Summary

High‑Risk Update—California’s System for Administering Federal Recovery Act Funds: State Departments Are Preparing to Administer Aspects of Recovery Act Funding, but Correction of Control Weaknesses and Prompt Federal and State Guidance Are Needed June 2009 Report 2009‑611.1 C A L I F O R N I A S T A T E A U D I T O R The first five copies of each California State Auditor report are free. Additional copies are $3 each, payable by check or money order. You can obtain reports by contacting the Bureau of State Audits at the following address: California State Auditor Bureau of State Audits 555 Capitol Mall, Suite 300 Sacramento, California 95814 916.445.0255 or TTY 916.445.0033 OR This report is also available on the World Wide Web http://www.bsa.ca.gov The California State Auditor is pleased to announce the availability of an on‑line subscription service. For information on how to subscribe, please contact the Information Technology Unit at 916.445.0255, ext. 456, or visit our Web site at www.bsa.ca.gov. Alternate format reports available upon request. Permission is granted to reproduce reports. For questions regarding the contents of this report, please contact Margarita Fernández, Chief of Public Affairs, at 916.445.0255. CALIFORNIA STATE AUDITOR Elaine M. Howle State Auditor Doug Cordiner B u r e a u o f S t a t e A u d i t s Chief Deputy 555 Capitol Mall, Suite 300 Sacramento, CA 95814 916.445.0255 916.327.0019 fax www.bsa.ca.gov June 24, 2009 2009-611.1 The Governor of California President pro Tempore of the Senate Speaker of the Assembly State Capitol Sacramento, California 95814 Dear Governor and Legislative Leaders: The Bureau of State Audits presents its analysis concerning the State’s efforts to develop the necessary infrastructure to administer federal funds received under the American Recovery and Reinvestment Act of 2009 (Recovery Act). This analysis follows up on the identification of the State’s implementation of the Recovery Act as a high-risk issue area in our April 2009 report titled California’s System for Administering Federal Recovery Act Funds (2009-611). Our analysis concludes that although some departments have exhibited more progress than others, none of the four departments we assessed—the Department of Education, the Department of Health Care Services, the Employment Development Department, and the Department of Social Services—are fully prepared to administer Recovery Act funding. Representatives from each of the four departments generally stated that they intend to rely on internal controls already in place for existing federal programs to administer Recovery Act funding. However, in our May 2009 report titled State of California: Internal Control and State and Federal Compliance Audit Report for the Fiscal Year Ended June 30, 2008 (2008-002), we noted 30 internal control weaknesses related to certain compliance requirements and federal programs for which the four departments we assessed expect to receive Recovery Act funds in fiscal years 2008–09 and 2009–10. We assessed the departments’ status in correcting these control weaknesses and found that progress has been limited—the departments appear to have corrected only four, are still in the process of correcting 22, and have taken minimal or no action for the remaining four. Further, some of the departments are uncertain as to whether they will be able to meet some of the reporting requirements established under Section 1512 of the Recovery Act, whereas other departments that administer entitlement or mandatory programs believe they are exempt from these reporting requirements. All four departments indicated they are either seeking or awaiting additional guidance from the federal government regarding these reporting requirements or are seeking guidance on other Recovery Act provisions. Finally, although the California Federal Economic Stimulus Task Force has provided general guidance for securing and applying for funds that are potentially available under the Recovery Act, we believe it should provide a more detailed framework to state departments for administering Recovery Act funding. Respectfully submitted, ELAINE M. HOWLE, CPA State Auditor High‑Risk Update—California’s System for Administering Federal Recovery Act Funds: State Departments Are Preparing to Administer Aspects of Recovery Act Funding, but Correction of Control Weaknesses and Prompt Federal and State Guidance Are Needed June 2009 Report 2009‑611.1 California State Auditor Report 2009‑611.1 vii June 2009 Contents Summary 1 Introduction 7 Analysis Results The California Federal Economic Stimulus Task Force Coordinates the State’s Efforts to Seek Funds, but Could do More to Assist Departments in Administering Recovery Act Funding 15 The Department of Education Needs to Address Internal Control Weaknesses and Needs Further Recovery Act Guidance 20 Health Care Services Intends to Use Existing Systems to Administer Recovery Act Funds, but Additional Action Is Needed 27 While EDD is Progressing With Efforts to Prepare to Administer Recovery Act Funding, More Steps Are Necessary 31 Social Services Is Still in the Process of Implementing Steps to Administer Recovery Act Funding 36 Recommendations 42 Appendix A Status of State Departments Preparedness to Administer American Recovery and Reinvestment Act of 2009 Funding 45 Appendix B Status of Actions State Departments Have Taken to Correct Internal Control Weaknesses Reported in the Single Audit Covering Fiscal Year 2007–08 95 California State Auditor Report 2009‑611.1 1 June 2009 Summary Analysis Highlights . . . Results in Brief Our analysis of the State’s applicable activities and internal controls at four state The federal government intends to provide states, local departments expected to receive significant governments, and other entities $787 billion under the American amounts of American Recovery and Recovery and Reinvestment Act of 2009 (Recovery Act) to Reinvestment Act of 2009 (Recovery Act) jump‑start the economy and to create or preserve jobs. As of funds revealed the following: May 28, 2009, the California Economic Recovery Portal Web site (State Recovery Portal) showed that California’s share of this » Some departments have made more funding will be $85.4 billion. progress than others in preparing for receiving, spending, and reporting As of May 2009 California was still establishing the necessary the Recovery Act funds, but none are processes and procedures to fully administer Recovery Act fully prepared. funding. Because the Recovery Act imposes significant provisions for accountability1 and transparency2 on entities that receive » All four departments intend to rely on funds, as well as penalties for noncompliance, we examined the internal controls already in place for State’s preparedness for administering Recovery Act funding by existing federal programs to administer analyzing applicable activities and internal controls at four state Recovery Act funding—yet our most departments expected to receive significant amounts of Recovery recent Single Audit report covering Act funds in fiscal year 2008–09: the Department of Education fiscal year 2007–08 identified several (Education), the Department of Health Care Services (Health Care internal control weaknesses at all Services), the Employment Development Department (EDD), and four departments. the Department of Social Services (Social Services). These four departments are responsible for administering 13 federal programs3 » Some of the departments are uncertain that have received or are expected to receive $50 million or more as to whether they will be able to meet in Recovery Act funds by the end of fiscal year 2008–09. Based on some reporting requirements while our analysis, we conclude that although some of the departments others believe they are exempt from have exhibited more progress than others, none of the four are fully certain reporting requirements. prepared to administer Recovery Act funding. » All four departments, as well as the Representatives from each of the four departments generally California Federal Economic Stimulus stated that, where applicable, they planned to rely on internal Task Force (Task Force), have requested controls already in place for existing federal programs to administer additional guidance from the federal Recovery Act funding. According to the U.S. Office of Management government that they have yet to receive. and Budget’s (OMB) February 18, 2009, initial implementing guidance for the Recovery Act, accountability objectives for » The Task Force has provided some implementing the Recovery Act include ensuring that funds are general guidance for securing and used for authorized purposes; mitigating the potential for fraud, applying for funds, but needs to provide waste, error, and abuse; and ensuring the recipients and uses of all more guidance for administering Recovery Act funds are transparent to the public and the public Recovery Act funding. benefits of these funds are reported clearly, accurately, and in a timely manner. 1 The federal Recovery Web site defines accountability as providing data that will allow citizens to evaluate the Recovery Act’s progress and provide feedback. 2 The federal Recovery Web site defines transparency as showing how, when, and where Recovery Act funds are spent. 3 What we refer to as federal programs are actually individual federal financial assistance awards that provide funding for an existing or new federal program or a component of a federal program. 2 California State Auditor Report 2009‑611.1 June 2009 Methods for Increasing Management Although relying on existing internal controls is a reasonable Personnel Salaries approach, our Single Audit report covering fiscal year 2007–084 noted 30 internal control weaknesses related to certain OMB • Merit salary increase program: Performance‑based Circular A‑133 compliance requirements and federal programs for salary increases funded from a merit compensation pool which the four departments we assessed expect to receive Recovery established annually by the chancellor’s office. Act funds in fiscal years 2008–09 and 2009–10. For example, • Equity (market) increase program: Adjustments Social Services’ processes for reviewing and authorizing counties’ designed to address discrepancies in pay, both within expense and assistance claims for the Temporary Assistance for and outside the university system, for comparable jobs. Needy Families program does not provide reasonable assurance • Reclassification: Salary increases resulting that federal funds were expended only for allowable activities and from changes in administrative classification that costs. Additionally, EDD did not adequately monitor subrecipients reflect changed assignments. of federal funds during the award period. For example, EDD did not conduct any on‑site reviews of community‑based organizations that received a total of $83.5 million in federal funding for the Workplace Investment Act programs in fiscal year 2007–08. As a result, Social Services and EDD cannot ensure that their respective subrecipients are or will be spending Recovery Act funds only on allowable activities. During our analysis, we noted that the four departments’ progress in correcting the 30 internal control weaknesses is limited—the departments appear to have corrected only four, are still in the process of correcting 22, and have taken minimal or no action for the remaining four. Consequently, without correcting these internal control deficiencies, relying on existing internal controls may not provide sufficient assurance that Recovery Act funding is properly administered. Some of the departments we evaluated stated that they are uncertain as to whether they will be able to meet the new reporting requirements established under Section 1512 of the Recovery Act that apply to many programs. For example, officials at Education acknowledged that the department was still waiting for guidance on performance reporting pursuant to Section 1512 of the Recovery Act. Reporting provisions oblige departments to report information to the federal government regarding the total amount of Recovery Act funds received, obligated, or spent and performance data such as the number of jobs created and preserved by projects or activities using Recovery Act funds. Although the departments indicated that they plan to use existing mechanisms to meet the requirements for reporting financial data, each indicated that it was either awaiting further guidance from the federal government regarding how to satisfy the requirement for reporting performance data or seeking guidance on other Recovery Act provisions. If departments are not successful obtaining this guidance from the federal oversight agencies soon, it may be too late to take the appropriate actions necessary to implement the reporting provisions of the Recovery 4 State of California: Internal Control and State and Federal Compliance Audit Report for the Fiscal Year Ended June 30, 2008, Report 2008‑002 (May 2009). California State Auditor Report 2009‑611.1 3 June 2009 Act correctly. Further, certain departments that administer entitlement or mandatory programs believe they are exempt from Section 1512 reporting requirements, but are seeking additional guidance from the State or federal government to confirm their belief. Finally, we examined the efforts of the California Federal Economic Stimulus Task Force (Task Force) to help departments prepare to administer the Recovery Act. Although it has provided general guidance for securing Recovery Act funds and administering the Recovery Act, we believe the Task Force should provide a more detailed framework for administering Recovery Act funding. Ideally, it would provide explicit direction regarding the systems or processes departments need to administer Recovery Act funding. Recognizing the variety of federal programs the departments administer, a one‑size‑fits‑all, detailed approach likely would not be practical. However, the Task Force could offer a broad framework within which departments can operate that would allow the flexibility necessary for each to administer its federal programs. This framework could include direction on how to coordinate with the State Controller’s Office (State Controller) to establish a unique account number for tracking the receipt of Recovery Act funds separately from other federal funds coming to California and an agenda or list of topics departments should discuss with their staff when providing training on how to administer Recovery Act funding. Additionally, once the OMB informs the Task Force whether the Recovery Act’s Section 1512 reporting requirements apply to both the recipient and subrecipient or just the recipient, the Task Force could provide an example of the type of language departments should include as part of their terms and conditions of an award to require subrecipients to meet Section 1512 reporting requirements. Recommendations We recommend that to strengthen the State’s preparedness to administer Recovery Act funding, the Task Force should do the following: • Continue in its leadership role in seeking guidance from the OMB and other pertinent federal agencies. In addition, the Task Force should coordinate its efforts to determine which state departments are waiting for guidance, the federal agencies from which the departments are seeking guidance, and the status of such requests. • Continue to raise concerns with the OMB and other federal agencies regarding Section 1512 reporting requirements. 