a national night out to demonstrate unity against
neighborhood crime. In our review of these and many other
staff activity reports submitted, we found no indication of how
these events relate to allowable HAVA activities. Federal cost
principles require that to be allowable, costs must be reasonable,
necessary, and allocable to the federal program. As a result, we
question the office’s use of HAVA funds to pay for such activities.
Without the certifications and time records required by federal
regulations, the office cannot assure that the $1,025,695 in
salaries and benefits it paid for with HAVA funds during fiscal
year 2003–04 are accurate and allowable. Moreover, charging
HAVA funds for staff activities that are not associated with
allowed uses of these funds puts the office at risk that the federal
government may ask for the repayment of some, if not all, of
these funds.
The Office’s Poor Oversight of HAVA Consultants Also
Resulted in Its Questionable Use of HAVA Funds
The office failed to properly and adequately account for the
activities of some of its consultants hired to assist in the
implementation of HAVA, resulting in the questionable use of
HAVA funds. Federal cost principles require that for costs to be
allowable and charged to a federally funded program, the costs
must be necessary, reasonable, and allocable to that program.
In many instances, we determined that costs the office charged
to HAVA funds were for activities that do not appear to relate
to HAVA activities, and thus we question the use of federal
Thirty-seven percent of funds to pay for them.
the staff activity reports
submitted between For example, of the 169 staff activity reports submitted between
December 3, 2003, and December 3, 2003, and September 5, 2004, by the regional
September 5, 2004, outreach consultants hired by the office, 62 (37 percent)
by regional outreach listed one or more activities that had no relationship to HAVA
consultants listed one or requirements. Rather than performing HAVA outreach, some of
more activities that had these consultants reported attending events such as fundraisers
no relationship to HAVA and a state delegation meeting for the Democratic National
requirements. Convention, and indicated they were representing the secretary
of state at these events. However, HAVA does not specify
3300 California State Auditor Report 2004-139 California State Auditor Report 2004-139 3311
attendance at fundraisers and political delegation meetings as
allowable HAVA activities, and some of these activities appear
to be partisan in nature. As we discussed earlier, the federal
Hatch Act generally prohibits state employees whose primary
responsibilities are funded with federal funds from participating
in partisan activities relating to campaigns, and state law places
similar restrictions on the use of public resources for partisan
political activities. Although the application of the federal
Hatch Act to contractors is unclear, permitting contractors to
engage in partisan activities as part of their work on a federal
program certainly violates the spirit of those laws. Furthermore,
state law makes it unlawful for a consultant to use public
resources for partisan activities. Therefore, we question the
office’s use of HAVA funds to pay for these types of activities.
We could not quantify
the amounts paid to However, we could not quantify the amounts paid to the
the consultants for consultants for attending these types of events, because, until
attending partisan or mid-September 2004, the office did not require contractors
other events unrelated to indicate on their invoices the activities they were billing
to HAVA, because, until for or how much time they spent on each one. Therefore, we
mid-September 2004, were unable to clearly link the activity reports the consultants
the office did not require submitted to the invoices the office paid. On the same day in
contractors to indicate September 2004 that we began our audit, the office changed
on their invoices the its policies and now requires that invoices reflect in detail the
activities they were billing activities being billed and how much time was spent on each one.
for or how much time
they spent on each one. The former undersecretary of state indicated that the office’s
regional managers, through verbal direction, provide day-
to-day supervision of regional outreach consultants and are
responsible for ensuring that the scopes of work in their
contracts are accomplished. He stated that the special recall
election in October 2003 hampered the office’s efforts to
establish better oversight of contracts, such as having an overall
contract administrator/manager who would be responsible for
monitoring contract work products and ensuring that progress
reports relating to contract activities are submitted regularly.
He also indicated that there was no requirement that these
consultants submit regular progress reports. The chief assistant
secretary of state told us that these regional outreach consultants
sometimes submitted staff activity reports, but that they were
used more to report on events and were not submitted on a
regular schedule.
In another example of using HAVA funds to pay for non-HAVA
activities, the office contracted with a law firm to provide expert
legal advice on legal issues, procedures, and programs facing
3300 California State Auditor Report 2004-139 California State Auditor Report 2004-139 3311
local elections officials to ensure the successful implementation
of HAVA requirements. The initial contract, statutorily exempt
from competitive bidding, was for $70,000 and was later
amended to increase it to $220,000. Although not specifically
called for in the scope of work, three work products relating to
this contract were for speeches prepared for the secretary of state
and given in January 2004.
Our review of the written text for these speeches revealed
they had little to do with HAVA. For example, the two themes
of a speech given at an NAACP retreat were to describe the
political landscape in the aftermath of the statewide special
election held on October 7, 2003, and to provide the secretary
of state’s view of the future electoral landscape that would
affect voters as politically active participants in the electoral
process. Although the speech listed four of HAVA’s requirements
and stated that federal funding would be available for voter
The office paid a law firm registration and education, more than half of the secretary of
using HAVA funds for the state’s remarks involved presenting statistics concerning the
preparation of speeches October recall election, bringing into question whether the
that had little or nothing entire speech should have been paid for with HAVA funds.
to do with HAVA. The other two speeches clearly had nothing to do with HAVA.
One was given at a Unity in Diversity dinner organized by the
Indo-American Community Federation, and the other speech
was in commemoration of Indian Republic Day. Nevertheless,
the office used a total of $1,050 in HAVA funds to pay the cost of
preparing these three speeches.
Partly because the office used HAVA funds to pay for these types
of questionable and non-HAVA-related activities, other HAVA
funds have been held up by Finance pending completion of a
detailed spending plan. Additionally, the office is at risk of having
the federal government require repayment of some, if not all, of
the HAVA funds it used to pay for the contractors’ activities.
The Office Does Not Adequately Administer Its
Consultant Contracts
The office also exercised poor oversight of this law firm’s
contract, approving and paying almost $70,000 for invoiced
services that violate the terms of the contract. The provisions of
the original contract stipulated that the law firm’s daily charge
for services would not exceed $1,200 per day and that the firm
would provide services one day a week on an as-needed basis
for the duration of the contract’s one-year term. However,
the invoice the law firm submitted for payment in April 2004
3322 California State Auditor Report 2004-139 California State Auditor Report 2004-139 3333
covering services rendered from November 17, 2003, through
April 7, 2004, lists 17 separate days on which the amount the
firm charged exceeded the contract’s $1,200 per day limit.
Moreover, rather than providing services one day a week as
called for by the terms of the contract, the firm billed the office
for 22 days in January, 21 days in February, 23 days in March,
and five days in the first two weeks of April 2004. Finally,
although the term of the contract was from December 1, 2003,
through December 31, 2004, the office paid for services rendered
in November 2003—before a binding contract was in place.
We found no indication that the former chief counsel reviewed
the April 2004 invoice, even though he was designated as the
office’s project representative for this contract and, therefore,
was presumably more familiar with the legal services rendered
and the contract’s payment terms. Instead, the invoice was
reviewed and approved for expedited payment by the chief
assistant secretary of state on April 14, 2004. Had the former
chief counsel reviewed the invoice, the office might have
avoided making a nearly $70,000 payment that violated the
contract’s terms. This weakness in its invoice review and
payment approval process not only resulted in the office paying
for services that are not fully allowable under HAVA but also
resulted in the office paying more than contractually required.
In another example of its poor contract oversight, the office
hired a consulting firm to perform public outreach within
the context of HAVA. The consultant proposed preparing an
outreach plan and was asked to identify specific events, people,
and opportunities for outreach. Although the office used HAVA
funds to pay this consultant $4,750, it was unable to provide us
with a plan or any other work products for this contract.
The Office Has Taken Some Steps to Improve Its
Administration of HAVA Funds
The office attempted to implement some measures to improve
its management of HAVA funds between mid-May and mid-
September 2004 but was forced to take even stronger actions,
including terminating all existing contracts with HAVA regional
outreach consultants, because staff and these consultants were
not consistently following some of these measures. According
to executive staff, the need to implement procedures to ensure
the proper expenditure of federal funds first became clear with
the departure of the former HAVA outreach coordinator. The
office has taken a variety of measures over the past few months
3322 California State Auditor Report 2004-139 California State Auditor Report 2004-139 3333
to ensure that HAVA funds are properly managed and spent. The
following are some of the more significant steps and the dates
they took effect:
• May 14, 2004—Instituted a procedure requiring fiscal review
and executive staff approval of requests for proposed HAVA
expenditures before expenditures are made. The procedure
requires that the request include a detailed description of
the proposal, its estimated cost, and a justification of how the
proposal relates to HAVA.
• August 11, 2004—To ensure consistency among the voter
education outreach efforts, the office sent a memorandum to
its regional offices outlining its expectations regarding several
different outreach activities and asked that regional staff and
consultants report on each of their activities weekly. The
memorandum also outlined the minimum information that
should be tracked.
• September 1, 2004—All regional directors were required to
submit weekly reports of all their HAVA outreach activities,
including the activities of the consultants working at the
respective regional offices. Regional offices and consultants
are to enter such outreach activities into a new reporting
database.
• September 14, 2004—The office sent a memorandum to
the regional directors instructing them to advise all HAVA
consultants that documentation of their work in the form of
staff activity reports, weekly reports, and reasonably detailed
invoices that include tracking the tasks performed and how
much time was spent on each task would be required before
the consultants would be paid.
• September 16, 2004—The office sent regional directors a
time sheet template that all HAVA contractors are to use when
reporting how they spent their time.
• September 17, 2004—The office sent a memorandum to the
regional directors establishing additional procedures to follow
prior to contracting for services that require the expenditure
of HAVA funds. These new procedures included the following:
n Once a potential contractor is identified, the individual’s
application and resume, along with a completed HAVA
expenditure request, contract request, and detailed scope of
work will be forwarded to the executive office for approval,
then to the management services division for processing.
3344 California State Auditor Report 2004-139 California State Auditor Report 2004-139 3355
n No person is to begin work before a contract that is consistent
with state law and office practices is fully executed.
Because of continued problems with the management of
HAVA activities, on September 23, 2004, the secretary of state
sent a memorandum to the former undersecretary of state
noting that many of the practices and procedures put into
place over the past several months had not been fully abided
by or enforced. He directed the former undersecretary to
warn staff and contractors that failure to comply would be
grounds for discipline up to and including termination for
staff and termination of contracts for independent contractors.
The secretary listed in his memorandum the procedures and
practices he was concerned were not being followed, which
included many of the measures previously listed and a few new
In late September 2004, directives. Among the new actions, the secretary directed that all
the secretary of state HAVA consultants in field offices be given termination notices,
directed that all that staff paid with HAVA funds have their job duties and pay
HAVA consultants in reviewed and the HAVA share adjusted where appropriate,
field offices be given and that time charged by staff to HAVA be reviewed to ensure
termination notices charges are proper. The secretary ended the memorandum by
and confirmed that the confirming that the office would soon hire an administrator
office would soon hire an specifically to oversee HAVA.
administrator specifically
to oversee HAVA. Later, on October 28, 2004, the secretary of state announced his
appointment of experienced office staff to replace the former
undersecretary, who was transferred, and the chief counsel,
who had resigned earlier to take a job at another agency, and
expressed his confidence that these individuals would help guide
the office in positive directions in running a successful agency.