4 California State Auditor Report 2009‑611.1 June 2009 • Establish a process to ensure that state departments with known internal control weaknesses take the necessary steps to promptly correct such deficiencies. This process should also include a mechanism to track the status of departments’ implementation of corrective action plans developed as a result of audits, reviews, or analyses conducted by the State Auditor’s Office (State Auditor), the Department of Finance (Finance), the U.S. Government Accountability Office (GAO), or each department’s respective federal inspector general. • Provide specific guidance to state departments, including the following: • Steps departments should take to coordinate with the State Controller in establishing unique account codes to track the receipt of Recovery Act funds separately from other federal funds. • Topics departments should discuss with their respective staff when training them on how to administer Recovery Act funds. • Examples of language departments should include in their terms and conditions of grant awards or contracts to assure that subrecipients, if required, are aware of specific Recovery Act provisions, particularly Section 1512 reporting requirements. State departments should do the following: • Promptly correct internal control deficiencies, including those identified during the Single Audit covering fiscal year 2007–08 and through other audits, reviews, or analyses conducted by state and federal agencies, such as the State Auditor, Finance, the GAO, and each federal agency’s respective inspector general. • Establish a process to track its progress in implementing any corrective action plans developed as a result of audits, reviews, or analyses conducted by the State Auditor, Finance, the GAO, or each federal agency’s respective inspector general. • Work with the Task Force to ensure that grants and contracts include specific language that informs subrecipients of the Recovery Act’s provisions, including Section 1512 reporting requirements, if required. • Modify policies and procedures to ensure that they reflect specific Recovery Act provisions. California State Auditor Report 2009‑611.1 5 June 2009 • Provide staff with appropriate training to ensure they are aware of new policies and procedures necessary to administer Recovery Act funding. 6 California State Auditor Report 2009‑611.1 June 2009 Blank page inserted for reproduction purposes only. California State Auditor Report 2009‑611.1 7 June 2009 Introduction Background On February 17, 2009, the federal government enacted the American Recovery and Reinvestment Act of 2009 (Recovery Act) to help fight the negative effects of the United States’ economic recession.5 According to the Recovery Act, its purposes include preserving and creating jobs; promoting economic recovery; assisting those most affected by the recession; investing in transportation, environmental protection, and other infrastructure; and stabilizing state and local governmental budgets. To achieve these purposes, the Recovery Act requires federal agencies to initiate expenditures and activities as quickly and prudently as possible; for certain programs, Recovery Act funds are available only until September 2010. According to the federal Recovery Web site, the federal government intends to provide $787 billion to recipients under the Recovery Act, including $288 billion in the form of tax benefits. A large portion of the remaining funds will be dispersed to states, local governments, territories, and tribes, which in turn will distribute funds to beneficiaries through grants, contracts, subsidies, and loan programs. According to the Council of State Governments, the Recovery Act provides over $300 billion in potential funding for states and state‑related programs. This funding includes almost $100 billion in flexible funding that replaces state spending, as much as $130 billion in formula funding that supplements state spending, and up to $100 billion in competitive grant funding opportunities. For a state to be eligible to receive these funds, Section 1607(a) of the Recovery Act requires the governor to certify not later than 45 days after the date of enactment that the state will request and use funds provided by the act and that the funds will be used to create jobs and promote economic growth. California’s governor completed this certification process on March 5, 2009. Accountability6 and transparency7 are the cornerstones of the Recovery Act. For example, Section 1521 of the Recovery Act established the Recovery Accountability and Transparency Board (Recovery Board), which consists of a chair appointed by the president and 10 federal inspectors general specified in Section 1522, 5 According to the National Bureau of Economic Research (NBER), a nonprofit economic research organization, the economy has been in recession since December 2007. NBER defines a recession as a significant decline in economic activity spread across the economy, normally visible in production, employment, real income, and other indicators, which lasts more than a few months. 6 The federal Recovery Web site (http://www.recovery.gov) defines accountability as providing data that will allow citizens to evaluate the Recovery Act’s progress and provide feedback. 7 The federal Recovery Web site defines transparency as showing how, when, and where Recovery Act funds are spent. 8 California State Auditor Report 2009‑611.1 June 2009 to coordinate and conduct oversight of covered funds to prevent fraud, waste, and abuse. According to Section 1523(a), the Recovery Board’s responsibility for performing oversight includes auditing or reviewing covered funds to determine whether wasteful spending, poor contract or grant management, or other abuses are occurring and referring matters it considers appropriate for investigation to the inspector general for the federal agency that distributed the covered funds. According to Section 1523(b), the Recovery Board must submit to the president and Congress reports on potential management and funding problems that require immediate attention, quarterly reports summarizing the findings of the Recovery Board and the findings of inspectors general of federal agencies, and annual reports consolidating applicable quarterly reports on the use of covered funds. The Recovery Board must also make recommendations to federal agencies on measures to prevent fraud, waste, and abuse relating to covered funds, as required by Section 1523(c). Finally, Section 1528 states that the Recovery Board shall coordinate its oversight activities with the comptroller general of the United States and state auditors. The U.S. Office of Management and Budget Accountability Objectives for Implementing the (OMB) further highlighted the need for American Recovery and Reinvestment Act of 2009 accountability in its February 18, 2009, initial implementing guidance for the Recovery Act, • American Recovery and Reinvestment Act of 2009 which directed federal agencies to immediately (Recovery Act) funds are awarded and distributed in a prompt, fair, and reasonable manner. take critical steps to meet the accountability objectives defined in the text box. • The recipients and uses of all Recovery Act funds are transparent to the public, and the public benefits of To facilitate the president’s commitment to these funds are reported clearly, accurately, and in a accountability and transparency, the Recovery timely manner. Act imposes significant reporting requirements • Recovery Act funds are used for authorized purposes, on entities that receive Recovery Act funds as and the potential for fraud, waste, error, and abuse well as penalties for noncompliance. For instance, are mitigated. Section 1512(c) requires certain recipients to • Projects funded under the Recovery Act avoid submit to the federal government a report unnecessary delays and cost overruns. containing several pieces of information not later than 10 days after the end of each calendar • Program goals are achieved, including specific program outcomes and improved results on broader quarter. The act also mandates that as a condition economic indicators. of receiving funds, federal agencies will require these recipients to provide this information. Source: U.S. Office of Management and Budget’s Initial Implementing Guidance for the Recovery Act, February 18, 2009. The required information includes the amount of Recovery Act funds received; the amount of Recovery Act funds spent or obligated; a detailed list of the projects on which recipients spent or obligated Recovery Act funds; an estimate of the jobs created and the number of jobs retained by the project or activity; and the infrastructure investments made by the recipients. Section 1512(d) requires federal agencies that made Recovery Act funds available to certain recipients to make the information in these reports publicly available by posting the information on a Web site. California State Auditor Report 2009‑611.1 9 June 2009 On April 3, 2009, the OMB updated its initial implementing guidance. The OMB intended this second installment of government‑wide guidance to clarify existing provisions and establish additional steps that must be taken to facilitate the accountability and transparency objectives of the Recovery Act. Among other things, this guidance noted that Section 1512 reporting requirements only apply to nonfederal recipients who receive funding through discretionary appropriations and that the requirements do not apply to entitlement or other mandatory programs, except as specifically required by the OMB. However, the OMB did not define an entitlement or mandatory program, nor did it specifically identify which programs are considered to be entitlements or mandatory. The Recovery Board established the federal Recovery Web site to serve as a portal for key information relating to the Recovery Act and to provide connections to other government Web sites with related information. California’s Expected Share of Recovery Act Funds California stands to receive a large share of the funds being made available under the Recovery Act. According to the California Economic Recovery Portal Web site (State Recovery Portal), as of May 28, 2009, California’s share of the Recovery Act funds is estimated to be $85.4 billion. Figure 1 shows the anticipated allocation of these funds. Figure 1 Breakdown of the Total Amount of Federal Funds California Is Expected to Receive Under the American Recovery and Reinvestment Act of 2009 (Dollars in Billions) Recipient to Be Determined—$6.9 (8.1%) Federal and Non-State Entities— $11.0 (12.9%) State and Non-State Entities— $37.3 (43.7%) Tax Relief—$30.2 (35.3%) Source: Bureau of State Audits’ analysis of data obtained from the California Economic Recovery Portal Web site, http://recovery.ca.gov, as of May 28, 2009. Note: California is expected to receive $85.4 billion under the American Recovery and Investment Act of 2009. 10 California State Auditor Report 2009‑611.1 June 2009 The State Recovery Portal was updated on May 28, 2009, and no longer shows Recovery Act funds by fiscal year. However, as shown in the second and third columns of Table 1, on April 13, 2009, the State Recovery Portal indicated that as many as 14 state entities could receive Recovery Act funds in fiscal year 2008–09, and as many as 22 state entities could receive Recovery Act funds in fiscal year 2009–10. At least four of these entities are expected to receive over $300 million each in fiscal year 2008–09. Collectively, the Office of the Secretary of Education (OSE), the Governor’s Office of Planning and Research (OPR), and the Department of Finance (Finance) are expected to receive a total of $5.2 billion, the largest share of Recovery Act funds coming to California. As of April 13, 2009, according to the State Recovery Portal, the majority of these funds will be allocated to one program to restore funding for education to the greater of 2008 or 2009 funding levels. Although the State Recovery Portal shows OSE, OPR, and Finance as the entities responsible for these funds, we learned that of the $5.2 billion, the Department of Education (Education) will administer $3.7 billion of these funds. Likewise, the Department of Health Care Services (Health Care Services) is expected to receive nearly $3.3 billion, the second largest share of Recovery Act funds coming to California, to provide supplemental federal funding for allowable Medicaid expenditures under the temporary increase of Medicaid Federal Medical Assistance Percentages program. Finally, of the nearly $2.5 billion the Employment Development Department (EDD) is expected to receive, $2.1 billion will be allocated to three components of the Unemployment Insurance program to temporarily extend the length of time an individual may receive unemployment benefits and to provide an increase in the amount of weekly benefits an unemployed individual is eligible to receive. Table 1 Amount of Federal Funding That State Departments and Other Entities Are Expected to Receive Under the American Recovery and Reinvestment Act of 2009 (Dollars in Millions) Per the California eConomiC reCovery Portal Web site as of: aPril 13, 2009 may 28, 2009 amounts for amounts for amounts for all resPonsible state DePartment anD other iDentifieD entities* fisCal year 2008–09 fisCal year 2009–10 fisCal years† Secretary of Education, Office of Planning and Research, and Department of Finance $5,202.5‡ $4,337.7 $4,875.5‡ Department of Health Care Services 3,286.9 4,496.9 12,154.0 Employment Development Department 2,493.5 4,531.5 4,931.0 Department of Social Services 332.4 891.8 2,706.0 Department of Community Services and Development 182.9 92.9 275.0 Department of Rehabilitation 40.4 28.3 68.6 Department of Developmental Services 28.2 28.3 53.2 Department of Child Support Services 20.4 27.7 54.4 California State Auditor Report 2009‑611.1 11 June 2009 Per the California eConomiC reCovery Portal Web site as of: aPril 13, 2009 may 28, 2009 amounts for amounts for amounts for all resPonsible state DePartment anD other iDentifieD entities* fisCal year 2008–09 fisCal year 2009–10 fisCal years† California Conservation Corps No Information 14.7 Provided 0§ Office of Planning and Research 10.3 0 13.5 California Department of Aging 6.9 4.9 21.8 Air Board 1.7 0 26.0 Arts Council 0.5 0.5 5.0 California Department of Transportation 0 780.0 2,569.6 California Tax Credit Allocation Committee 0 612.9 6.9 California Emergency Management Agency 0 375.5 332.9 Water Board 0 302.6 295.9 Energy Commission 0 295.0 577.8 Department of Public Health 0 160.0 1,145.5 Housing and Community Development 0 55.1 312.4 Department of Forestry and Fire Protection 0 25.0 54.5 Managed Risk Medical Insurance Board 0 10.0 0ll Toxic Substances Control 0 10.0 10.0 Secretary of Education 0 0 3,547.4 Secretary of Education, Office of Planning and Research 0 0 1084.8# California High‑Speed Rail Authority, Department of Transportation 0 0 800.0 Office of the Chief Information Officer 0 0 389.0 Health and Human Services Agency 0 0 200.0 State Controller’s Office 0 0 100.0 California Conservation Corps, Department of Conservation 0 0 58.1 Office of Statewide Health Planning and Development 0 0 50.0 Military Department 0 0 26.7 Business, Transportation, and Housing Agency 0 0 15.8 State department(s) not identified 0 300.0 513.0 Other** 2,632.0 3,583.6 17,966.8 Totals $14,253.3 $20,950.2 $55,241.1 Source: Bureau of State Audits’ analysis of data obtained from the California Economic Recovery Portal Web site (State Recovery Portal), http://recovery.ca.gov. * Recovery Act funds will go entirely to the identified state department or will be shared among state departments and non‑state entities. † We obtained these amounts from the State Recovery Portal on May 28, 2009. Before this date, the State Recovery Portal specified the fiscal year for the amount shown. On May 28, 2009, the California Federal Economic Stimulus Task Force updated the State Recovery Portal and included only the total amount of California’s estimated share of funds from the American Recovery and Reinvestment Act of 2009. ‡ Office of Planning and Research entered into an interagency agreement with the Department of Education to administer $2,565 million of these funds. § As of May 28, 2009, the responsible state department for these funds appears to be the California Conservation Corps and the Department of Conservation, as indicated later in this table. ll As of May 28, 2009, the State Recovery Portal no longer listed funds for the Managed Risk Medical Insurance Board. # Office of Planning and Research entered into an interagency agreement with the Department of Corrections and Rehabilitation to administer these funds. ** The dollar amounts shown here include those amounts the State Recovery Portal shows will go to federal or non‑state entities and those amounts for which a recipient has yet to be determined. 12 California State Auditor Report 2009‑611.1 June 2009 Recent Actions California Has Taken Regarding Main Program Areas Through Which Funding Recovery Act Funds Will Flow Under the American Recovery and Reinvestment Act of 2009 California recently took two steps to better ensure that the State’s spending of Recovery • Health and Human Services/Health Information Act funds is accountable and transparent. On Technology March 26, 2009, the governor announced the • Transportation creation of the California Federal Economic • Housing Stimulus Task Force (Task Force), whose responsibilities include tracking the Recovery • Energy Act funding the State receives; working with • Environment/Water Quality the president’s administration; assisting cities, • General Government counties, nonprofits, and others to access funds that are potentially available to them under the • Education Recovery Act; ensuring that Recovery Act funds • Labor funneled through the State are spent efficiently and effectively; and maintaining a Web site • Broadband that is frequently and thoroughly updated for Source: California Economic Recovery Portal Web site, Californians to be able to track Recovery Act http://recovery.ca.gov, as of May 14, 2009. funds. Representatives from the governor’s office and Finance comprise the Task Force’s leadership body. Additionally, as shown in the text box, the Task Force includes one representative from the administration for each of the nine main program areas through which Recovery Act funding will flow. In addition to the Task Force, on April 3, 2009, the governor announced the creation of the position of Recovery Act inspector general to act as “watchdog” over Recovery Act funds as they are dispersed in California. According to the executive order that created the position, the Recovery Act inspector general’s responsibilities include protecting the integrity and accountability of the expenditure of Recovery Act funds in California by preventing and detecting fraud, waste, and misconduct in the use of those funds; conducting periodic reviews and audits to ensure state and local government compliance with the federal provisions of the Recovery Act and applicable state law; and providing independent and objective reports to the governor, the Legislature, the U.S. Government Accountability Office (GAO), and the Recovery Board on the activities and findings of the reviews and audits, including any identified program and management problems as they relate to use of the Recovery Act funds in California and recommendations to correct them. Reports by the Recovery Act inspector general shall be posted on a Web site to provide accountability and transparency to the public. California State Auditor Report 2009‑611.1 13 June 2009 Scope and Methodology California Government Code, Section 8546.5, authorizes the Bureau of State Audits to establish a process for identifying state agencies or issues that are at high risk for potential waste, fraud, abuse, and mismanagement, or that have major challenges associated with their economy, efficiency, or effectiveness. In April 2009 we designated the State’s system for administering Recovery Act funds as a statewide high‑risk issue. Under our authority to review high‑risk areas, we decided to assess the State’s preparedness to administer Recovery Act funding. Specifically, we assessed the status of internal controls for administering the Recovery Act funds at four state departments. To gain a better understanding of this high‑risk issue, we reviewed the Recovery Act, applicable issues of the Federal Register, reports issued by the GAO, and the March 2009 Circular A‑133 Compliance Supplement and other guidance issued by the OMB. We also reviewed information posted on the federal Recovery Web site and the State Recovery Portal. To identify guidance the State has provided to departments regarding their administration of Recovery Act funds, we interviewed members of the Task Force. Additionally, we reviewed two Recovery Act bulletins the Task Force issued to departments as of May 2009 and two letters the Task Force wrote in response to an OMB questionnaire and notice for information collection activities. Finally, the Task Force directed Finance to conduct oversight and accountability readiness reviews for Recovery Act funding at state entities. We examined the results of these readiness reviews for six of these entities.8 To select the departments we evaluated, we relied on financial data from the State Recovery Portal, as of April 13, 2009, to identify those departments for which the Task Force expected the State to receive $300 million or more in Recovery Act funds by the end of fiscal year 2008–09.9 We identified four departments meeting this criterion: Education,10 Health Care Services, EDD, and the Department of Social Services. We further refined our scope to focus only on those federal programs for which the Task Force expected a state department to receive or be awarded $50 million 8 As of June 12, 2009, Finance completed three additional reviews, including two departments we evaluated. 9 On May 28, 2009, the Task Force updated this financial data. See the fourth column of Table 1 in the Introduction for the revised data covering all fiscal years. 10 Education has the primary role in administering those federal grants for which the State Recovery Portal shows OSE, OPR, and Finance as being responsible. 14 California State Auditor Report 2009‑611.1 June 2009 or more in Recovery Act funds during the same fiscal year. We summarize this information for each department in Tables 2, 4, 6, and 8 in the Analysis Results section of this report. To determine the status of departments’ preparedness for administering Recovery Act funds, we examined and followed up on responses to a questionnaire we distributed to the four departments. We developed this questionnaire based on potential risks the OMB identified in its April 3, 2009, updated implementing guidance for the Recovery Act and summarized the results of this questionnaire in Appendix A. To verify the information that the departments provided in their responses to the questionnaire, we interviewed key personnel at each department and reviewed relevant documents pertaining to processes or procedures already in use, developed, or that will be developed by the departments to administer Recovery Act funds. Finally, to ensure that internal controls used by the four departments we evaluated were sufficient to appropriately administer Recovery Act funds, we examined our most recent Single Audit report covering fiscal year 2007–08 to identify relevant findings citing internal control weaknesses. Our analysis focused on those types of internal controls that could potentially affect the State’s ability to properly administer Recovery Act funds, such as those over activities allowed, allowable costs, cash management, eligibility, reporting, and subrecipient monitoring. Where applicable, we also interviewed key personnel to identify the status of the corrective actions the departments had taken to resolve each weakness. For those internal control weaknesses the departments indicated they had fully corrected, we performed limited testing to verify whether these assertions were accurate. Appendix B presents, by department and OMB Circular A‑133 compliance requirement, the status of actions the four departments have taken to correct select internal control weaknesses reported in the Single Audit covering fiscal year 2007–08. California State Auditor Report 2009‑611.1 15 June 2009 Analysis Results The California Federal Economic Stimulus Task Force Coordinates the State’s Efforts to Seek Funds, but Could do More to Assist Departments in Administering Recovery Act Funding Although the California Federal Economic Stimulus Task Force (Task Force) has coordinated with state departments to secure and apply for funds that are potentially available to them under the American Recovery and Reinvestment Act of 2009 (Recovery Act), it has not yet provided specific guidance for reporting on Recovery Act funds. According to the Task Force, it has not provided this guidance because it is awaiting clarification from the federal government. The Task Force has provided general direction to departments regarding accountability through two Recovery Act bulletins (bulletin) issued as of May 2009. However, the Task Force did not provide specific guidance on how to implement the directives of these bulletins. For example, the first bulletin indicated that state departments must be prepared to separately track the receipt and disbursement of Recovery Act funds in their accounting systems. We believe the State could be better served if the Task Force developed a framework to provide more specific direction. Consequently, we believe the Task Force could provide more statewide leadership on administering the Recovery Act. The Task Force Has Begun Efforts to Aid Departments in Administering Recovery Act Funding As of May 2009, the Task Force has taken several actions toward achieving its mission. For instance, the Task Force has collaborated with departments to identify funds that are potentially available to them under the Recovery Act and has advised them in applying for these funds. Further, according to the chief operating officer of the Department of Finance (Finance), who as a member of the Task Force is charged with overseeing its accountability and auditing functions, the Task Force has also issued instructions for tracking and monitoring the receipt of Recovery Act funds and other fund information. However, the Task Force has not provided any specific guidance to departments for reporting on Recovery Act funds because it is awaiting guidance from the U.S. Office of Management and Budget (OMB) for clarification on certain aspects of the Recovery Act’s Section 1512 reporting requirements. Until it receives such guidance, the Task Force has referred state departments to their respective federal awarding agency to ensure that they understand what reporting requirements those federal agencies may have in addition to OMB requirements. 