THE OFFICE USED QUESTIONABLE PRACTICES TO
PROCURE GOODS AND SERVICES RELATED TO HAVA
The office bypassed competitive bidding for most HAVA
expenditures by obtaining and then inappropriately using a
Department of General Services (General Services) exemption
from competitive bidding, by not following General Services’
policies in making California Multiple Award Schedule (CMAS)
procurements, and by not following state procurement policy
regarding commodity purchases. CMAS is a procurement
method that allows state agencies to avoid the administrative
time and expense of the State’s formal competitive bid process
by purchasing goods and services under preestablished contracts
awarded and maintained by General Services. As shown in
3344 California State Auditor Report 2004-139 California State Auditor Report 2004-139 3355
Table 4, between June 2003 and September 2004, the office
entered into 77 contracts for services with a combined value of
$4.9 million in HAVA discretionary funds.
TABLE 4
Procurement Method Used for HAVA Service Contracts
Between June 2003 and September 2004
Number of
Procurement Method Contracts* Total Amount
No-bid exemption† 46 $1,546,000
California Multiple Award Schedule 12 2,394,000
Contracts with other governmental entities‡ 5 586,000
Legal services‡ 2 345,000
Contracts for services under $5,000‡ 11 17,000
Competitively bid 1 29,000
Totals 77 $4,917,000
Source: The Office of the Secretary of State’s list of HAVA contracts.
* Does not include commodity purchase orders.
† One no-bid contract, entered into in June 2003, included a no-bid justification
separately approved by the Department of General Services. However, later
amendments to the contract used the no-bid exemption.
‡ Statutorily exempt from competitive bidding.
The office used a General Services exemption from
competitive bidding for 46 of those contracts, totaling over
$1.5 million. However, most of the contracts entered into
under this exemption did not have the urgency described
in the justification provided to General Services. Also, the
office appears to have split purchase orders to avoid CMAS
procurement limits and competitive bidding requirements.
Further, for 10 of the 12 HAVA-expensed purchase orders it made
using CMAS, the office did not follow recommended policy
and obtain comparison quotes from other qualified vendors.
In addition to the contracts discussed above, two of the three
non-CMAS, commodity purchase orders in our sample that had
been issued by the office and paid with HAVA funds did not
follow state policies requiring informal bids. As a result of these
practices, the State is less sure that the office obtained the best
value for the purchases it made with HAVA funds. Moreover, in
fiscal year 2004–05 the office entered into contracts and paid
some consultants for voter outreach services although it did not
have the spending authority to do so.
3366 California State Auditor Report 2004-139 California State Auditor Report 2004-139 3377
The Office Used an Exemption From Competitive Bidding for
Reasons Other Than the One Described in Its Request
The office requested and received from General Services an
exemption from competitive bidding on HAVA contracts. The
justification it provided for this exemption was the urgent need
to meet the deadlines set forth in HAVA. However, most of the
contracts entered into under the no-bid exemption were for
services that did not relate to any specific HAVA deadline and
could have been competitively bid had the office planned better.
The one-year no-bid exemption, effective September 1, 2003,
through August 30, 2004, allowed the office to enter into
a maximum of 50 no-bid contracts not to exceed a total of
$24.3 million. As Table 5 shows, the office used the no-bid
exemption to hire consultants to perform voter outreach and
registration, implement media campaigns, handle public
relations, and monitor poll workers.
TABLE 5
Contracts Entered Into Under the Office of the
Secretary of State’s No-Bid Exemption
Number of
Description of Activities Contracts Total Amount
Voter outreach, March and
November 2004 elections 35 $ 854,082
Media campaign, March 2004 election 5 500,000
Public relations 4 169,170
Poll worker monitoring, March and
November 2004 elections 2 22,500
Totals 46 $1,545,752
Source: The Office of the Secretary of State’s list of HAVA contracts.
Most of the activities performed by these consultants were
for regularly scheduled elections occurring in March and
November 2004. An executive staff member in charge of special
projects who had a hand in overseeing the office’s HAVA
activities indicated an urgent need to educate voters about the
necessary identification for first-time registered voters, the use
of provisional ballots, and the complaint process that HAVA
required to be in place by January 1, 2004, justified a no-
bid contract. However, as we discussed earlier, the office did
not adequately ensure that its consultants were using their
compensated time to educate voters about these issues. In fact,
the office could not provide us with documentation, such as a
3366 California State Auditor Report 2004-139 California State Auditor Report 2004-139 3377
plan showing what activities these consultants were to complete
by March 2004 or by any other specified deadline. The scope of
work sections for the consultants’ contracts were equally vague,
generally requiring only that the consultant “perform voter and
election outreach activities.” Finally, the office did not establish any
way to determine whether its consultants’ efforts were successful.
According to the office, it believes that it adhered to state
procurement processes. It sought and obtained an exemption
approval from General Services to begin implementation of
the HAVA requirements. The office believes it prioritized HAVA
requirements, effectively working around a recall election and
other office priorities.
However, the office’s reason does not explain why it continued
The office continued to use this exemption for contracts related to activities for
to use the General the November 2004 election and beyond. Of the 46 contracts
Services exemption from executed under the exemption, 27 (59 percent) had start dates
competitive bidding for occurring after the March 2004 election, with most ending in
activities that it could November or December 2004. It is also reasonable to presume
have planned in advance that even in the absence of HAVA, the office would be planning
and competitively bid. various types of voter outreach well in advance of scheduled
elections and would need only to add HAVA-related information
to its scheduled campaigns.
The office’s lack of planning may have been the reason that it
used the no-bid procurement method for some contracts. For
instance, as evidenced by the contract documents we reviewed,
the office’s $500,000 media campaign for the March 2004
election was not put together until February 2004. It appears
that this late start to the campaign, and not the requirement
to meet a HAVA deadline, may have necessitated the use of the
no-bid exemption. Because the office used the no-bid exemption
rather than competitive bidding, the State has less assurance that it
received the best value for its HAVA expenditures.
The Office Did Not Follow General Services Policies in Its Use
of CMAS Contracts
The office appears to have split purchase orders to avoid CMAS
procurement limits and competitive bidding requirements.
State law authorizes state agencies to use multiple award
schedules established by General Services as an alternative to
using a formal competitive bid. However, the law says that
General Services shall determine the delegated authority for
agencies wishing to use multiple awards. In its January 2003
3388 California State Auditor Report 2004-139 California State Auditor Report 2004-139 3399
CMAS agency packet, General Services set the order limit at
During a two-month $500,000 on all information technology (IT) purchases and
period, the office used requires that if the total of multiple purchase orders exceeds
CMAS four times to this limit, state agencies should document why the orders
procure consultant are separate. In June 2004, the office used CMAS to procure
services from the same $90,000 in IT consultant services from one vendor for its
vendor and for the same statewide voter registration project and in the next month used
project that in total CMAS three more times to procure IT consulting services from
exceeded the CMAS the same vendor for the same project. The three subsequent
order limit, but could not CMAS purchase orders—for $459,000, $55,000, and $27,000,
satisfactorily explain why respectively—totaled $631,000, thus exceeding the General
it used separate orders. Services-imposed order limit. We found no documentation in
the procurement file explaining why the orders were separate
and not combined. The office’s contracts officer explained that the
orders were separate because the statements of work, term dates,
and contract managers were different. However, we found that the
statements of work for the purchase orders were not sufficiently
different to warrant different contracts, and the fact that the
consultants had different term dates of service and were reporting to
different managers would not necessitate different orders.
The office also bypassed CMAS order limits by using multiple
purchase orders to procure $1,145,000 in IT consulting services
from one vendor for its voting systems advisory project. As
shown in the Figure on the following page, the office used
four separate CMAS purchase orders and two amendments to
inventory and review voting systems, provide security-related
support, and conduct election day monitoring and testing.
According to the office, the four CMAS purchase orders related
to its inventory, testing, and monitoring of voting systems
should be considered as separate projects. It stated that the
first purchase order was necessary to inventory county voting
systems when it became aware that a voting system vendor had
installed unauthorized software, which was used in at least one
election. The office asserts that the second purchase order was
to provide on-site evaluation of the voting system software and
hardware that was used in selected counties on election day
in March 2004 to ensure the use of certified voting systems.
Further, it stated that the third purchase order was to hire a
technical expert on election system security to analyze the
software of these complex voting systems. Finally, it asserts that
the fourth purchase order was to conduct parallel monitoring
(tests of the voting system using simulated election day voting
conditions) of voting systems during the November 2004
election to determine if the equipment had been manipulated or
3388 California State Auditor Report 2004-139 California State Auditor Report 2004-139 3399
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4400 California State Auditor Report 2004-139 California State Auditor Report 2004-139 4411
programmed to mis-report votes. Nevertheless, these purchase
orders and amendments totaled more than $1.1 million,
exceeding the CMAS order limit; were all made to the same
vendor for consultant services to inventory, test, and monitor
related electronic voting systems; and were all executed in
less than a one-year period—yet the office did not document
why each purchase order was separate, as called for by General
Services. When it uses CMAS to avoid competitive procurements
on large projects such as these, the office cannot be sure it
received the best value and that it acted in the best interests of
the State.
Moreover, despite its policy to follow the same practices General
Services requires of other state agencies, the office did not
obtain comparison quotes for 10 of the 12 HAVA-expensed
CMAS purchase orders. As the entity that oversees the CMAS
program, General Services is responsible for developing the
program’s policies and procedures. In May 2003, General
Services issued a management memorandum requiring state
agencies to solicit three price quotations for CMAS purchases
over $5,000. Although the memorandum explained that all
constitutional officials, including the office, were exempt from
Contrary to its own the requirements it imposed, the office’s policies state that it will
policy, the office did go along with the spirit of the management memorandum and
not obtain comparison comply with its intent. Nevertheless, the office did not attempt
quotes for 10 of the to obtain any comparison quotes from qualified vendors for two
12 HAVA-expensed CMAS of the three HAVA-expensed CMAS purchase orders we reviewed,
purchase orders. and the office’s contracts officer stated that she could only
document that one of the other nine CMAS purchase orders had
comparison quotes.
One of the purchase orders we reviewed for which the office did
not obtain comparison quotes was for $413,000 in consulting
services for a voting systems project, and the other was for
$56,000 in translation services. The office’s contracts officer
explained that the office did not obtain comparative quotes
because the executive office had already received and approved
a proposal from the particular voting systems consultant
selected for the contract and because there were no other
qualified CMAS vendors in the region for the translation services
required. However, in both cases, the office could have sought
a no-bid exemption from General Services rather than using
CMAS, and it could have found other qualified vendors had
it wanted to obtain comparison quotes for these services. In
fact, we found several CMAS vendors that could provide these
services. Although the office is not specifically required to obtain
4400 California State Auditor Report 2004-139 California State Auditor Report 2004-139 4411
comparison quotes for its CMAS purchases, the experience of
numerous state agencies has shown that when vendors must
compete to win a contract, the State obtains better value in
either price reductions or other concessions from the vendor.