16 California State Auditor Report 2009‑611.1 June 2009 On April 1, 2009, the OMB posted in the Federal Proposed Standard Data Elements for Reports Register a notice for information collection Under Section 1512 of the American Recovery activities inviting the general public and federal and Reinvestment Act of 2009 agencies to comment on the standard data elements being reviewed under emergency review • The General Section requires information regarding the procedures for use in complying with the award and award recipient. reporting requirements under Section 1512 of the • Sections 1 and 2 require information regarding the Recovery Act (standard data elements). According project or activity for which American Recovery to the OMB, the standard data elements were and Reinvestment Act of 2009 (Recovery Act) funds developed to serve as a government‑wide standard were awarded. data set for agencies to use in collecting • Sections 3 and 4 require information regarding certain information, as shown in the text box, from subcontracts or subawards funded in whole or in part recipients of federal grants, cooperative under the Recovery Act. agreements, and loan funds. Once the standard Source: The U.S. Office of Management and Budget’s request data elements are approved, each federal agency for public comments regarding proposed requirements as must require its recipients to report the published in the Federal Register on April 1, 2009. information and data electronically through a central government‑wide portal or through an agency information collection process within 10 days after each calendar quarter, unless the data has been filed in a prior reporting period and is still accurate and current. The Task Force submitted a response on behalf of California to the OMB’s notice for information collection activities on April 30, 2009, requesting, among other things, clarification on Section 1512 reporting requirements from the federal government. This response included questions, concerns, and comments that various departments had communicated to the Task Force. The Task Force specifically requested that the OMB develop a standard methodology for estimating job creation and retention whenever actual data is not practical to obtain and clarify which provisions of the Recovery Act are considered discretionary appropriations and which are considered entitlements or mandatory programs in order to identify programs subject to the reporting requirements under Section 1512 of the Recovery Act. Additionally, on May 13, 2009, the Task Force submitted a letter responding through the National Association of Budget Officers to a questionnaire issued by the OMB. The Task Force suggested that allowing 40 days to capture, validate, and report quarterly data will ensure accurate data without the additional burden of reporting twice, once by compiling estimates and once by providing actual data. Currently, the Recovery Act only allows recipients 10 days after the end of each quarter to submit a Section 1512 report. The Task Force further requested the OMB to clarify whether the standard data element reporting requirements under Section 1512 apply to subrecipients as well as to prime recipients, and to limit subrecipient data to information appropriate and necessary to ensure accountability and transparency. According to the Task California State Auditor Report 2009‑611.1 17 June 2009 Force, because California’s constitution requires all provisions in excess of federal law to be completely funded by the State, it would not be fiscally practical for the State to require subrecipients to provide it with the standard data elements.11 However, this information is needed to accurately report what is required by the Recovery Act. The Task Force’s Efforts Include Coordination With Finance to Assess Department Readiness To assist departments in their preparation for complying with the accountability and transparency provisions of the Recovery Act, the Task Force requested Finance to review state entities’ readiness to receive and administer Recovery Act funds, with specific emphasis on their accountability and oversight processes. The state entities that Finance included in its original review, which was performed from April 13, 2009, through April 27, 2009, were the Department of Community Services and Development (Community Services and Development), the Employment Development Department (EDD), the California Energy Commission (Energy Commission), the Governor’s Office of Planning and Research, the California Department of Transportation, and the State Water Resources Control Board. The Task Force says Finance will perform additional reviews to assess readiness at other departments in the future. In fact, as of June 12, 2009, Finance had completed three additional reviews, including two departments—the Department of Social Services (Social Services) and the Department of Health Care Services (Health Care Services)—that we evaluated. According to Finance, it relied upon interviews and inquiry of The Task Force has coordinated department staff when conducting its review; it did not evaluate with Finance to assess various documents and reports received from the departments for validity. departments’ readiness; however, Although we commend the Task Force for its proactive approach to the reviews are based on interviews assessing readiness, without reviewing documents to support their and inquiries only. assertions, Finance cannot adequately ensure that departments have the proper accountability and oversight processes in place to administer the Recovery Act funding. Finance concluded that four of the original six departments it reviewed have adequate accountability and oversight controls in place related to Recovery Act funding, including EDD, one of the departments we assessed. However, Finance’s conclusion on the readiness of EDD differs from the results of our analysis. For example, as discussed later in the report, EDD needs to improve its 11 California’s constitution requires the State to provide funds to reimburse local governments for costs arising from the Legislature or any state agency mandating a new program or higher level of service from a local government. 18 California State Auditor Report 2009‑611.1 June 2009 oversight of subrecipients. Additionally, EDD is still in the process of programming some of its financial systems so that it can distinguish Recovery Act funds from other federal funds. Finance stated that the remaining two departments—the Energy Commission and Community Services and Development—should address concerns and recommendations identified in its readiness review to achieve adequate accountability and oversight readiness. For example, Finance reported that the Energy Commission stated that it does not have an information technology system capable of capturing the proposed Recovery Act standard data elements, nor has it created any specific mechanisms for ensuring data accuracy. Similarly, Finance reported that Community Services and Development stated that it has not conducted a formal self‑assessment of risks related to its Recovery Act responsibilities. Finance recommended, among other things, that Community Services and Development conduct a risk assessment and add all provisions related to the Recovery Act to its standard agreements. One of two recommendations directed to the Energy Commission was to assess its resources to determine if they are adequate to administer and report on the large increase of federal funds it received from the Recovery Act. Finally, Finance recommended that all departments continue coordination efforts with state and federal authorities to obtain clear guidance over allowable administrative and overhead expenses, oversight roles and responsibilities for direct funding to localities, if applicable, and additional specific reporting data requirements of the Recovery Act. Finance requested that departments develop and submit corrective action plans to address the concerns noted in its readiness reviews by May 30, 2009. According to its chief operating officer, as of June 9, 2009, Finance has received the departments’ corrective action plans and has discussed departmental plans for improvement. Further, the chief operating officer stated that Finance will conduct detailed follow‑up audits and reviews to address the findings and recommendations it reported in its readiness reviews and will ensure that the departments’ corrective action plans are being implemented. The Task Force Could Provide More Specific Guidance to State Departments Although the Task Force issued two bulletins to departments in May 2009 to provide general guidelines on the Recovery Act’s accountability provisions, it did not provide any specific direction on how to implement these guidelines. On May 18, 2009, the Task Force issued the first bulletin to communicate ongoing accountability guidance for California’s receipt and control of Recovery Act funds. Among other things, the bulletin indicates that departments must be California State Auditor Report 2009‑611.1 19 June 2009 prepared to separately track the receipt and disbursement of Recovery Act funds in their accounting systems; provide training regarding proper grant management and accountability; develop clear and informative information‑reporting systems; and develop tracking mechanisms for specific Recovery Act standard data elements, including the number of jobs created. The Task Force issued the second bulletin on May 29, 2009, to communicate recent federal guidance regarding reporting and accountability for the State’s receipt and control of Recovery Act funds. The bulletin indicates that if Recovery Act funds are awarded to subrecipients through an existing program, the award document and the disbursement documents shall distinguish the Recovery Act funds from other federal funds; that departments should maintain documentation to identify each subrecipient, the award amount, and projects funded through the Recovery Act; and that departments that award Recovery Act funds through contracts, loans, grants, or other agreements should ensure that the award documentation includes terms and conditions that require the subrecipient to meet the performance and Section 1512 reporting requirements identified by the respective federal agencies from which the funds originate. Although the bulletins provide general direction to the departments The Task Force has issued charged with administering Recovery Act funds, they did not include two bulletins to departments in any specific guidance on how to implement the directives included which it provides general direction in the bulletins. The Task Force has discussed this and anticipates regarding the administration of providing additional instruction as further guidance from the federal Recovery Act funds, but did not government becomes available. However, we believe the Task Force include any specific guidance on could still provide more statewide leadership on implementing how to implement the directives in the Recovery Act. Ideally, it would provide explicit direction to the bulletins. departments regarding the systems or processes they need to administer Recovery Act funding. Recognizing the variety of federal programs the departments administer, a one‑size‑fits‑all, detailed approach likely would not be practical. However, the Task Force could offer a broad framework within which they can operate that allows the flexibility necessary for each department to administer its federal programs. This framework could include directions on how to coordinate with the State Controller’s Office (State Controller) to establish a unique account number for tracking the receipt of Recovery Act funds separately from other federal funds coming to California and an agenda or list of topics departments should discuss with their staff when providing training on how to properly administer Recovery Act funding. Additionally, once the OMB informs the Task Force whether the Recovery Act’s Section 1512 reporting requirements apply to both the recipient and subrecipient or just the recipient, the Task Force could provide an example of the type of language departments should include as part of their terms and conditions of an award to require subrecipients to meet these reporting requirements. 20 California State Auditor Report 2009‑611.1 June 2009 Without providing specific instruction on how to implement the directives of the Recovery Act bulletins, the State lacks assurance that departments will properly administer Recovery Act funding. Finally, according to Finance’s chief operating officer, the Task Force is in the process of developing an inventory of standard data elements to define the reporting requirements that apply to each state entity. The Task Force intends to create a database that will compile and summarize this information for each department in The Task Force has yet to determine order to meet the requirement for quarterly reporting of the required the expected date of completion data elements under Section 1512 of the Recovery Act. The Task for creating a database that Force plans to post this information on the California Economic will compile and summarize Recovery Portal Web site (State Recovery Portal). According to information for each department Finance’s chief operating officer, as of May 19, 2009, the Task Force in order to meet the requirement has yet to determine the expected date of completion for this data for quarterly reporting under inventory because, in part, it is dependent on the federal government Section 1512 of the Recovery Act. completing its list of reporting requirements. The Department of Education Needs to Address Internal Control Weaknesses and Needs Further Recovery Act Guidance The Department of Education (Education) is moderately prepared to administer Recovery Act funding because, although it has some necessary processes in place, it is waiting for guidance before it begins to implement others and it needs to correct internal control weaknesses. For example, Education has established separate resource codes for the Recovery Act grant awards using unique identifiers within the standardized account code structure to ensure that Recovery Act funds are clearly distinguishable. Additionally, according to Education, it will use its existing apportionment process to distribute some Recovery Act funds to local educational agencies (LEAs) to ensure that Recovery Act funds are awarded in a prompt, fair, and reasonable manner. According to Education, it will use a formula driven allocation process to award grants to all Special Education Local Plan Areas. However, more work is needed in some critical areas. According to Education, for two of the three programs we evaluated, it monitors LEAs for state and federal program and fiscal compliance through the categorical program monitoring (CPM) and auditing processes. However, according to Education, the CPM monitors each LEA only once every four years. Although they do not qualify as adequate during-the-award monitoring, Education noted that the LEAs also receive annual OMB Circular A‑133 audits. These audits are required to be completed within nine months after the fiscal year being audited. Consequently, because the OMB Circular A‑133 audits are performed after the funds have already been spent, they do not satisfy the during-the-award monitoring requirement contained in the OMB’s Circular A‑133 compliance supplement. During-the-award monitoring is monitoring that California State Auditor Report 2009‑611.1 21 June 2009 occurs throughout the year. Education also has concerns about the Recovery Act’s Section 1512 quarterly reporting requirements, and until it receives guidance from the OMB, it believes it will be difficult to know whether it can prepare these reports on a timely basis. Education submitted its concerns to the OMB and is waiting for guidance on whether, under Recovery Act, Section 1512, LEAs must provide the standard data elements required or whether the prime recipient (in this case, Education) may report the best available data for the Section 1512 reporting requirements. Information from the State Recovery Portal as of April 13, 2009, indicate that Education’s estimated share of Recovery Act funds will be approximately $4.4 billion for fiscal year 2008–09 for three federal programs it administers. Table 2 displays how funds will be allocated among three federal programs that Education administers. The Task Force expects that approximately 74 percent of the $4.4 billion will be used to restore funding for K‑12, higher education, and special education grants to the greater of 2008 or 2009 funding levels. Table 2 The Department of Education’s Use of Its Estimated Share of Federal Funds Under the American Recovery and Reinvestment Act of 2009 for Fiscal Year 2008–09 (Dollars in Millions) reCovery reCovery aCt Program’s Catalog reCovery aCt aCt funDs funDs the reCovery aCt reCovery aCt of feDeral funDs the feDeral for WhiCh feDeral funDs eDuCation funDs eDuCation DomestiC assistanCe Program is exPeCteD eDuCation government reCeiveD through sPent through feDeral Program number to reCeive aPPlieD aWarDeD aPril 30, 2009* aPril 30, 2009† State Fiscal Stabilization Fund— state allocations—restoration of 84.394 $3,266.6 ‡ $2,565.0§ $0.0 $0.0 K‑12 and CSU/UC IDEA—Part B—special 84.389 613.4 NA 613.5 0.0 0.0 education grants Title I—Grants to local educational agencies and school improvement (targeted grant, finance 84.391 564.0 NA 562.5 0.0 0.0 incentive grant, and school improvement grant) Totals $4,444.0 $3,741.0 $0.0 $0.0 Sources: California Economic Recovery Portal Web site, http://recovery.ca.gov, as of April 13, 2009; and accounting records maintained by the Department of Education (Education) and the Governor’s Office of Planning and Research (OPR). NA = Not applicable. * This represents the amount of Recovery Act funds Education has drawn down from the federal government for fiscal year 2008–09 as of April 30, 2009. † This represents the amount of Recovery Act funds Education has either spent on its own behalf or provided to subrecipients for fiscal year 2008–09 as of April 30, 2009. ‡ While Education is responsible for the distribution, it did not submit the application for these funds. Pursuant to Section 14005 of the Recovery Act, the governor is the party responsible for submitting the application for these funds. The governor of California submitted this application on April 9, 2009. Furthermore, the governor was not required to request a particular amount of funding. Recovery Act funds awarded for this program were based on a formula pursuant to Section 14001(d) of the Recovery Act. § The Recovery Act requires the governor to apply for California’s share of funds under the act’s State Fiscal Stabilization Fund. The governor applied for these funds on April 9, 2009, and the U.S. Department of Education awarded $3,266 million to the State on April 17, 2009. OPR entered into an interagency agreement with Education to distribute approximately $2,565 million of these funds to local educational agencies for K‑12. OPR plans to enter into similar interagency agreements with the University of California and California State University to disburse the remaining funds. 22 California State Auditor Report 2009‑611.1 June 2009 California’s public education system is administered at the state level by Education, under the direction of the State Board of Education and the superintendent of public instruction (superintendent), to educate approximately 6.3 million students. The primary duties of Education and the superintendent are to provide technical assistance to local school districts and to work with the educational community to improve academic performance. According to Education’s deputy state superintendent of the government affairs branch and other staff, the department has a number of executives and top‑level management from different branches who will manage the overall implementation activities for the Recovery Act funding. However, Education stated that this internal Recovery Act working group is not a formal governance body. The deputy state superintendent of the government affairs branch has held weekly informal meetings with the Education representative to the Task Force to discuss the Recovery Act; any relevant information discussed is then provided to the internal Recovery Act working group, which in turn relays the necessary information to the working group members’ staff. Education also communicates with representatives from the Office of the Secretary of Education (OSE) and Finance as needed, either by phone or through face‑to‑face meetings. Existing Internal Controls That Education Intends to Use in Administering Recovery Act Funding Are Weak Education has not fully corrected Education stated that it intends to use existing processes, procedures, nine of the 12 internal control and financial and operational systems that constitute internal weaknesses we identified in our controls to administer Recovery Act funding. However, our review most recent Single Audit report of the status of internal control weaknesses identified in our State of covering fiscal year 2007–08, California: Internal Control and State and Federal Compliance Audit yet intends to use these existing Report for the Fiscal Year Ended June 30, 2008 (2008‑002) (Single processes, procedures, and internal Audit) report covering fiscal year 2007–08 revealed 12 internal controls to administer Recovery control weaknesses that may affect Education’s ability to administer Act funding. Recovery Act funds. Table 3 displays select internal control weaknesses at Education for federal programs that are expected to receive $50 million or more under the Recovery Act during fiscal years 2008–09 and 2009–10. Education has not fully corrected nine of these 12 weaknesses and has taken minimal or no action to correct two of the nine weaknesses. For example, we reported that Education disbursed over $1.6 billion to LEAs during the fiscal year ended June 30, 2008, with no assurances that these subrecipients minimized the time between the receipt and disbursement of federal funds. In addition, in its March 2009 report regarding Education’s cash management practices, the inspector general for the U.S. Department of Education (DOE) stated Education has yet to implement an agency‑wide cash management system that minimizes the time elapsing between LEA receipt and disbursement of federal education California State Auditor Report 2009‑611.1 23 June 2009 3 elbaT eht rednU eroM ro noilliM 05$ evieceR ot detcepxE erA tahT noitacudE fo tnemtrapeD eht ta smargorP laredeF rof sessenkaeW lortnoC lanretnI tiduA elgniS 01–9002 dna 90–8002 sraeY lacsiF rof 9002 fo tcA tnemtsevnieR dna yrevoceR naciremA )snoilliM ni sralloD( DeifitneDi saW ssenkaeW lortnoC lanretni eht erehW aera s’margorP yrevoCer fo tnuoma yrevoCer fo tnuoma fo golataC etats eht sDnuf tCa etats eht sDnuf tCa tneiPiCerbus hsaC /DeWolla seitivitCa CitsemoD lareDef evieCer ot stCePxe evieCer ot stCePxe slatot gnirotinom gnitroPer ytilibigile tnemeganam stsoC elbaWolla rebmun eCnatsissa 01–9002 raey laCsif ni 90–8002 raey laCsif ni margorP lareDef etats—dnuF noitazilibatS lacsiF etatS * * * * * * 493.48 9.806,1$ 6.662,3$ CU/USC dna 21‑K fo noitarotser—snoitacolla 3 3 0 0 0 0 †193.48 5.316 4.316 stnarg noitacude laiceps—B traP—AEDI dna seicnega lanoitacude lacol ot stnarG—I eltiT ecnanfi ,tnarg detegrat( tnemevorpmi loohcs 6 2 1 0 3 0 †983.48 3.749 0.465 )tnarg tnemevorpmi loohcs dna ,tnarg evitnecni stnarg evitnecni—dnuF noitazilibatS lacsiF etatS * * * * * * 593.48 0.534 0.0 )”poT eht ot ecaR“ sa nwonk osla( 3 1 0 0 2 0 575.39 0.222 0.0 tnarG kcolB tnempoleveD dna eraC dlihC * * * * * * 683.48 8.07 0.0 ygolonhceT noitacudE—II eltiT 21 6 1 0 5 0 5.798,3$ 0. 