The Office Did Not Follow State Procurement Policy in Its
Purchase of Commodities Paid for With HAVA Funds
According to state procurement policy, for all commodity
purchases over $5,000, state agencies are required to obtain at
least two informal bids. Of the three commodity purchases in
our sample, two were for more than $5,000, yet the office did
Despite a state not seek informal bids for either of them. The office purchased
procurement requirement, more than $9,200 in poll worker brochures in January 2004
the office did not seek from one vendor and spent more than $13,800 for “My Vote
informal bids for the two Counts” T-shirts, pens, and buttons in February 2004 from another
commodity purchases over vendor but did not seek bids before making those purchases. After
$5,000 in our sample. the $9,200 order was filled, the office noticed it did not obtain any
informal bids from other vendors. It then obtained a lower bid
from another vendor. However, by the time the office obtained the
second bid, the goods had already been delivered.
The office’s procurement policy requires that the division
ordering the commodities submit an approved purchase
request form to the management services division, which
then makes the purchase, obtaining informal bids when
required. By ordering commodities directly instead of through
the management services division, executive staff ignored
this policy, and as a result, the office did not follow the rules
associated with commodity purchases. By not adhering to
procurement rules, the office failed to assure that it received the
best value for its use of HAVA funds.
The Office Spent HAVA Funds on Activities for Which It Had
No Spending Authority
The office bypassed the Legislature’s approval authority
by inappropriately executing contracts and charging non-
administrative expenditures to its fiscal year 2004–05 HAVA
administration account. The office entered into 18 consultant
contracts totaling $230,400 beginning on or after July 1, 2004,
and later paid consultants $84,600 through these contracts
for voter outreach activities. However, the Legislature had not
approved such spending authority. Moreover, although the
Legislature later granted the office authority to spend HAVA funds
on certain activities, these activities did not include voter outreach.
4422 California State Auditor Report 2004-139 California State Auditor Report 2004-139 4433
Until early September 2004, the office had not received any
authority from Finance and the Legislature to spend HAVA funds
to pay for activities taking place in fiscal year 2004-05, except for
the administrative costs relating to HAVA. The office described
these administrative costs as consisting of the administrative
overhead associated with managing all HAVA activities, such
as accounting, centralized state costs, audits of related HAVA
activities, and the cost of office staff assigned full-time to
implement HAVA’s requirements. On September 7, 2004, the
Legislature authorized the office to spend $15.2 million in fiscal
year 2004–05 HAVA funds to pay for certain activities considered
essential for the November 2, 2004, election. These approved
uses, however, did not include voter outreach activities.
Nevertheless, between July 1, 2004, and September 7, 2004, the
office entered into 18 contracts for voter outreach consulting
services having an aggregate value of $230,400, when it had no
legal authority to pay for these types of activities. In addition,
for two of these contracts, a regional office had consultants
start working at least one month before there was an executed
contract for their services.
While deliberations over the office’s fiscal year 2004–05 HAVA
spending authority were taking place, the consultants that
Although it had not received fiscal year 2004–05 contracts to perform voter outreach
received spending had already begun work and subsequently submitted invoices
authority for such for their services. To pay for these contractor invoices, the office
activities, the office used $84,600 of its $1.7 million HAVA administration account,
paid $84,600 to voter which had been approved earlier through the regular fiscal year
outreach consultants in 2004–05 budget process. However, this was inconsistent with
fiscal year 2004–05 by the office’s past practice for paying for such activities. In fiscal
inappropriately charging year 2003–04, its accounting unit established a specific HAVA
these activities to its HAVA voter outreach accounting code to identify voter outreach costs as
administration account. separate from administrative costs, and used this code when paying
for voter outreach activities with HAVA funds. It was only after
failing to receive spending authority for voter outreach activities
that the office began charging these activities to the administration
account.
On September 24, 2004, the office sent out a letter giving 30-day
termination notice to all its voter outreach contract consultants.
However, because it entered into contracts and allowed
consultants to start work on activities for which it had not yet
received spending authority, the office put itself in a position
of having to decide whether not to pay consultants for services
rendered in good faith or pay the consultants by bypassing the
Legislature’s authority over spending. Had it waited to enter into
4422 California State Auditor Report 2004-139 California State Auditor Report 2004-139 4433
these contracts until after it received the appropriate spending
authority or at least advised its contractors that it would not
allow them to start work until it had received such authority,
the office could have avoided paying for these unauthorized
contract costs that totaled $84,600.
THE OFFICE UNNECESSARILY DELAYED GRANT
PAYMENTS TO COUNTIES
The office failed to disburse HAVA funds for replacing voting
machines within the time frames outlined in its grant
application package, internal procedures, and contracts with
counties, causing some to lose interest income they could have
used to replace their voting equipment. HAVA provides states
with grant funds to replace outdated punch card or lever-
operated voting systems in qualifying voter precincts with
new voting systems that meet HAVA requirements. The federal
government allocated $57.3 million of these funds to California,
and the office determined how much each county would receive
based on the number of qualifying voting precincts in each. Of
the $57.3 million allocated, the office disbursed $34.4 million
(60 percent) to qualifying counties as of June 30, 2004.
In a September 2003 application packet, the office notified
counties of their allocated amounts, invited them to apply
for these grant funds, and said that payment would occur
approximately 30 days after a county received written
confirmation from the office that its application had been
approved and a contract had been executed. Correspondingly,
the office’s internal accounting procedures outlined the timeline
for payment at approximately 30 days for application approval
and 30 days for disbursement of funds, for a total of 60 days.
Further, the office’s contracts with the county recipients of the
The office disbursed grant funds said that payment would be made in accordance
the voting machine with the California Prompt Payment Act, which requires state
replacement funds to agencies to pay undisputed requests for payment on a contract
counties an average of within 45 days of receipt.
168 days after receiving
the application, or 108 Despite the language contained in its application package, its
days longer than the 60- procedures, and its contracts, the office disbursed these funds
day timeline outlined in an average of 168 days after receiving the application, causing
its accounting procedures. one county to submit a claim for lost interest income. One of
the major reasons the office took so long to disburse the funds
was that the executive office took an average of 56 days to
approve applications, even though staff had already thoroughly
examined and approved them. The timeline in the accounting
4444 California State Auditor Report 2004-139 California State Auditor Report 2004-139 4455
procedures for the grant funds indicates that it would take five
business days to obtain this executive approval. A second major
reason for the delay was that the office had the State Controller’s
Office send the county checks to its Sacramento headquarters,
rather than to the counties directly, and the office then took an
average of 45 days to disburse the checks to the counties. The
accounting procedures relating to these grant funds state that this
step would take three business days, but staff indicated that when
they wrote the procedures they were not aware they would later
need to obtain additional executive approval to mail the checks
to the counties.
An official in the executive office explained that the office
required the additional approval because it wanted to make
sure no legal issues had arisen between the approval of the
application and issuance of the check. This official stated that
some checks were held for a period of time because concerns
had arisen that the voting systems purchased by some counties
would not comply with HAVA’s accessibility requirements. The
office held other checks because of a controversy surrounding
the direct-recording electronic voting systems purchased by
some counties, which the secretary of state decertified in April 2004
because of concerns over the security and programming accuracy
of these systems and because the systems did not permit voters
to independently verify the accuracy of their electronic vote.
The official indicated that the office ultimately decided to
release the checks based on assurances made by the counties
that their systems would be compliant by January 1, 2006, the
deadline imposed by HAVA. However, it should be noted that
the office took more than 120 days to pay two counties that
were not involved in any voting system controversy. Further,
the assurances of HAVA compliance provided by the counties
were included in their original application packets and were not
obtained after the controversies over the voting systems arose.
Therefore, it was not necessary to obtain additional assurance
Because of delays in from the counties and should not have added any delay in
disbursement, Los Angeles disbursing the funds.
County requested
payment of approximately Because of the delays in disbursement, in May 2004 Los Angeles
$27,000 in interest that County requested payment of $27,000 in interest from the office
it asserted it could have under California’s Prompt Payment Act; it asserted it could have
earned had the office earned and used this amount for replacing its voting equipment
made timely payment on had the office made timely payment on the contract. The office
the contract. denied the claim, saying that the Prompt Payment Act was not
applicable, and although the county’s counsel believes it has
legal grounds for appeal, it declined to pursue the appeal at
4444 California State Auditor Report 2004-139 California State Auditor Report 2004-139 4455
the time. Other counties also report losing interest income. For
example, according to the election division coordinator for its
registrar of voters, Santa Clara County lost $18,000 in interest
income as a result of the office’s late payment. If the office had
disbursed the funds according to its guidelines, the State would
not have been exposed to the risk of having claims for lost interest
brought against it, and counties could have used the interest
earnings on HAVA activities.
RECOMMENDATIONS
To ensure that it successfully implements the requirements
called for in HAVA, the office should take the following steps:
• Develop a comprehensive implementation plan that includes
all HAVA projects and activities.
• Designate the individuals responsible for coordinating and
assuring the overall implementation of the plan.
• Identify and dedicate the resources necessary to carry out the
plan and assign roles and responsibilities accordingly.
• Establish timelines and key milestones and monitor to ensure
that planned HAVA activities and projects are completed
when scheduled and that they meet expectations.
To establish or strengthen controls, comply with federal and
state laws, and reduce the risk that HAVA funds are spent
inappropriately, the office should take the following actions:
• Develop clear job descriptions for employees working
on HAVA activities that include expectations regarding
conflicts of interest, incompatible activities, and any other
requirements important in administering federal funds.
• Establish and enforce a policy prohibiting partisan activities
by employees and consultants hired by the office; periodic
staff training and annual certification by all employees that
they have read and will comply should be part of this policy.
• Standardize the language used in all consultant contracts
to include provisions regarding conflicts of interest and
incompatible activities, such as partisan activities.
4466 California State Auditor Report 2004-139 California State Auditor Report 2004-139 4477
• Ensure that time charged to HAVA or any other federal
program is supported with appropriate documentation,
including time sheets and certifications.
• When competition is not used to award contracts, establish a
process to screen and hire consultants.
• Follow control procedures for the review and approval of
contracts to ensure that contracts include a detailed description
of the scope of work, specific services and work products, and
performance measures.
• Require that contract managers monitor for the completion
of contract services and work products prior to approving
invoices for payment.
• Review invoices to assure that charges to be paid with HAVA
funds are reasonable and allowable and conform to the terms
of the contract.
• Follow competitive bidding requirements to award contracts
and restrict the use of exemptions to those occasions that
truly justify the need for them.
• Follow General Services policies when using CMAS for
contracting needs.
• Comply with state policy for procuring commodities.
• Prohibit fiscal year 2004–05 expenditures for HAVA activities until
it receives spending authority from Finance and the Legislature.
• Disburse federal HAVA funds to counties for voting machine
replacement within the time frames set out in its grant
application, procedures, and contracts.
4466 California State Auditor Report 2004-139 California State Auditor Report 2004-139 4477
We conducted this review under the authority vested in the California State Auditor by
Section 8543 et seq. of the California Government Code and according to generally accepted
government auditing standards. We limited our review to those areas specified in the audit
scope section of this report.