444,4$ slatoT laredeF dna etatS dna lortnoC lanretnI :ainrofilaC fo etatS ’stiduA etatS fo uaeruB ;9002 ,31 lirpA fo sa ,vog.ac.yrevocer//:ptth ,)latroP yrevoceR etatS( etis beW latroP yrevoceR cimonocE ainrofilaC :secruoS .)ADFC( ecnatsissA citsemoD laredeF fo golataC eht dna ;9002 yaM ,200‑8002 tropeR ,)tiduA elgniS( 8002 ,03 enuJ dednE raeY lacsiF eht rof tropeR tiduA ecnailpmoC fo ecffiO s’ronrevoG eht ,noitacudE fo yraterceS eht fo ecffiO eht swohs latroP yrevoceR etatS eht hcihw rof stnarg laredef esoht gniretsinimda ni elor yramirp eht sah noitacudE fo tnemtrapeD ehT :etoN .elbisnopser gnieb sa ecnaniF fo tnemtrapeD eht dna ,hcraeseR dna gninnalP .80–7002 raey lacsfi gnirevoc tiduA elgniS ruo ni dedulcni ton erew ,erofereht dna ,smargorp wen era esehT * esuaceb smargorp eseht rof srebmun ADFC wen deussi tnemnrevog laredef ehT .80–7002 raey lacsfi gnirevoc troper tiduA elgniS ruo htiw eerga ton lliw smargorp owt eseht rof rebmun ADFC laredef ehT † laicepS eht elihw 010.48 si rebmun ADFC s’margorp I eltiT eht ,80–7002 raey lacsfi gnirevoc troper tiduA elgniS eht nI .9002 fo tcA tnemtsevnieR dna yrevoceR naciremA eht rednu gnidnuf eviecer lliw yeht .720.48 si rebmun ADFC s’margorp noitacudE 24 California State Auditor Report 2009‑611.1 June 2009 funds, despite repeated audit findings over many years. Because it uses an advance payment method for most federal education programs, Education needs a cash management system that ensures federal program cash is disbursed at or about the time that LEAs need to pay federal program costs. According to Education, it has established an internal task force and developed a cash management improvement plan to address deficiencies and ensure compliance with federal cash management requirements. Education stated it is currently in the initial stages of implementing a pilot project of its cash management improvement plan. The Single Audit covering fiscal year 2007–08 identified five internal control weaknesses regarding cash management. Education has not fully corrected three of these weaknesses and for two of those three it has taken minimal or no action to correct the weakness. Until it fully addresses its cash management weaknesses, it cannot be assured that subrecipients will minimize the time between the receipt and disbursement of federal funds. Education expects to receive Recovery Act funds for two existing federal programs, as well as one new federal program, in fiscal year 2008–09. Education plans to use its existing processes, procedures, and financial and operational systems that constitute internal controls to administer Recovery Act funding. Education told us that though the State Fiscal Stabilization Fund is a new program that will provide funding to LEAs, program funds will be disbursed through Education’s current apportionment process. To comply with Task Force guidance to separately track Recovery Act funds, Education has established separate resource codes within its standardized account code structure to identify funds provided under the Recovery Act. In addition, it requested that the State Controller establish separate accounts for the two programs for which Education received Recovery Act funds directly from the federal government. The Governor’s Office of Planning and Research had the State Controller set up an account for the third program we analyzed at Education—the State Fiscal Stabilization Fund. Because the authority to receive federal funds is based on the grant document departments receive from the federal awarding agency, departments must submit a document to the State Controller to establish accounts for the receipt authority of federal funds. These accounts are established for each program using the unique Catalog of Federal Domestic Assistance (CFDA) number. California State Auditor Report 2009‑611.1 25 June 2009 According to Education, it plans to use its existing monitoring processes from its CPM to oversee the Recovery Act funds it receives for two of the three programs we evaluated. However, according to Education, CPM monitors each LEA only once Education believes it will need every four years. Although they do not qualify as adequate additional resources if the federal during-the-award monitoring, Education noted that the LEAs also government requires monitoring received annual OMB Circular A‑133 audits. During-the-award as the activities and expenditures monitoring is monitoring that occurs throughout the year. are occurring because it currently The audits are required to be completed within nine months monitors local educational agencies after the fiscal year being audited. Consequently, because OMB only once every four years. Circular A‑133 audits are performed after the funds have already been spent, they do not satisfy during-the-award monitoring. Education stated that it will need additional resources if the federal government requires monitoring as the activities and expenditures are occurring. According to Education, it will submit a waiver, as allowable under the Recovery Act, to access additional administrative dollars. According to Education’s director of audits and investigations, if Education were to receive additional administrative funds for monitoring, it would most likely be used for developing Recovery Act monitoring procedures, monitoring travel costs, and possible overtime costs of existing staff. Additionally, the director of audits and investigations stated that Education has already shifted staff responsibilities and priorities to manage Recovery Act funding and additional administrative funds would be immediately used. In addition to concerns regarding the frequency of its monitoring activities, we reported weaknesses in its process for monitoring subrecipients in our Single Audit report covering fiscal year 2007–08. We identified and reported six internal control weaknesses related to its existing subrecipient monitoring process. Five of those six weaknesses have not been fully corrected. To ensure that its existing monitoring procedures are effective for the Recovery Act funds, it must fully correct the reported control weaknesses. Education Is Still Waiting for Clarification on Recovery Act Requirements Education also intends to use existing systems for its performance reporting, but it is currently awaiting guidance from the federal government concerning the Recovery Act’s Section 1512 performance reporting requirements. According to Education, it does not yet know the types of reports it will be required to prepare, so it is difficult to state whether Education will prepare them on a timely basis. Education also stated that it would be a huge workload for Education to report on a quarterly basis 10 days after the end of the quarter considering the large number of LEAs receiving Recovery Act funds and the fact that Education does not currently report on a quarterly basis. 26 California State Auditor Report 2009‑611.1 June 2009 Additionally, Education does not know whether it would be required to seek LEA‑level information quarterly. It submitted comments to the OMB on May 1, 2009, requesting clarification on whether, under Section 1512 of the Recovery Act, LEAs must provide the standard data elements required or whether the prime In a letter to OMB, Education stated recipient (Education) may report the best available data. In its that there are over 1,000 local comments submitted to the OMB, Education stated there are over educational agencies in California, 1,000 LEAs in California, most of which will receive Recovery Act most of which will receive funds, and it is concerned about the utility of quarterly narrative Recovery Act funds, and expressed information on each LEA’s planned use of Recovery Act funds. concerns about meeting the Specifically, Education noted reporting deadlines of 10 days after reporting deadlines. the close of each quarter leave little, if any, time for LEA or state review and correction of data. Education questioned how accurate, valid, or reliable the data would be with such a short deadline. As of June 4, 2009, Education stated that it had not yet received a response from the OMB. In regard to Section 1512 performance reporting, Education stated that DOE has not yet confirmed the metrics that will be used to measure progress in meeting the Recovery Act assurances. Additionally, in its April 30, 2009, comments to the OMB, the Task Force stated that the majority of California state agencies and subrecipients have no experience in collecting and estimating job creation and retention, either by number of jobs or types of jobs. Therefore, the Task Force has requested that the OMB develop a standard methodology for estimating job creation and retention whenever actual data is not practical to obtain. Table A.1 in Appendix A presents, by programs expected to receive $50 million or more in fiscal year 2008–09, an assessment of Education’s preparedness to administer Recovery Act funding for each program. Table B in Appendix B presents, by OMB Circular A‑133 compliance requirement, the status of action Education has taken to correct select internal control weaknesses reported in the Single Audit covering fiscal year 2007–08. As shown in Appendix B, of the 12 internal control weaknesses we identified, Education has fully addressed three, is in the process of taking corrective action for seven, and has taken minimal or no action to address the remaining two. Education provided written comments, as well as verbal comments at our exit conference, recommending specific changes to the report. We made those changes we considered necessary. California State Auditor Report 2009‑611.1 27 June 2009 Health Care Services Intends to Use Existing Systems to Administer Recovery Act Funds, but Additional Action Is Needed Health Care Services is mostly prepared to administer Recovery Act funding. For example, it has policies for eligibility determinations and has informed the counties of these changes. For areas where its responsibilities are unclear, Health Care Services has taken the For areas where its responsibilities appropriate measure of seeking guidance from its federal control are unclear, Health Care Services agency, the Center for Medicare and Medicaid Services. Additionally, has taken the appropriate measure according to its associate director, Health Care Services has of seeking guidance from its federal corrective action plan processes in place to promptly resolve any control agency. audit weaknesses identified that may impact its ability to administer the Recovery Act. The associate director of Health Care Services stated it has a sufficient level of personnel to manage the Recovery Act program, and that its staff is sufficiently informed about the Recovery Act. Because the Recovery Act merely results in increased federal funding for an existing program, the associate director believes Health Care Services’ existing internal controls should be sufficient for ensuring that Recovery Act funds are used for only authorized purposes. However, some areas need more work. For example, Health Care Services is still working on implementing corrective action for 11 internal control weaknesses reported in our Single Audit covering fiscal year 2007–08. Also, although the associate director believes that Section 1512 reporting requirements for the Recovery Act do not apply to the temporary increase of Medicaid Federal Medical Assistance Percentages (FMAP) funds, Health Care Services has not yet received final confirmation from the OMB that its understanding is correct. The Task Force estimates, as shown on the State Recovery Portal on April 13, 2009, that Health Care Services’ share of the Recovery Act funds will be approximately $3.3 billion for fiscal year 2008–09. As shown in Table 4 on the following page, these funds will be allocated to provide temporary supplemental federal funding for allowable Medicaid expenditures. As of April 30, 2009, Health Care Services had spent more than $2.0 billion, or approximately 62 percent, of these Recovery Act funds. The mission of Health Care Services is to preserve and improve the health status of all Californians. To fulfill its mission, Health Care Services finances and administers a number of individual health care service delivery programs, including the California Medical Assistance Program (Medi‑Cal), which provides health care services to low‑income persons and families who meet defined eligibility requirements. Health Care Services has identified two “department leads” to oversee its implementation of the FMAP funds it received under the Recovery Act. The primary 28 California State Auditor Report 2009‑611.1 June 2009 contact is Health Care Services’ associate director and Medi‑Cal tribal liaison, and the alternate contact is its deputy director for administration. The undersecretary of California’s Health and Human Services Agency serves as the liaison between the department and the Task Force, relaying and receiving Recovery Act information as necessary. Table 4 The Department of Health Care Services’ Use of Its Estimated Share of Federal Funds Under the American Recovery and Reinvestment Act of 2009 for Fiscal Year 2008–09 (Dollars in Millions) reCovery aCt reCovery reCovery aCt Program’s reCovery aCt funDs for aCt funDs funDs health reCovery aCt funDs Catalog of funDs the feDeral WhiCh health the feDeral Care serviCes health Care serviCes feDeral DomestiC Program is exPeCteD Care serviCes government reCeiveD through sPent through feDeral Program assistanCe number to reCeive* aPPlieD aWarDeD aPril 30, 2009† aPril 30, 2009‡ Temporary increase of medicaid Federal Medical Assistance Percentages (FMAP) 93.778§ $3,259.9 NAll $3,331.2 $1,992.0 $2,053.6 Sources: California Economic Recovery Portal Web site (State Recovery Portal), http://recovery.ca.gov, as of April 13, 2009; and records maintained by the Department of Health Care Services (Health Care Services). NA = Not applicable. * This represents the amount of American Recovery and Reinvestment Act of 2009 (Recovery Act) funds the State Recovery Portal shows Health Care Services may receive from the federal government by the end of fiscal year 2008–09. † This represents the amount of Recovery Act funds Health Care Services has drawn down from the federal government for fiscal year 2008–09 as of April 30, 2009. ‡ This represents the amount of Recovery Act funds Health Care Services has either spent on its own behalf or provided to subrecipients for fiscal year 2008–09 as of April 30, 2009. § Although Health Care Services did not provide us what it thought the temporary increase in the FMAP program’s Catalog of Federal Domestic Assistance (CFDA) number is, we believe the CFDA number is 93.778 because the temporary increase in FMAP is merely a change in the sharing ratio of program costs for the Medical Assistance Program. ll According to the chief of Health Care Services’ financial management branch, no application was required because this Recovery Act funding is applied to an existing program. Existing Internal Controls That Health Care Services Intends to Use in Administering Recovery Act Funding Are Weak Health Care Services intends to use existing internal controls to administer Recovery Act funding. However, as shown in Table 5 on the following page, our review of the status of certain internal control weaknesses previously identified in our Single Audit report covering fiscal year 2007–08 revealed that there were 11 deficiencies that may affect Health Care Services’ ability to administer Recovery Act funding, covering areas such as activities allowed and allowable costs, eligibility, reporting, and subrecipient monitoring. For example, for our fiscal year 2007–08 audit of expenditures charged to Medi‑Cal, we selected a sample of 50 fee‑for‑service claims and used Health Care Services’ medical review branch of trained medical professionals to determine whether the expenditure was California State Auditor Report 2009‑611.1 29 June 2009 for an allowable service rendered and was supported by medical records or other evidence indicating that the service was actually provided and consistent with the medical diagnosis. We noted six claims that did not appear to be for an allowable service. Specifically, five paid claims were not considered medically necessary, and one claim did not have sufficient documentation to support whether the required medical procedures were rendered to the beneficiary. As of May 19, 2009, Health Care Services had drafted letters requesting recoveries from four of the providers identified in the deficiency, but has not sent them. It plans on recovering the other two claims from the hospitals during its annual post‑payment reviews. While recovering these payments is a good start, until Health Care Services takes steps to correct the internal control weaknesses that caused the errors, it cannot adequately ensure only medically necessary claims and eligible providers are paid. If the existing system of internal controls allows such mispayments to occur under Medi‑Cal, relying on that same system could allow mispayments to occur with the increased FMAP funds from the Recovery Act. Table 5 Single Audit Internal Control Weaknesses for the Federal Program at the Department of Health Care Services That Is Expected to Receive $50 Million or More Under the American Recovery and Reinvestment Act of 2009 for Fiscal Years 2008–09 and 2009–10 (Dollars in Millions) area Where internal Control Weakness Was iDentifieD Program’s Catalog amount of reCovery amount of reCovery of feDeral aCtivities aCt funDs the state aCt funDs the state DomestiC alloWeD/ exPeCts to reCeive exPeCts to reCeive assistanCe alloWable Cash subreCiPient feDeral Program in fisCal year 2008–09 in fisCal year 2009–10 number Costs management eligibility rePorting monitoring total Temporary increase of medicaid Federal Medical Assistance Percentages (FMAP) $3,259.9 $4,469.9 93.778* 4 0 4† 1 2 11 Sources: California Economic Recovery Portal Web site, http://recovery.ca.gov, as of April 13, 2009; and the Bureau of State Audits’ State of California: Internal Control and State and Federal Compliance Audit Report for the Fiscal Year Ended June 30, 2008 (Single Audit), Report 2008‑002, May 2009. * Although the Department of Health Care Services did not provide us what it thought the Catalog of Federal Domestic Assistance (CFDA) number is for the temporary increase in FMAP, we believe the CFDA number is 93.778 because this increase is merely a change in the sharing ratio of program costs for the Medical Assistance Program. † Although two of these weaknesses were identified during procedures performed over special tests and provisions for our Single Audit covering fiscal year 2007–08, we categorize them here as eligibility weaknesses because they relate to provider eligibility. Further, Health Care Services has not fully resolved an internal control weakness over eligibility that we previously identified during the Single Audit report covering fiscal year 2006–07 and noted again in fiscal year 2007–08. Specifically, we reported that Health Care Services is unable to reconcile presumptive 30 California State Auditor Report 2009‑611.1 June 2009 eligibility12 numbers with the enrollment listings qualified providers file because it lacks an automated system to process these records. Inadequate tracking of presumptive eligibility numbers risks duplicated issuances of numbers or unauthorized use if the existence of the recipient is not authenticated. Health Care Services reported in its corrective action plan for the Single Audit covering fiscal year 2007–08 that it is participating in an enterprise enrollment portal (EEP) feasibility study report on a Web‑based application process that will include the presumptive eligibility program for pregnant women. As of May 2009 Health Care Services reports that its advance‑planning document is currently under review to acquire federal funding for the EEP. The timeline for the EEP includes acquisition beginning in July 2009 and design, development, and implementation beginning in July 2012. Because it expects to receive Recovery Act funds mainly for an existing federal program rather than new programs, Health Care Services plans to use its existing internal controls to administer Recovery Act funds. For example, its accounting section uses a database and reporting system known as the CMS 64 accounting system (CMS 64) for federal reporting and to claim state and federal funding participation for health care programs it administers. To To comply with the Task Force comply with Task Force guidance to separately track Recovery Act guidance to separately track funds, Health Care Services draws down and tracks the additional Recovery Act funds, Health Care FMAP funds manually, outside of CMS 64. Currently, Health Services draws down and tracks the Care Services is calculating the 11.59 percent temporary increase additional funds manually, outside for FMAP manually; however, it is in the process of updating its of its accounting system. CMS 64, and will begin testing the system June 1, 2009, with an implementation date of July 1, 2009. Health Care Services Is Still Waiting for Clarification on Recovery Act Reporting Requirements The associate director of Health Care Services stated that the department’s position is that it is not subject to the federal reporting requirements under Section 1512 of the Recovery Act at this time because the programs it administers are entitlement or mandatory programs. In guidance the OMB published in April 2009, she stated it appears that these types of programs would be exempt from Section 1512 reporting requirements. She also stated that another entity had made inquiries to the OMB seeking additional clarification on this requirement. Health Care 12 The presumptive eligibility component of this program grants immediate temporary Medi‑Cal coverage for California residents who are pregnant but do not have health insurance or Medi‑Cal coverage for prenatal care. Health Care Services grants qualified providers the right to enroll recipients under this program. The provider is required to submit to Health Care Services a weekly enrollment summary of all presumptive eligibility identification numbers it issued. California State Auditor Report 2009‑611.1 31 June 2009 Services provided a copy of a letter dated May 1, 2009, from the American Public Human Services Association (association) to the OMB asking for clarification about which federal programs are considered entitlement or mandatory programs. According to its Web site, the association is a nonprofit organization of state and local human services agencies and individuals who work or are interested in public human service programs, including Medicaid. The associate director and Medi‑Cal tribal liaison also stated that Health Care Services is still awaiting the OMB’s clarification on this requirement. Table A.2 in Appendix A presents, for the one program expected to receive $50 million or more in fiscal year 2008–09, an assessment of Health Care Services’ preparedness to administer Recovery Act funding for the temporary increase of Medicaid FMAP. Table B in Appendix B presents, by OMB Circular A‑133 compliance requirement, the status of actions Health Care Services has taken to correct certain internal control weaknesses reported in the Single Audit covering fiscal year 2007–08. As shown in Appendix B, Health Care Services is in the process of taking corrective action for all 11 internal control weaknesses we identified. Health Care Services recommended specific changes to the report during our exit conference. We made those changes we considered necessary. While EDD is Progressing With Efforts to Prepare to Administer Recovery Act Funding, More Steps Are Necessary EDD has made moderate progress toward implementing the steps necessary to administer Recovery Act funding. For instance, it has created an internal oversight group to manage new Recovery Act policies and has taken steps to add more staff to monitor the use of Recovery Act funds. Further, EDD staff has worked with subrecipients of Workforce Investment Act (WIA) funds to ensure that they are aware of the changing provisions associated with the Recovery Act. However, more work is needed in some critical areas. For example, EDD stated that it would have to provide EDD has stated that it would have estimates in order to meet the current reporting deadlines of the to provide estimates in order to Recovery Act, and is still awaiting guidance regarding Section 1512 meet the current reporting performance reporting. Also, although it has established unique deadlines of the Recovery Act, and grant codes for Unemployment Insurance (UI) Recovery Act funds, additional programming needed additional programming is needed to ensure Recovery Act and to separately track the funds is other federal funding transactions are charged to the correct code. scheduled to be completed by EDD stated that the additional programming will be completed June 30, 2009. by June 30, 2009. 32 California State Auditor Report 2009‑611.1 June 2009 The Task Force estimates that EDD’s share of Recovery Act funds will be approximately $2.5 billion for fiscal year 2008–09. As shown in Table 6, these funds will be allocated among seven federal programs that EDD administers. The Task Force expects that the majority of these funds will be split among three components of the UI program to temporarily extend the length of time an individual may receive unemployment benefits and to provide an increase in the amount of weekly benefits an unemployed individual is eligible to receive. EDD promotes California’s economic growth by providing services to keep employers, employees, and job seekers competitive. EDD connects employers with job seekers; administers the UI, Disability Insurance, and Paid Family Leave programs; and provides employment and training programs under the federal WIA. According to the chief of EDD’s accounting section, the department created a Recovery Act work group (work group), consisting of representatives from various branches and divisions within EDD, to oversee the department’s implementation of the Recovery Act. According to the chief of the accounting section, the work group maintains regular contact with the Task Force, providing daily reports on the total amount of Recovery Act benefits paid to date and weekly updates on upcoming Recovery Act events, and responding to questions from the Task Force’s Labor Workforce and Development Agency representative. Existing Internal Controls Over Subrecipient Monitoring Need to Be Strengthened EDD generally intends to use existing internal controls to administer Recovery Act funding because it believes these funds are simply supplements or augmentations to existing programs. However, our review of the status of internal control weaknesses previously identified in our Single Audit report covering fiscal year 2007–08 revealed three weaknesses related to subrecipient monitoring that, if not corrected, may directly affect EDD’s ability In our most recent Single Audit to administer Recovery Act funding. Table 7 on page 35 displays report covering fiscal year 2007–08, Single Audit internal control weaknesses at EDD for federal we noted that EDD did not conduct programs that are expected to receive $50 million or more under on-site monitoring reviews of any the Recovery Act during fiscal years 2008–09 and 2009–10. community-based organizations We reported that EDD did not conduct on‑site monitoring reviews that received federal funding of any community‑based organizations (CBOs) that received federal under the Workforce Investment funding under the three WIA programs during fiscal year 2007–08. Act programs, even though in Combined, the CBOs received $83.5 million in WIA funding. total these organizations received According to EDD’s corrective action plan, it intends to resolve this $83.5 million in such funding. issue by increasing the size of its monitoring workforce. However, we have concerns regarding the ability of EDD to quickly hire a sufficient monitoring workforce to perform such monitoring. California State Auditor Report 2009‑611.1 33 June 2009 Table 6 The Employment Development Department’s Use of Its Estimated Share of Federal Funds Under the American Recovery and Reinvestment Act of 2009 for Fiscal Year 2008–09 (Dollars in Millions) reCovery Program’s aCt funDs reCovery Catalog of the feDeral reCovery aCt aCt funDs reCovery aCt feDeral DomestiC Program funDs