Respectfully submitted,
ELAINE M. HOWLE
State Auditor
Date: December 16, 2004
Staff: Doug Cordiner, CGFM, Audit Principal
Robert C. Cabral, CPA, CIA, CISA
Benjamin M. Belnap, CIA
Alicia Jenkins
Heather McIntier
Siu-Henh Ung
4488 California State Auditor Report 2004-139 California State Auditor Report 2004-139 4499
APPENDIX
Status of the Office of the Secretary
of State’s Planned Uses of Federal
Help America Vote Act Funds
The Office of the Secretary of State (office) received federal
Help America Vote Act (HAVA) funds to improve the
administration of elections (discretionary funds) and to
replace punch card and lever-operated voting machines (voting
machine replacement funds). It also was awarded HAVA funds
designated for achieving compliance with certain mandatory
requirements, as well as funds to make polling places more
accessible and provide information to individuals with disabilities.
In addition to the predesignated use of HAVA voting machine
replacement funds to replace punch card or lever-operated
voting machines in specified counties, the office identified
five uses for the discretionary funds in its fiscal year 2003–04
Section 28 application. It also identified four uses of the
funds for making polling places accessible to individuals with
disabilities in its fiscal year 2004–05 Section 28 application.
Further, the office listed its proposed uses of funds to meet
HAVA’s mandatory requirements in its September 2004 update to
the state plan.
The office’s planned use of these HAVA funds and the status
of these plans as of November 2004 are shown in Table A
on the following pages. As shown in the table and discussed
in the report, the office has not made significant progress in
implementing its proposed HAVA projects and may potentially
miss important implementation milestones.
4488 California State Auditor Report 2004-139 California State Auditor Report 2004-139 4499
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5500 California State Auditor Report 2004-139 California State Auditor Report 2004-139 5511
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gnisu
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5500 California State Auditor Report 2004-139 California State Auditor Report 2004-139 5511
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etatS
ecfifO eht ot gnidroccA
etaD
etaD
tratS
etaD
*tegduB
sdnuF
)AVAH(
tcA
etoV
aciremA
pleH
ton
seod
esnopser
ehT
40–3002 raey lacsfi gnirud derebmucne ro
tneps erew sdnuF
6002
enuJ
3002
.tpeS
suoiraV
000,001,2
$
ssecorp
larotcele
fo
yduts
dna
noitaulavE
sutats
raelc
a
edivorp
ynam eht htiw ylpmoc ot dedeen ffats dna
stnatlusnoc esu
ot
edulcni stnemeriuqer esehT .AVAH yb detadnam
stnemeriuqer
noitacfiitrec ,esabatad tnailpmoc-AVAH a fo
tnemhsilbatse
eht
wen eht htiw noitcnujnoc ni noitamrofni noitartsiger
retov
fo
ohw sretov emit-tsrfi niatrec rof stnemeriuqer
noitacfiitnedi
llop dna ,noitacude laicfifo noitcele dna retov
,liam yb retsiger .gniniart rekrow
detnemelpmi
yllaitraP
raey lacsfi gnirud yltcerid dednepxe ton
erew sdnuf AVAH
3002
.guA
3002
.naJ
4002
,1
yraunaJ
000,002
a
gnitaerc
rof
ecnatsissa
lacinhcet
lacoL
lacol taht detcepxe si ti hguohtla ,tcejorp
siht rof 40–3002
sretov
lanoisivorp
rof
metsys
ssecca
eerf
htiw detaicossa stsoc rof tnemesrubmier mialc
yam snoitcidsiruj
dna 40–3002 sraey lacsfi gnirud ssecca eerf
fo noitatnemelpmi
saw tcejorp eht ,secruoser gnitsixe gnitcerider
yB .50–4002
noitcele yramirp 4002 hcraM eht rof detnemelpmi
yllaitnatsbus
lareneg 4002 rebmevoN eht rof detnemelpmi
yletelpmoc
dna
ni seitnuoc eht ot senilediug dedivorp
ecfifo ehT .noitcele
slaicfifo snoitcele ytnuoc ot mudnaromem
a dna 3002 tsuguA .4002 yraunaJ
ni
detelpmoC
40–3002 raey lacsfi ni yltcerid dednepxe erew
sdnuf AVAH
oN
3002
enuJ
3002
.naJ
4002
,1
yraunaJ
000,002
erudecorp
tnialpmoc
fo
noitatnemelpmI
.AVAH yb deriuqer erudecorp tnialpmoc
eht tnemelpmi
ot
,3002 enuJ ni detnemelpmi saw erudecorp
tnialpmoc
ehT
.secruoser AVAH-non yliramirp
gnisu ,revewoh
detnemelpmi
yllaitraP
40–3002 raey lacsfi ni yltcerid dednepxe erew
sdnuf AVAH
oN
4002
.naJ
3002
.guA
4002
,1
yraunaJ
000,001
esuohgniraelc
gnitov
saesrevO
.AVAH yb deriuqer tcejorp esuohgniraelc
eht tnemelpmi
ot
yllaitnatsbus saw tcejorp eht ,secruoser gnitsixe
gnitcerider
yB
eht hguorht noitcele yramirp 4002 hcraM eht
rof detnemelpmi
detnemelpmi yletelpmoc dna eniltoh noitamrofni
retov s’ecfifo
tnemngissa eht htiw noitcele lareneg 4002
rebmevoN eht
rof
.tcejorp eht fo noitatnemelpmi ekatrednu ot
nosrep cfiiceps
a fo
gnidneps nehw drager siht ni detapicitna
si troffe lanoitiddA
.serutidnepxe eseht rof deniatbo
si ytirohtua
ton
seod
esnopser
ehT
esu ot 40–3002 raey lacsfi ni derebmucne ro
tneps erew sdnuF
4002
.raM
3002
.naJ
4002
,1
yraunaJ
000,001
rof
mrof
ecnailpmoc
noitartsiger
retoV
sutats
raelc
a
edivorp
noitacfiirev miretni na poleved ot dedeen ffats
dna stnatlusnoc
liam
yb
retsiger
ohw
sretov
.liam yb retsiger ohw sretov niatrec gnidrager
noitamrofni
fo
gniognO
lacsfi rof noitartsinimda rof noillim 5$ detseuqer
ecfifo
ehT
6002
enuJ
3002
.guA
defiiceps
enoN
000,000,5
dna
thgisrevO
evitartsinimdA
noillim 7.1$ ,tnuoma siht fO .60–5002 hguorht
40–3002 sraey
AVAH
fo
noitatnemelpmI
.50–4002 dna 40–3002 sraey lacsfi rof devorppa
saw raey
rep
000,002,72$
sdnuF
yranoitercsiD
latoT
.05
egap
no
etontoof
eht
ees
esaelP
*
5522 California State Auditor Report 2004-139 California State Auditor Report 2004-139 5533
detegraT
AVAH
eht
ot
gnidroccA
sutatS
4002 rebmevoN fo sa
sutatS
noitelpmoC
detamitsE
noitatnemelpmI
desoporP
laredeF
fo
sesU
dennalP
rotiduA
etatS
ecfifO eht ot gnidroccA
etaD
etaD
tratS
etaD
*tegduB
sdnuF
)AVAH(
tcA
etoV
aciremA
pleH
sdnuF
tnemecalpeR
enihcaM
gnitoV
detnemelpmi
yllaitraP
ynaM .ssergorp ni si seitnuoc ot sdnuf
eseht
fo noitacolla ehT
5002
enuJ
3002
enuJ
†6002
,1
yraunaJ
000,003,75$
smetsys
gnitov
drac
hcnup
ecalpeR
ecfifo ehT .noitacolla rieht rof deilppa
tey
ton evah seitnuoc
tcepser htiw 4002 rebmetpeS fo sa noillim
1.15$ desrubsid sah
eb ot noillim 2.6$ si ecnalab gniniamer
ehT .seitnuoc 61 ot
eht morf snoitacilppa gniviecer nopu seitnuoc
41 ot detubirtsid
tcA tegduB eht yb deriuqer sa ytirohtua
gnidneps
dna seitnuoc .4002 fo
tnemecalpeR
enihcaM
gnitoV
latoT
000,003,75$
sdnuF
sdnuF
stnemeriuqeR
yrotadnaM
stnemeriuqeR
yrotadnaM
detnemelpmi
eb
ot
teY
eht elbane ot 50–4002 raey lacsfi rof
devorppa
saw 000,092$
5002
enuJ
4002
yraunaJ
6002
,1
yraunaJ
817,775,24
noitazinredom
tnempiuqe
gnitoV
dna ycarucca eht fo noitacfiirev yad-noitcele
tcudnoc ot ecfifo
nopU .)gnirotinom lellarap( senihcam gnitov
cinortcele fo ytiruces
fo tcA tegduB eht yb deriuqer ytirohtua
gnidneps
eht gniviecer
ecnailpmoc etatilicaf ot tneps eb lliw yenom
gniniamer eht ,4002
na evah smetsys gnitov lla taht tnemeriuqer
AVAH eht htiw
laredef tsrfi eht yb liart tidua repap
defiirev
retov elbissecca
ytnuoc fo gnitsisnoc ecrof ksat A .6002
,1
yraunaJ retfa noitcele
ni tsissa lliw sevitatneserper ytinummoc
dna slaicfifo snoitcele .ssecorp siht
detnemelpmi
eb
ot
teY
tegduB eht yb deriuqer ytirohtua gnidneps
eht gniviecer nopU
5002
enuJ
4002
yraunaJ
6002
,1
yraunaJ
521,005,23
rof
ytilibissecca
tnempiuqe
gnitoV
ecnailpmoc etatilicaf ot tneps eb lliw sdnuf
AVAH ,4002 fo tcA
seitironim
egaugnal
dna
delbasid
ainrofilaC ni secalp gnillop lla taht tnemeriuqer
AVAH eht htiw
elbissecca rehto ro cinortcele gnidrocer-tcerid
eno tsael ta evah
ksat A .6002 ,1 yraunaJ retfa noitcele
laredef
tsrfi eht yb tinu
ytinummoc dna slaicfifo snoitcele ytnuoc
fo gnitsisnoc ecrof
.ssecorp siht ni tsissa
lliw sevitatneserper
detnemelpmi
eb
ot
teY
fo stnemeriuqer eht teem ot deriuqer ydaerla
era smetsys gnitoV
5002
enuJ
4002
yraunaJ
6002
,1
yraunaJ
000,001
seitironim
egaugnal
rof ytilibisseccA
ot deriuqer si noitadilav ,revewoH .tcA
sthgiR
gnitoV laredef eht
etad ot tneps neeb evah sdnuf AVAH
oN
.ecnailpmoc erusne
ot detcerider neeb evah secruoser
gnitsixE
.tcejorp siht no
.tcejorp
siht ecnemmoc
detnemelpmi
eb
ot
teY
tneps neeb evah sdnuf AVAH oN .ssecorp
gniogno na si sihT
gniogno
4002
yraunaJ
6002
,1
yraunaJ
000,003
noitaulave
smetsys
gnitoV
ot detcerider neeb evah secruoser gnitsixE
.tcejorp
siht no etad ot
.tcejorp
siht ecnemmoc
egap
txen
no
deunitnoc
.05
egap
no
etontoof
eht
ees
esaelP
*
hcus
deviecer
dna
detseuqer ainrofilaC .etad noitatnemelpmi
,4002 ,1 yraunaJ
s’AVAH
dnetxe
ot
reviaw
a
detnarg
era
dna
kees
taht
setats
ot ylno
seilppa
etad
evitceffe
sihT
†
.reviaw
a
5522 California State Auditor Report 2004-139 California State Auditor Report 2004-139 5533
detegraT
AVAH
eht
ot
gnidroccA
sutatS
4002 rebmevoN fo sa sutatS
noitelpmoC
detamitsE
noitatnemelpmI
desoporP
laredeF
fo
sesU
dennalP
rotiduA
etatS
ecfifO eht ot gnidroccA
etaD
etaD
tratS
etaD
*tegduB
sdnuF
)AVAH(
tcA
etoV
aciremA
pleH
detnemelpmi
eb
ot
teY
ot ylppa taht serudecorp eht ni deniatnoc era snoitinfied
tsoM
gniogno
5002
.naJ
6002
,1
yraunaJ
000,002
$
etov
a
fo noitinfieD
deen snoitanimreted eseht ,revewoH .smetsys gnitov defiitrec detpoda yllamrof ni dedulcni ylbaborp dna detadilav
eb ot
siht no etad ot tneps neeb evah sdnuf AVAH oN .snoitaluger dneps ot ytirohtua nehw ecnemmoc lliw tcejorp ehT .tcejorp .deniatbo si sdnuf
AVAH
detnemelpmi
yllaitraP
yB .tcejorp siht no tneps yltcerid neeb evah sdnuf AVAH
oN
4002
.naJ
3002
yluJ
4002
,1
yraunaJ
000,001
dna
snoitaluger
tollab
lanoisivorP
ecnadiug dedivorp ecfifo eht ,secruoser gnitsixe gnitcerider
senilediug
seitnuoc ot metsys ssecca eerf a dna stollab lanoisivorp
no
snoitcele ytnuoc ot mudnaromem a tnes dna 3002 tsuguA
ni
eb ot detcepxe era snoitalugeR .4002 ,12 yraunaJ no slaicfifo rof deniatbo si ytirohtua gnidneps AVAH sa noos sa detpoda .esoprup
siht
detnemelpmi
yllaitraP
yB .tcejorp siht no tneps yltcerid neeb evah sdnuf AVAH
oN
4002
.naJ
3002
yluJ
4002
,1
yraunaJ
000,005
lanoisivorp
a
fo
noitaerc
eht
eesrevO
ecnadiug dedivorp ecfifo eht ,secruoser gnitsixe gnitcerider
metsys
ssecca
eerf
tollab
ni seitnuoc ot metsys ssecca eerf a dna stollab lanoisivorp
no
snoitcele ytnuoc ot mudnaromem a tnes dna 3002 tsuguA .4002 ,12 yraunaJ no slaicfifo
detelpmoC
dna stnemeriuqer gnitsop AVAH detacinummoc ecfifo
ehT
4002
.naJ
3002
.tpeS
4002
,1
yraunaJ
000,002
lla
fo gnitsop
eht
erusne
ot
pleH
deriuqer eht dedulcni taht seitnuoc ot elbaliava sretsop
edam
noitamrofni
AVAH
deriuqer
.noitamrofni
detnemelpmi
yllaitraP
rof etad noitelpmoc tcejorp desoporp eht ,4002 rebotcO
fo sA
6002
.naJ
3002
.naJ
†6002
,1
yraunaJ
000,000,04
esabatad
noitartsiger
retov
ediwetatS
htiw ,6002 ,1 yraunaJ si esabatad noitartsiger ediwetats
eht
wef tsrfi eht gnirud detcudnoc eb ot sresu suoirav rof gniniart eht ot dettimbus saw troper yduts ytilibisaef ehT .6002 fo shtnom .4002 rebotcO ni lavorppa rof )ecnaniF( ecnaniF fo tnemtrapeD
detnemelpmi
eb
ot
teY
eht yb detubirtsid eb ot emit ni dedeen eb lliw
esehT
5002
enuJ
5002
.naJ
6002
,1
yraunaJ
000,005
smrof
noitartsiger
weN
gnidnepS .tnemeriuqer eht fo etad evitceffe ,6002 ,1 yraunaJ detnirp eb nac smrof wen erofeb dedeen eb lliw ytirohtua fo tamrof eht no gnikrow yltnerruc era ffatS .detubirtsid
dna
.smrof wen
eht
detnemelpmi
eb
ot
teY
,AVAH fo etad evitceffe eht yb ecalp ni eb ot deen serudecorP
6002
enuJ
5002
.naJ
6002
,1
yraunaJ
000,005
noitartsiger
gnissecorp
dna
gniticiloS
.6002 ,1 yraunaJ ecnemmoc taht stnemeriuqer ,103 noitceS
smrof
gnipoleved no seitnuoc eht htiw gnikrow eb lliw ecfifo
ehT
evah lliw seitnuoc eht taht detcepxe si tI .serudecorp
hcus
hcihw rof tnemeriuqer siht htiw gniylpmoc ni stsoc laitnatsbus .tnemesrubmier gnikees eb lliw
yeht
detnemelpmi
eb
ot
teY
,AVAH fo etad evitceffe eht yb ecalp ni eb ot deen serudecorP
6002.naJ
5002
.naJ
6002
,1
yraunaJ
000,000,2
noitamrofni
fo
noitacfiireV
.6002 ,1 yraunaJ ecnemmoc taht stnemeriuqer ,103 noitceS eb tsum noitamrofni tivadfifa noitartsiger wen ,etad siht
nO
nwonknu evlovni lliw sihT .esabatad s’etatS eht gnisu defiirev rotoM fo tnemtrapeD eht ,seitnuoc ot stsoc laitnatsbus
tub
.ecfifo eht dna ,selciheV
.05
egap
no etontoof
eht
ees
esaelP
*
.35
egap
no
etontoof
ees
esaelP
†
5544 California State Auditor Report 2004-139 California State Auditor Report 2004-139 5555
detegraT
AVAH
eht
ot
gnidroccA
sutatS
4002
rebmevoN fo sa sutatS
noitelpmoC
detamitsE
noitatnemelpmI
desoporP
laredeF
fo sesU
dennalP
rotiduA
etatS
ecfifO eht ot gnidroccA
etaD
etaD
tratS
etaD
*tegduB
sdnuF
)AVAH(
tcA etoV
aciremA
pleH
detnemelpmi
yllaitraP
rof
senilediug
eht seitnuoc ot detacinummoc ecfifo
ehT
4002
.naJ
3002
.naJ
4002
,1
yraunaJ
000,001
$
rof
senilediug
dna
snoitalugeR
3002
tsuguA
ni liam yb retsiger ohw sretov gniyfitnedi
sretov
niatrec
fo
noitacfiitnedi
no slaicfifo
snoitcele ytnuoc ot mudnaromem a tnes
dna
ycnegreme
na decnuonna ecfifo ehT .4002 ,12 yraunaJ
fo noitacfiitnedi
eht gnidrager 4002 yraunaJ ni noitaluger
tnenamrep
a gnitfard
si ecfifo sihT .liam yb retsiger ohw sretov
AVAH
sniatbo
ti nehw decnuonna eb lliw taht noitaluger
.snoitaluger
detaler-AVAH rof ytirohtua gnidneps
detnemelpmi
yllaitraP
ni noitaluger
ycnegreme na decnuonna ecfifo
ehT
4002
.naJ
3002
.naJ
4002
,1
yraunaJ
000,000,1
sretov
niatrec
rof
ssecorp
noitacfiitnedI
.sretov
niatrec
fo noitacfiitnedi eht gnidrager 4002 yraunaJ
stsoc
rof
tnemesrubmier
mialc ot detcepxe era seitnuoc
ehT
tnemeriuqer
noitacfiitnedi
eht gnitnemelpmi htiw detaicossa
.etad
ot dettimbus
neeb evah smialc on hguohtla ,serudecorp
348,775,021$
stnemeriuqeR
yrotadnaM
latoT
seitivitcA
rehtO
detelpmoC
dna
detpoda
erew serudecorp tnialpmoc evitartsinimdA
3002
enuJ
3002
.naJ
4002
,1
yraunaJ
000,003
serudecorp
tnialpmoC
.3002 enuJ ni etis beW s’ecfifo eht no detsop
detnemelpmi
yllaitraP
dna
etatS
eht nihtiw
ecfifo elgnis detangised eht si ecfifo
ehT
4002
.naJ
3002
.guA
4002
,1
yraunaJ
000,002
dna
saesrevo
rof gnitov
ni ecnatsissA
saesrevo
dna
yratilim
gnidrager seiriuqni ot gnidnopser nageb
sretov
secivres
demrofinu
eetnesba
yllacfiiceps
saw laudividni nA .4002 ,1 yraunaJ yb gnitov
ot stroffE
.4002
enuJ ni rotanidrooc margorp eht sa dengissa
yratilim
ot stroffe
hcaertuo lanoitacude esaercni ylevitcaorp
gnidneps
nehw lufsseccusnu erew sretov saesrevo
dna
.deined saw ytirohtua
detnemelpmi
toN
rof detairporppa
noillim 7.1$ eht ni dedulcni si
sihT
3002
enuJ
3002
.naJ
defiiceps
enoN
000,002
noitubirtsid
tnemyap
rof
slortnoC
elbaliava
eb ,erofereht
,lliw sdnuf esehT .stsoc evitartsinimda
nalp
gnidneps
eht ni detacidni sa sesoprup AVAH rehto
rof
.4002
fo
tcA tegduB
eht yb deriuqer sa ecnaniF ot dettimbus
detnemelpmi
toN
detroba
erew
hcaertuo
lanoitacude ecnahne ot stroffe dennalP
6002
enuJ
3002
.naJ
defiiceps
enoN
000,009,3
tinu
noitacude
retoV
sdnuf
AVAH
oN .ytirohtua gnidneps fo kcal eht fo esuaceb
desoporp
ehT
.tcejorp siht no tneps neeb ,erofereht ,evah
.meti
siht
rof noitacolla eht ecuder yam nalp gnidneps
egap
txen
no
deunitnoc
.05
egap
no
etontoof
eht ees
esaelP
*
5544 California State Auditor Report 2004-139 California State Auditor Report 2004-139 5555
detegraT
AVAH
eht
ot
gnidroccA
sutatS
4002 rebmevoN
fo sa sutatS
noitelpmoC
detamitsE
noitatnemelpmI
desoporP
laredeF
fo
sesU
dennalP
rotiduA
etatS
ecfifO eht
ot gnidroccA
etaD
etaD
tratS
etaD
*tegduB
sdnuF
)AVAH(
tcA
etoV
aciremA
pleH
detnemelpmi
yllaitraP
sa noillim 9.9$ fo ytirohtua
gnidneps deviecer ecfifo ehT
6002
enuJ
4002
yluJ
defiiceps
enoN
000,000,51$
smargorp
noitacude
ytnuoC
stnarg edam ecfifo ehT .4002
fo tcA tegduB eht yb detcerid
retov rof sisab tnemesrubmier
a no seitnuoc gniylppa ot
si tI .gniniart dna tnemtiurcer
rekrow llop dna noitacude
,AVAH ot detubirtta era sdnuf
eht rehtehw tniop siht ta raelcnu
sdnuf eht taht semussa ecfifo
ehT .152 noitceS ro 101 noitceS
gnidneps desoporp ehT .101
noitceS ,AVAH ot detubirtta era
fo tcA tegduB eht yb deriuqer
sa ecnaniF ot dettimbus nalp
.meti siht rof
noitacolla eht ecuder yam 4002
detnemelpmi
eb
ot
teY
ni saw margorp on ,ytirohtua
gnidneps fo kcal eht fo esuaceB
6002
enuJ
4002
yluJ
defiiceps
enoN
000,000,52
rekrow
llop
dna
laicfifo
snoitcelE
saw yenom AVAH oN .noitcele
4002 rebmevoN eht rof ecalp
gniniart
dna
noitacude
noitacolla eht ecuder yam nalp
gnidneps desoporp ehT .tneps .meti siht rof
detnemelpmi
eb
ot
teY
saw margorp on ,ytirohtua
gnidneps fo kcal eht fo esuaceB
6002
enuJ
4002
yaM
defiiceps
enoN
000,001,61
dna
tnirp
hguorht
hcaertuo
noitacudE
desoporp ehT .noitcele
4002 rebmevoN eht rof ecalp ni
aidem
cinortcele
ehT .meti siht rof noitacolla
eht ecuder yam nalp gnidneps
ot tcepser htiw ytirohtua gnidneps
sdnuf AVAH kees lliw ecfifo .snoitcele laredef erutuf
detnemelpmi
eb
ot
teY
ni saw margorp on ,ytirohtua
gnidneps fo kcal eht fo esuaceB
6002
enuJ
4002
yaM
defiiceps
enoN
000,000,01
stnarg
gniniart
dna
noitacudE
saw yenom AVAH oN .noitcele
4002 rebmevoN eht rof ecalp
noitacolla eht ecuder yam nalp
gnidneps desoporp ehT .tneps
gnidneps sdnuf AVAH
kees lliw ecfifo ehT .meti siht rof
.snoitcele laredef
erutuf ot tcepser htiw ytirohtua
detnemelpmi
yllaitraP
rof 50–4002 raey
lacsfi ni devorppa saw noillim 6.4$
4002
.ceD
4002
.rpA
defiiceps
enoN
000,006
noitacfiitrec
metsys
gnitoV
ytiruces eht htiw gniylpmoc
rof seitnuoc ot tnemesrubmier
noitacfiitreced
dna
fo noitacfiitrecer eht ot detaler
ecfifo eht yb detcerid serusaem
tnuoma eht taht demuserp ecfifo
ehT .senihcam gnitov cinortcele
.sdnuf 101
noitceS ,AVAH ot detubirtta eb lliw
detnemelpmi
eb
ot
teY
saw 000,004$ fo tnuoma eht
ni ytirohtua gnidneps hguohtlA
6002
enuJ
4002
.tpeS
defiiceps
enoN
000,008
weiver
edoc
ecruoS
,noitcele 4002 rebmevoN
eht rof rebmetpeS ni devorppa
taht slasoporp ni tluser
ton
did sreffo fo snoitaticilos eerht
weiver edoc ecruos evisneherpmoc
ylemit rof wolla dluow
.noitcele 4002 rebmevoN
eht ot tcepser htiw sesylana dna
saw margorp eht hguohtlA
.tneps saw yenom AVAH oN
kcal eht ot eud noitcele 4002
rebmevoN eht rof dednepsus
smetsys gnitov fo snoitacfiitrec
erutuf ot ylppa lliw ti ,emit fo
serutidnepxe hcus rof ytirohtua
gnidneps AVAH taht dedivorp .deniatbo si
.05
egap
no
etontoof
eht
ees
esaelP
*
5566 California State Auditor Report 2004-139 California State Auditor Report 2004-139 5577
detegraT
AVAH
eht
ot
gnidroccA
sutatS
4002
rebmevoN fo
sa sutatS
noitelpmoC
detamitsE
noitatnemelpmI
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fo
sesU
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etaD
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tratS
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)AVAH(
tcA
etoV
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pleH
detnemelpmi
eb
ot
teY
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yb deriuqer
sa ecnaniF ot dettimbus
nalp gnidneps ehT
6002
enuJ
5002
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defiiceps
enoN
000,002
$
dna
smetsys
gnitov
fo sgniraeH
smus
lanoitidda
dneps ot esoporp
lliw 4002 fo tcA tegduB
lenap
serudecorp
serudecorp
dna smetsys gnitov
eht yb dleh sgniraeh rof
nevig ,60–5002
dna 50–4002
sraey lacsfi gnirud lenap
gnitov
cinortcele
gnidrocer-tcerid
lla taht tnemeriuqer eht
si sihT .liart
repap a evah ,AVAH
rednu ,tsum senihcam
lla taht gniriuqer
noitalsigel
etats ralimis htiw tnetsisnoc
retfa
ro no defiitrec
smetsys gnitov
cinortcele gnidrocer tcerid
tidua
repap defiirev
retov elbissecca
na evah ,5002 ,1 yraunaJ
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gnieb
si sgniteem
eseht rof eludehcs ehT .liart
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yllaitraP
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ylpmoc
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AVAH
gnitiawa si ecfifo
ehT .egats tnempoleved
103
noitceS
.snoitaluger
eseht htiw deecorp
ot redro ni ytirohtua
detnemelpmi
toN
evitartsinimda
rof
detairporppa
noillim
7.1$ eht ni dedulcni si sihT
6002
enuJ
3002
.naJ
defiiceps
enoN
000,006
sessecorp
lortnoc
tidua
dna
lacsiF
.sdnuf
101 noitceS
,AVAH ot tcepser
htiw evoba dessucsid stsoc
sesoprup
AVAH
rehto
rof elbaliava eb
,erofereht ,lliw sdnuf esehT
sa ecnaniF
ot dettimbus nalp
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.4002 fo
tcA tegduB eht yb deriuqer
detnemelpmi
toN
rof detairporppa
noillim
7.1$ eht ni dedulcni si sihT
6002
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3002
.naJ
defiiceps
enoN
000,004,3
slortnoc
tidua
dna
lacsiF
,AVAH
ot tcepser
htiw evoba dessucsid
stsoc evitartsinimda
elbaliava
eb
,erofereht
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nalp
gnidneps
eht ni detacidni
sa sesoprup AVAH rehto rof
.4002
fo tcA tegduB
eht yb deriuqer
sa ecnaniF ot dettimbus
detnemelpmi
toN
rof detairporppa
noillim
7.1$ eht ni dedulcni si sihT
4002
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3002
.naJ
defiiceps
enoN
000,002
serusaem
dna
slaog
ecnamrofreP
,AVAH
ot tcepser
htiw evoba dessucsid
stsoc evitartsinimda
elbaliava
eb
,erofereht
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nalp
gnidneps
eht ni detacidni
sa sesoprup AVAH rehto rof
.4002
fo tcA tegduB
eht yb deriuqer
sa ecnaniF ot dettimbus
detnemelpmi
toN
rof detairporppa
noillim
7.1$ eht ni dedulcni si sihT
4002
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defiiceps
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000,003
tnemeganam
nalp
etatS
,AVAH
ot tcepser
htiw evoba dessucsid
stsoc evitartsinimda
elbaliava
eb
,erofereht
,lliw sdnuf
esehT .sdnuf 101 noitceS
nalp
gnidneps
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sa sesoprup AVAH rehto rof
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fo tcA tegduB
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sa ecnaniF ot dettimbus
egap
txen
no
deunitnoc
.05
egap
no
etontoof
eht
ees
esaelP
*
5566 California State Auditor Report 2004-139 California State Auditor Report 2004-139 5577
detegraT
AVAH
eht
ot
gnidroccA
sutatS
4002 rebmevoN fo sa sutatS
noitelpmoC
detamitsE
noitatnemelpmI
desoporP
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fo
sesU
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tratS
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)AVAH(
tcA
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detelpmoC
ni 82 noitceS hguorht deviecer ytirohtua gnidneps eht
gnisU
4002
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4002
.naJ
defiiceps
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000,092
$
gnirotinom
lellaraP
raey lacsfi ni 4002 fo tcA tegduB eht dna 40–3002 raey
lacsfi
-tcerid fo gnirotinom lellarap detcudnoc ecfifo eht ,50–4002 eht ta seitnuoc lareves ni smetsys gnitov cinortcele gnidrocer lareneg 4002 rebmevoN eht dna noitcele yramirp 4002
hcraM
dedrocer stinu detset eht rehtehw enimreted ot noitcele lellarap erutuF .etelpmoc si tcejorp sihT .yletarucca
setov
ni gnicnemmoc esuaceb ylekilnu eb ylbaborp lliw gnirotinom smetsys gnitov cinortcele gnidrocer-tcerid lla ,6002 yraunaJ .liart tidua repap defiirev-retov ,elbissecca na evah
tsum
detnemelpmi
yllaitraP
gnisu margorp gnirotinom llop a detnemelpmi ecfifo
ehT
6002
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4002
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noitcele laredef 4002 hcraM eht rof sdnuf ,101 noitceS
,AVAH
;ecfifo laredef rof snoitcele fo noitartsinimda eht evorpmi
ot
gnitov ,serudecorp gnitov gninrecnoc sretov etacude
ot
llop ,slaicfifo noitcele niart ot ;ygolonhcet gnitov dna
,sthgir
smetsys gnitov evorpmi ot ;sreetnulov noitcele dna ,srekrow gnirotinom lloP .ytilibissecca evorpmi ot dna ;ygolonhcet
dna
gnisu noitcele yramirp 4002 hcraM eht rof detcudnoc
saw
gnidneps AVAH rof tseuqer A .sdnuf ,101 noitceS
,AVAH
4002 rebmevoN eht rof gnirotinom llop tcudnoc ot ytirohtua AVAH taht gnimussA .devorppa ton saw noitcele lareneg llop tcudnoc ot snalp ecfifo eht ,detnarg si ytirohtua gnidneps .snoitcele laredef erutuf rof gnirotinom
000,098,77
$
seitivitcA
rehtO
latoT
elbacilppa
ton
sutatS
eht fo tnecrep 52 gnipeek si ti ,ecfifo eht ot gnidroccA
defiiceps
enoN
182,950,66
evreser
tnedurP
.evreser ni sdnuf stnemeriuqer yrotadnam
421,725,462$
sdnuF
tnemeriuqeR
yrotadnaM
latoT
htiW
slaudividnI
rof
ecnatsissA
noitcelE
sdnuF
seitilibasiD
drawA
tnarG
40–3002
raeY
lacsiF
detnemelpmi
yllaitraP
hguorht ,dessecorp sah ecfifo ehT .ssergorp ni si tcejorp
ehT
4002
.ceD
3002
.tpeS
defiiceps
enoN
939,243
rof
ytilibissecca
ecalp
gnilloP
slaicfifo snoitcele ytnuoc fo gnitsisnoc eettimmoc yrosivda
na
seitilibasid
htiw
slaudividni
deticilos slasoporp ,)gnitoV-AC( sevitatneserper ytinummoc
dna
noitcele dnepxe dna eviecer ot slaicfifo snoitcele ytnuoc
morf
eht rof stnarg )DIAE( seitilibasid htiw slaudividni rof ecnatsissa gnidneps gnitiawa si ecfifo ehT .noitairporppa laredef
3002
sdnuf AVAH fo seitnuoc ot stnarg lautca eht ekam ot ytirohtua oN .esoprup siht rof etatS eht yb deviecer neeb evah
taht
gnidneps fo tpiecer eht gnidnep tneps neeb evah sdnuf
AVAH
.ytirohtua
.05
egap
no
etontoof
eht
ees
esaelP
*
5588 California State Auditor Report 2004-139 California State Auditor Report 2004-139 5599
detegraT
AVAH
eht
ot
gnidroccA
sutatS
4002
rebmevoN
fo sa
sutatS
noitelpmoC
detamitsE
noitatnemelpmI
desoporP
laredeF
fo sesU
dennalP
rotiduA
etatS
ecfifO
eht
ot
gnidroccA
etaD
etaD
tratS
etaD
*tegduB
sdnuF
)AVAH(
tcA
etoV
aciremA
pleH
detnemelpmi
yllaitraP
hguorht
,dessecorp
sah ecfifo
ehT .ssergorp
ni si tcejorp
ehT
4002
.ceD
3002
.tpeS
defiiceps
enoN
939,243
$
seitinutroppo
noitapicitrap
dna
sseccA
slaicfifo
snoitcele
ytnuoc
morf
deticilos
slasoporp ,gnitoV-AC
laredef
3002
eht
rof stnarg
DIAE
dnepxe dna eviecer
ot
ot
ytirohtua
gnidneps
gnitiawa
si ecfifo
ehT .noitairporppa
neeb
evah
taht
sdnuf
AVAH
fo seitnuoc
ot stnarg eht
ekam
tneps
neeb
evah
sdnuf
AVAH
oN
.etatS eht yb deviecer
.ytirohtua
gnidneps
fo tpiecer eht gnidnep
detnemelpmi
yllaitraP
hguorht
,dessecorp
sah ecfifo
ehT .ssergorp
ni si tcejorp
ehT
4002
.ceD
3002
.tpeS
defiiceps
enoN
939,243
ot woh
no
gniniart
laicfifo
snoitcelE
slaicfifo
snoitcele
ytnuoc
morf
deticilos
slasoporp ,gnitoV-AC
ssecca
etomorp
laredef
3002
eht
rof stnarg
DIAE
dnepxe dna eviecer
ot
ot
ytirohtua
gnidneps
gnitiawa
si ecfifo
ehT .noitairporppa
neeb
evah
taht
sdnuf
AVAH
fo seitnuoc
ot stnarg eht
ekam
tneps
neeb
evah
sdnuf
AVAH
oN
.etatS eht yb deviecer
.ytirohtua
gnidneps
fo tpiecer eht gnidnep
detnemelpmi
yllaitraP
sah
,gnitoV-AC
hguorht
,ecfifo
ehT .ssergorp
ni si tcejorp
sihT
4002
.ceD
3002
.tpeS
defiiceps
enoN
939,243
eht
tuoba
noitamrofnI
slaicfifo
snoitcele
ytnuoc
morf
deticilos
slasoporp dessecorp
secalp
gnillop
fo ytilibissecca
laredef
3002
eht
rof stnarg
DIAE
dnepxe dna eviecer
ot
ot
ytirohtua
gnidneps
gnitiawa
si ecfifo
ehT .noitairporppa
eht gnidnep
tneps
neeb
evah
sdnuf
AVAH
oN .stnarg eht
ekam
.ytirohtua
gnidneps fo
tpiecer
657,173,1
$
drawA
tnarG
40–3002
raeY
lacsiF
latoT
detnemelpmi
eb
ot
teY
dnuor
dnoces
a rof
seitnuoc
morf
slasoporp
fo noitaticilos
ehT
nwonknU
nwonknU
defiiceps
enoN
559,589
drawA
tnarG
50–4002
raeY
lacsiF
rof
ytirohtua
gnidneps
AVAH
fo tpiecer
gnitiawa si stnarg
fo
htiw
eunitnoc
ot si
nalp ehT
.sdnuf
4002 fo tcA tegduB
eht
gnisu
,dnuor
tsrfi
eht
rof evoba
deniltuo
sa ssecorp tnarg
eht
ecfifo
eht ot
snoitadnemmocer
ekam dna
weiver ot gnitoV-AC .stnarg DIAE gnidrager
rof
ecnatsissA
noitcelE
latoT
117,753,2
$
sdnuF
seitilibasiD
htiW
slaudividnI
538,483,153$
sdnuF
AVAH
latoT
82
noitceS
50–4002
raey
lacsfi
sti
dna
,nalp
etats
eht
ot etadpu
4002 rebmetpeS
sti
,noitacilppa
82
noitceS
40–3002
raey
lacsfi
s’ecfifo
eht
morf
emoc
sesu
dennalp
ehT
:secruoS
sutats
4002
rebmevoN
eht dna
,setad
noitelpmoc
detegrat
,setad trats detamitse
ehT
.2002
fo
tcA
etoV
aciremA
pleH
eht
morf
emoc
setad
noitatnemelpmi
AVAH
ehT
.noitacilppa
.ecfifo
eht
morf
emoc
.05
egap
no
etontoof
eht
ees
esaelP
*
5588 California State Auditor Report 2004-139 California State Auditor Report 2004-139 5599
Blank page inserted for reproduction purposes only.
6600 California State Auditor Report 2004-139 California State Auditor Report 2004-139 6611
Agency’s comments provided as text only.
Secretary of State
1500 11th Street
Sacramento, CA 95814
December 3, 2004
Elaine M. Howle*
California State Auditor
Bureau of State Audits
555 Capitol Mall, Suite 300
Sacramento, CA 95814
Dear Ms. Howle,
Thank you for the opportunity to respond to the audit report regarding the implementation by the
Office of the Secretary of State of the Help America Vote Act of 2002 (HAVA). We appreciate
the Bureau of State Audit’s (Bureau) report and recommendations and, in fact, discuss below our
intentions to implement as soon as possible the recommendations not already implemented. At the
1
end of this letter, we also clarify certain issues and dispel misimpressions that we believe need to
be included to make this a more accurate report.
As the audit correctly indicates, this office was overburdened by a cyclone of unprecedented and
historic forces:
• a combination of three elections -- a first-ever statewide recall election, a presidential
primary, and a presidential general election;
• a nation-wide controversy over electronic voting that threatened to undermine public
confidence in the equipment used to cast and count ballots; and
• the management of HAVA, a complex law with built-in ambiguities and little administrative
guidance. This office historically has not administered federally funded programs.
Even with conflicting demands on our time and staff, we have been able to competently fulfill our
core mission of supervising those elections during this period. In particular, this office and county
elections officials received high marks for the efficient and professional manner in which the
unprecedented recall election was conducted. So while we are disappointed that our administration
of HAVA may not have been consistent with our performance in other areas, any mistakes that were
made were certainly not intentional. We don’t believe the audit report finds otherwise.
* California State Auditor’s comments begin on page 69.
6600 California State Auditor Report 2004-139 California State Auditor Report 2004-139 6611
We continue to believe that the sum total of work performed – whether directed at increasing
voting access for the disabled community, ensuring the accuracy and security of electronic voting
machines, or providing voter education – can be fairly characterized as professional, solid work that
the Secretary of State’s office performed in the public interest.
We are now in the process of implementing many of your recommendations, in addition to the
changes we have made at our own initiative over the past several months to ensure proper
management and oversight of HAVA activities.
We have recently appointed a new upper-level management team. Each member of that team has
extensive experience with state systems and procedures and the ability to administer effectively the
office and its programs, particularly the HAVA program.
In addition, we are in the process of contracting with a respected management consulting firm to
provide oversight of HAVA implementation activities. We are confident our new team, working in
collaboration with the HAVA management contractor, will improve the program’s effectiveness and
productivity. We expect to award the HAVA management contract to a firm in December 2004.
With this audit report in hand, we will now take even more aggressive corrective action, including
the implementation of all the audit’s recommendations, as follows:
Bureau Recommendations: Develop a comprehensive implementation plan that includes all HAVA
projects and activities; and Establish timelines and key milestones and monitor to ensure that
planned HAVA activities and projects are completed when scheduled and meet expectations.
• The office has drafted a preliminary implementation plan that we are in the process of
finalizing.
• On December 2, 2004, the office sent to the Department of Finance (DOF) its revised HAVA
spending plan to provide details of the proposed distribution of HAVA funds for 2004-05 and
2005-06. This has been an iterative process and, as the Bureau notes, two versions of the
plan have previously been sent to DOF for review. We consider the ongoing discourse with
DOF to be an important part of the process.
Bureau Recommendations: Designate the individuals responsible for coordinating and assuring the
overall implementation of the plan; and Identify and dedicate the resources necessary to carry out
the plan and assign roles and responsibilities accordingly.
• A member of our HAVA staff has been clearly identified to manage the overall effort. That
individual will be supported by the management consultant firm and will join a team
consisting of managers responsible for the implementation of all HAVA requirements. This
individual reports directly to the Undersecretary.
2
6622 California State Auditor Report 2004-139 California State Auditor Report 2004-139 6633
Bureau Recommendation: Develop clear job descriptions for employees working on HAVA activities
that include expectations regarding conflicts of interest, incompatible activities, and any other
requirements important in administering federal funds.
• We have communicated, verbally and in writing, the specific roles and responsibilities of staff
and the importance of adhering to appropriate activity and timesheet reporting procedures.
The final duty statements for staff will include a clear statement of conflicts of interest,
incompatible activities, and other requirements, including those from the Hatch Act, that are
important in administering federal funds.
Bureau Recommendation: Establish and enforce a policy prohibiting partisan activities by
employees and consultants hired by the office. Periodic staff training and annual certification by all
employees that they have read and will abide should be part of this policy.
• We are collecting model language that we can use to develop written rules prohibiting
inappropriate partisan activities of employees, consultants and contractors.
• We will establish a program of periodic staff training and annual recertification to ensure
ongoing compliance.
Bureau Recommendation: Standardize the language used in all consultant contracts to include
provisions regarding conflicts of interest and incompatible activities, including partisan activities.
• The office has standardized the language used in all consultant contracts to include
provisions regarding conflicts of interest and incompatible activities. It is now standard
procedure for the office to include such language in all contracts.
Bureau Recommendation: Ensure that time charged to HAVA or any other federal program is
supported with appropriate documentation, including time sheets and certifications.
• We have obtained and are adapting for our use the time sheets and procedures that are
commonly used by other state agencies that receive federal funds, such as the Department
of Transportation and the Department of Social Services.
Bureau Recommendation: When competition is not used to award contracts, establish a process to
screen and hire consultants.
• We are developing and documenting a process to screen and hire consultants, which we
anticipate putting into practice within the next few weeks. In the interim, we will continue
to award non-competitively-bid contracts only if specifically approved by the Secretary of
State and the Department of General Services. We believe that even if authorized by state
procurement rules, non-competitively-bid contracts should be the rare exception.
3
6622 California State Auditor Report 2004-139 California State Auditor Report 2004-139 6633
Bureau Recommendation: Follow control procedures for the review and approval of contracts
that include a detailed description of the scope of work, specific deliverables, and performance
measures.
• We have established a more efficient contract review process, which requires any contractor
to have a detailed scope of work, specific deliverables, and performance measures. These
requirements are now standard practice at the Office of the Secretary of State.
Bureau Recommendation: Require that contract managers monitor for the completion of contract
deliverables prior to approving invoices for payment.
• The office has reminded its managers of the need to ensure the completion of contract
deliverables prior to approving invoices for payment and is writing detailed procedures for
invoice approval.
Bureau Recommendation: Review invoices to assure that charges to be paid with HAVA funds are
reasonable and allowable and conform to the terms of the contract.
• We have implemented a system whereby a manager from our Management Services
Division reviews contractors’ deliverables and matches them against the contractors’
contracts. If obligations are not met, no HAVA funds will be disbursed. The new
management consultant will have a role in this oversight as well.
Bureau Recommendation: Use competitive bidding requirements to award contracts and restrict
the use of exemptions from competitive bidding to those occasions that truly justify the need for an
exemption.
• We will restrict the use of exemptions from competitive bidding to those occasions that truly
justify the need.
Bureau Recommendations: Follow General Services policies when using CMAS for contracting
needs; and Comply with state policy for procuring commodities.
• We will comply fully with applicable state procurement policies.
Bureau Recommendation: Prohibit fiscal year 2004-05 expenditures for HAVA activities until it
receives spending authority from the Department of Finance and the Legislature.
• We will make sure that 2004-2005 funds are not expended or encumbered without the
appropriate spending authority.
Bureau Recommendation: Disburse HAVA funds to counties for voting machine replacement within
the timeframes set out in its grant application, procedures, and contracts.
4
6644 California State Auditor Report 2004-139 California State Auditor Report 2004-139 6655
• We currently do not have spending authority to disburse these HAVA funds. When we do,
we will disburse the funds expeditiously within the timeframes set out in the grant application,
procedures, and contracts to eligible counties who have applied for voting machine
replacement funds.
PROGRESS IMPLEMENTING HAVA
2
The Bureau’s report provides significant detail of the HAVA program from May 2004 to October 2004.
However, the Office of the Secretary of State has been working on the planning and implementation
of HAVA for nearly 24 months. In that time, we have made significant progress in implementing
HAVA requirements, including:
• The Secretary of State, in consultation with county elections officials, has allocated and
distributed $51.1 million to counties for replacement of punch-card voting machines. This
is in addition to the approximately $59 million that counties have already received for voting
machine modernization as a result of the passage of Proposition 41. The Secretary of State
3
has also allocated $9.9 million to counties for voter education and poll worker training and
$4.6 million to counties to enhance the security of electronic voting machines.
• The office, in consultation with county elections officials, has developed a Provisional
Ballot and Free Access Program, which provides all California voters with the right to cast
provisional ballots and a method to determine whether the ballots were counted.
• The office has established an information clearinghouse for military and overseas voters.
• We revised voter registration forms to be consistent with HAVA requirements and these forms
have been distributed to 58 California counties.
• The office has developed and implemented the nation’s first “parallel monitoring” program to
help ensure accuracy and security of electronic voting machines.
• Working with the county elections officials, we have successfully developed and implemented
a posting program to inform voters of their rights.
• The office has developed a program for implementing HAVA’s identification requirements for
certain first-time voters who register to vote by mail. The office developed and implemented
an interim system to verify information regarding voters who would otherwise have to present
identification in order to vote.
• The office has developed and implemented an administrative complaint procedure.
5
6644 California State Auditor Report 2004-139 California State Auditor Report 2004-139 6655
With respect to implementing HAVA, much has been accomplished, but much remains to be done
in order to meet various January 1, 2006, deadlines. We are committed to working with county
elections officials, the Election Assistance Commission, the Governor, the Legislature, and other
organizations and individuals to make California’s implementation of HAVA a model for the nation.
We look forward to continuing the positive working relationship with the Bureau that has been
established through this audit effort. We invite the Bureau to work closely with us as we strive to
complete an exemplary HAVA program.
Sincerely,
(Signed by: Kevin Shelley)
KEVIN SHELLEY
Secretary of State
(Signed by: Cathy Mitchell)
CATHY MITCHELL
Undersecretary of State
6
6666 California State Auditor Report 2004-139 California State Auditor Report 2004-139 6677
Clarifications
1. The audit report states that the Secretary of State failed to provide funding or guidance to train
poll workers or elections officials.
Actually, the Secretary of State, in consultation with the President of the California Association
of Clerks and Elections Officials (CACEO), developed a program to provide counties with
3
$9.9 million in funding for voter education and poll-worker training. The program was
approved by the Legislature and the Department of Finance on September 7, 2004.
2. The audit report states the Secretary of State could have been more proactive in assisting counties
with implementing such things as provisional voting procedures and a free access system by
January 1, 2004, indicating that the office did not provide guidelines until January 21, 2004.
4
Actually, the Secretary of State provided written guidelines on August 12, 2003, in addition to
frequent follow-up verbal advice and a memorandum on January 21, 2004, as noted later in
the audit on page 3 of Table A.1.
3. The audit report states that the Secretary of State’s office appears to have split purchase
orders to avoid CMAS procurement limits and competitive bidding requirements for information
technology services.
Actually, the contracts for information technology services on voting systems were to
address needs from related but completely separate purposes that quickly arose from
emergencies that could not have been predicted –emergencies with the potential of
compromising the public’s confidence in equipment used to cast and count ballots. At the
time these separate contracts for information technology services relating to voting systems
5
were initiated, our intent was only to address a series of serious problems as they emerged
– and not to avoid CMAS procurement procedures.
4. The audit report states that Renne & Holtzman Public Law Group, LLP over-charged the state
pursuant to its contract.
6
Actually, we believe that the audit report finding was based on contract language
superseded by an amended contract designed to reflect the original intent of the contract.
We do not believe that the law firm over-charged the state for the critical legal services
it provided. However, if it is determined that the law firm did over-charge the state, an
appropriate offset will be made with respect to amounts invoiced but not yet paid.
5. The report suggests in many locations that this agency was not proactive in communicating
with county elections officials.
7
6666 California State Auditor Report 2004-139 California State Auditor Report 2004-139 6677
For the record:
There are nearly 25,000 precincts and 100,000 poll workers in a California election. The
7
state’s role is to provide guidance to county elections officials regarding implementation
of HAVA requirements. Evidence that we took this charge seriously is demonstrated by the
following:
Between January 2003 and mid-October 2004, Elections Division staff:
• Attended at least nine HAVA-related meetings and participated in sub-committee
meetings with county elections officials relating to implementation of HAVA, statewide
voter registration database, provisional voting, identification requirements for first-time
mail registrants, and free access to determine if one’s provisional ballot was counted;
• Participated in discussions on HAVA implementation at the December 2002 and
December 2003 annual new law workshops hosted by the California Association of
County Elections Officials (CACEO);
• Visited three other states to study their statewide voter registration database systems;
• Mailed a dozen county election official memos (known as CC/ROV’s) on topics related
to HAVA, including collecting ID requirements, provisional ballots, HAVA’s posting
requirements for information at the polls, and driver’s license/voter rolls interface;
• Conducted five public hearings throughout the state to develop, with county elections
officials’ input, California’s State Plan;
• Adopted regulations relating to the ID requirements for specified first-time, mail-
registrant voters;
• Created a web site with FAQ’s for county elections officials and voters to use to obtain
information about free access programs, ID requirements, provisional voting, military
and overseas voting, and links to other resources and laws;
• Developed the driver’s license validator system for interface with the CalVoter
registration database; and
• Disseminated guidelines for implementing provisional voting.
6. The audit report states that the office spent HAVA funds on activities for which it had no spending
authority.
Actually, the office had no intention of avoiding any obligation to obtain spending authority
from the Department of Finance and the Legislature before expending HAVA funds. The
Budget Act of 2004 appropriates $1.7 million to the Secretary of State’s office from the
Federal Trust Fund for “operational costs” associated with implementation of HAVA. Based
on this language, and discussions which occurred when the language was inserted into the
8
Budget Act of 2004, the office believed “operational costs” to include any activity authorized
by HAVA and contracted accordingly, but recognized that there was an aggregate cap of $1.7
million for 2004-05. If it is determined that “operational costs” should be more narrowly
construed to mean “administrative costs,” the office will do so.
8
6688 California State Auditor Report 2004-139 California State Auditor Report 2004-139 6699
COMMENTS
California State Auditor’s Comments
on the Response From the Office of
the Secretary of State
To provide clarity and perspective, we are commenting on
the response to our audit report from the Office of the
Secretary of State (office). The numbers correspond with
the numbers we have placed in the office’s response.
1
Based on the evidence reviewed and the tests performed, we
believe all the issues discussed in the report are accurate and
meet audit standards.
2
The office is mistaken. As stated on page 12 in the scope and
methodology section of the report, to determine whether the
office used Help America Vote Act of 2002 (HAVA) funds only
for allowable purposes and in accordance with Section 28 of the
Budget Act of 2003, we selected and tested a sample of expenditure
transactions that the office paid in fiscal year 2003–04. We also
reviewed certain transactions from fiscal year 2004–05.
3
This statement is somewhat misleading. Although the office
may have allocated $9.9 million to the counties for voter
education and poll worker training, as we state on page 18, as
of November 22, 2004, these funds had not been disbursed to
the counties.
4
We amended page 18 of our report to reflect that the office
provided guidelines in August 2003. However, these guidelines, a
letter to the president of the California Association of Clerks and
Election Officials (association), which was also sent to all county
elections officials, only affirmed the association’s interpretation
of two sections of HAVA and listed the minimum standards for a
free access system for voters. This amendment to our report does
not change our conclusion on page 18 that, although the office
took various steps to ensure local elections officials complied with
the requirements that were to take effect on January 1, 2004,
most occurred too late to be of assistance and others had not yet
occurred, such as the county education and training grants that
had not been disbursed to counties as of November 22, 2004.
6688 California State Auditor Report 2004-139 California State Auditor Report 2004-139 6699
5
Regardless of its intent, the Department of General Services
requires that the office document why each California Multiple
Award Schedule (CMAS) purchase order is separate which, as
we state on page 41, it did not do. Moreover, the four CMAS
purchase orders—all to the same vendor for the same voting
systems project—totaled more than $1.1 million, exceeding the
CMAS limit.
6
The office is mistaken. Although the amendment did
change the provisions that were violated in the initial
contract, the amended provisions would only affect services
rendered subsequent to the execution of the amendment on
July 12, 2004. As we state on pages 32 and 33, the invoice billing
for services that violated the original contract’s terms covered
the period from November 17, 2003, through April 7, 2004,
three months before the contract amendment was executed.
7
The office has yet to issue comprehensive guidelines to the
local elections officials to ensure the consistent and appropriate
implementation of all HAVA requirements.
8
It is odd the office would hold such a belief. The description
of what makes up the administrative costs that we include on
page 43 was taken from information the Department of Finance
(Finance) summarized from a plan submitted by the office.
Moreover, this same information appeared in a letter Finance
sent to the Legislature and copied to the former assistant
secretary of state.
7700 California State Auditor Report 2004-139 California State Auditor Report 2004-139 7711
cc: Members of the Legislature
Office of the Lieutenant Governor
Milton Marks Commission on California State
Government Organization and Economy
Department of Finance
Attorney General
State Controller
State Treasurer
Legislative Analyst
Senate Office of Research
California Research Bureau
Capitol Press
7700 California State Auditor Report 2004-139 California State Auditor Report 2004-139 7711