for the feDeral funDs eDD reCovery aCt funDs assistanCe is exPeCteD WhiCh eDD government reCeiveD through eDD sPent through feDeral Program number to reCeive aPPlieD aWarDeD aPril 30, 2009* aPril 30, 2009† Federal funding for extended unemployment (Fed‑Ed) unknown‡ $885.3 NA§ NAll $0.0# $0.0# Unemployment Insurance— extension of Emergency Unemployment Compensation (EUC) 17.225 693.0** NA§ NAll 0.0†† unknown†† Increase in unemployment compensation benefits 17.225 480.0 NA§ NAll 215.1 215.1 Workforce Investment Act: Dislocated Workers 17.260 188.6 NA§ $221.9 0.135 0.135 Workforce Investment Act: Youth Services 17.259 158.6 NA§ 186.6 0.275 0.275 Workforce Investment Act: Adult Work Services 17.258 68.1 NA§ 80.1 0.065 0.065 State Unemployment Insurance and 17.225 Employment Service Operations and 17.207 19.9 NA§ 59.9‡‡ 0.0 0.0 Totals $2,493.5 NA§ $548.5 $215.6 $215.6 Sources: California Economic Recovery Portal Web site (State Recovery Portal), http://www.recovery.ca.gov, as of April 13, 2009; and accounting records maintained by the Employment Development Department (EDD.) NA = Not applicable. * This represents the amount of Recovery Act funds EDD has drawn down from the federal government for fiscal year 2008–09 as of April 30, 2009. † This represents the amount of Recovery Act funds EDD has either spent on its own behalf or provided to subrecipients for fiscal year 2008–09 as of April 30, 2009. ‡ EDD believes this program will be funded through Catalog of Federal Domestic Assistance (CFDA) number 17.225, but notes that the federal government has not confirmed the CFDA number. § According to EDD, all Recovery Act funds it is expected to or has received in fiscal year 2008–09 are for extensions of existing programs. As a result, EDD was not required to apply for the funds. ll According to EDD, it does not receive a Notice of Obligation (award notice) for Unemployment Insurance (UI) benefits. According to EDD, it estimated sums it is likely to receive in fiscal year 2008–09 based on unemployment levels and unemployment claims it projected. # According to EDD, benefit payments for the Recovery Act Fed‑Ed program began in May 2009. As a result, there are no receipts and expenditures to report in this table. ** Although the State Recovery Portal did not show EDD as the responsible state department for this program, we confirmed that it will administer the program. †† Although EDD is able to identify the total amount of EUC receipts and expenditures (Recovery Act extended EUC expenditures and regular EUC expenditures paid with other federal funds combined), as of June 12, 2009, the accounting programming to distinguish payments from the Unemployment Compensation Account and the federal treasury general fund, which is used to pay the extended EUC expenditures, is not in place. As a result, EDD cannot isolate Recovery Act extended EUC financial activity from regular EUC financial activity. ‡‡ EDD plans to use the entire $59.9 million to update its UI information technology systems. 34 California State Auditor Report 2009‑611.1 June 2009 Until EDD fully resolves this issue, it cannot ensure that CBOs are acting in compliance with applicable laws, regulations, or provisions of grant agreements. As a result, because EDD plans to use existing processes, Recovery Act funds may not be monitored effectively if it does not correct the weaknesses in these processes. Conversely, EDD appears to have fully addressed the internal control weakness over reporting that we previously identified. Specifically, we reported that the WIA dislocated workers ETA‑9130 report (round 1) EDD submitted to the U.S. Department of Labor (DOL) revealed that EDD did not report dislocated worker funds it transferred to the WIA Adult Program. During procedures performed as part of this analysis, we examined one dislocated workers ETA‑9130 report (round 1) that EDD submitted to DOL in fiscal year 2008–09 and determined that the supporting accounting records agreed with the report. Therefore, it appears the weakness reported in fiscal year 2007–08 may have been an isolated instance, and EDD’s existing internal controls over reporting are sufficient for complying with the financial reporting provisions of the Recovery Act. As we commence our Single Audit report covering fiscal year 2008–09, we intend to conduct additional procedures to determine whether all weaknesses identified in our most recent Single Audit report covering fiscal year 2007–08 have been corrected. Because it expects to receive Recovery Act funds only for existing federal programs rather than new programs, EDD plans to use its existing internal controls and data systems to administer Recovery Act funding. For example, EDD uses a data system called the Job and Training Automation System (JTA) to reimburse WIA subgrantees for contract services rendered. The JTA uses grant codes to track which federal program cash is being drawn down from. To comply with Task Force guidance to separately track Recovery Act funds, EDD has already established unique grant codes to identify Recovery Act funds. Conversely, according to EDD officials, it is currently developing accounting programming procedures to distinguish Recovery Act fund payments from the federal Treasury general fund payments for one of its UI programs. EDD has also begun to address changes prompted by the Recovery Act in eligibility requirements for the WIA Youth Services Summer Program by providing guidance to subrecipients, bringing new regulations to their attention. EDD Is Still Waiting for Clarification on Recovery Act Reporting Provisions EDD also intends to use existing financial reporting systems to comply with the financial reporting provisions of the Recovery Act, but is currently awaiting guidance from the federal government California State Auditor Report 2009‑611.1 35 June 2009 7 elbaT eroM ro noilliM 05$ evieceR ot detcepxE erA tahT tnemtrapeD tnempoleveD tnemyolpmE eht ta smargorP laredeF rof sessenkaeW lortnoC lanretnI tiduA elgniS 01–9002 dna 90–8002 sraeY lacsiF rof 9002 fo tcA tnemtsevnieR dna yrevoceR naciremA eht rednU )snoilliM ni sralloD( DeifitneDi saW ssenkaeW lortnoC lanretni erehW aera s’margorP yrevoCer fo tnuoma yrevoCer fo tnuoma fo golataC etats eht sDnuf tCa etats eht sDnuf tCa tneiPiCerbus hsaC /DeWolla seitivitCa CitsemoD lareDef ni evieCer ot stCePxe ni evieCer ot stCePxe slatot gnirotinom gnitroPer ytilibigile tnemeganam stsoC elbaWolla rebmun eCnatsissa 01–9002 raey laCsif 90–8002 raey laCsif margorP lareDef dednetxe rof gnidnuf laredeF † † † † † † *nwonknu 5.522,2$ 3.588$ )dE‑deF( tnemyolpmenu fo noisnetxe—ecnarusnI tnemyolpmenU noitasnepmoC tnemyolpmenU ycnegremE † † † † † † 522.71 0.704,1 0.396 )CUE( margorP tnemyolpmenu ni esaercnI † † † † † † 522.71 0.027 0.084 stfieneb noitasnepmoc 2 1 1 0 0 0 062.71 3.33 6.881 srekroW detacolsiD :tcA tnemtsevnI ecrofkroW 1 1 0 0 0 0 952.71 0.82 6.851 secivreS htuoY :tcA tnemtsevnI ecrofkroW 1 1 0 0 0 0 852.71 0.21 1.86 secivreS kroW tludA :tcA tnemtsevnI ecrofkroW 522.71 dna ecnarusnI tnemyolpmenU etatS dna snoitarepO ecivreS tnemyolpmE † † † † † † 702.71 0.04 ‡9.91 § § § § § § 572.71 0.57 0.0 srekrow rof stnarg evititepmoC 4 3 1 0 0 0 8.045,4$ 5.394,2$ slatoT rof tropeR tiduA ecnailpmoC laredeF dna etatS dna lortnoC lanretnI :ainrofilaC fo etatS ’stiduA etatS fo uaeruB ;9002 ,31 lirpA fo sa ,vog.ac.yrevocer//:ptth ,etis beW latroP yrevoceR cimonocE ainrofilaC :secruoS eht ta ffats htiw dleh sweivretni dna yb deniatniam sdrocer gnitnuocca dna ;)ADFC( ecnatsissA citsemoD laredeF fo golataC eht ;9002 yaM ,)tiduA elgniS( 200‑8002 tropeR ,8002 ,03 enuJ dednE raeY lacsiF eht .)DDE( tnemtrapeD tnempoleveD tnemyolpmE .rebmun ADFC eht demrfinoc ton sah tnemnrevog laredef eht taht seton tub ,522.71 rebmun ADFC hguorht dednuf eb lliw margorp siht seveileb DDE * .80–7002 raey lacsfi gnirevoc tiduA elgniS ruo ni dedulcni ton erew )702.71 rebmun ADFC( margorp secivreS tnemyolpmE eht dna )522.71 rebmun ADFC( margorp )IU( ecnarusnI tnemyolpmenU ehT † eht esu ot snalp DDE .doirep raey‑owt a revo deviecer eb ot detcepxe si tnuoma ehT .90–8002 raey lacsfi ni noillim 9.95$ dedrawa saw snoitarepO secivreS tnemyolpmE dna ecnarusnI tnemyolpmenU etatS ‡ .smetsys ygolonhcet noitamrofni IU sti etadpu ot noillim 9.95$ eritne .80‑7002 raey lacsfi gnirevoc troper tiduA elgniS ruo ni dedulcni ton saw ,erofereht dna ,margorp wen a si sihT § 36 California State Auditor Report 2009‑611.1 June 2009 EDD has already performed a regarding such provisions. However, EDD has already performed a “dry run” of the financial reports “dry run” of the financial reports required by the Recovery Act for required by the Recovery Act for the the WIA programs it administers. DOL has accepted these initial WIA programs it administers. Recovery Act financial reports. In addition to its financial reporting requirements, Section 1512 of the Recovery Act proposes additional reporting requirements, including performance reporting data. With regard to additional reporting, EDD stated that it has sought guidance from DOL and the OMB to obtain additional information regarding how it can satisfy proposed OMB reporting guidelines. EDD was unable to provide documentary evidence to support the nature of guidance that it sought. However, as of May 6, 2009, EDD indicates that it has yet to receive the requested guidance from DOL. EDD stated that, as of June 11, 2009, it can only meet the 10‑day reporting deadline under Section 1512 by using estimated financial data. However, because EDD still requires guidance on performance reporting, it cannot ensure Section 1512 reporting compliance at this time. Tables A.3.1 and A.3.2 in Appendix A presents, by programs that have or are expected to receive or be awarded $50 million or more in fiscal year 2008–09, an assessment of EDD’s preparedness to administer Recovery Act funding for each program. Table B in Appendix B presents, by OMB Circular A‑133 compliance requirement, the status of action EDD has taken to correct certain internal control weaknesses reported in the Single Audit covering fiscal year 2007–08. As shown in Appendix B, EDD has fully addressed one issue and is in the process of correcting the remaining three. EDD provided comments at our exit conference recommending specific changes to the report. We made those changes we considered necessary. Social Services Is Still in the Process of Implementing Steps to Administer Recovery Act Funding Social Services has made progress toward implementing the steps necessary to administer Recovery Act funding. For example, Social Services indicates that it set up a work group to manage the issues associated with implementing programs under the Recovery Act and also meets weekly on an informal basis with its contact on the Task Force to discuss Recovery Act information. However, there are some critical areas where more work is needed. For example, the Assistance for vulnerable individuals—Emergency Fund for the Temporary Assistance for Needy Families (TANF) Emergency Contingency Fund (TANF Contingency Fund) is a new program created under the Recovery Act, for which Social Services intends California State Auditor Report 2009‑611.1 37 June 2009 to use existing internal controls to administer Recovery Act funding. Nevertheless, in our Single Audit report covering fiscal year 2007–08, we found two internal control weaknesses related to subrecipient monitoring and one weakness related to activities allowed and allowable costs that may affect Social Services’ ability to administer the Recovery Act funds. As of April 13, 2009, the Task Force estimated that Social Services’ share of the Recovery Act funds would be $332.4 million for fiscal year 2008–09. As shown in Table 8, the majority of these funds will be allocated to two federal programs that Social Services administers to increase food stamp benefits and the amount of assistance available for vulnerable individuals. Because we reviewed only those programs expected to receive $50 million or more in Recovery Act funds, our review covers $260.8 million of the $332.4 million Social Services is expected to receive. Table 8 The Department of Social Services’ Use of Its Share of Federal Funds Under the American Recovery and Reinvestment Act of 2009 for Fiscal Year 2008–09 (Dollars in Millions) reCovery aCt funDs reCovery aCt reCovery reCovery aCt Program’s the feDeral funDs for aCt funDs funDs soCial reCovery aCt funDs Catalog of Program WhiCh soCial the feDeral serviCes reCeiveD soCial serviCes feDeral DomestiC is exPeCteD serviCes government through sPent through feDeral Program assistanCe number to reCeive aPPlieD aWarDeD aPril 30, 2009* aPril 30, 2009† Increase in the Supplemental Nutrition Assistance Program (SNAP) benefits (food stamps program) 10.551 $140.0 ‡ § § § Assistance for vulnerable individuals—Emergency Fund for Temporary Assistance for Needy Families (TANF) Program (TANF Contingency Fund) 93.714 120.8 ll $246.4# $0** $0** Totals $260.8 $246.4 $0 $0 Sources: California Economic Recovery Portal Web site, http://recovery.ca.gov, as of April 13, 2009; interviews held with the Department of Social Services’ (Social Services) staff; and records provided by Social Services. * This represents the amount of Recovery Act funds Social Services has drawn down from the federal government for fiscal year 2007–08 as of April 30, 2009. † This represents the amount of Recovery Act funds Social Services has either spent on its own behalf or provided to subrecipients for fiscal year 2007–08 as of April 30, 2009. ‡ According to the manager of Social Services’ federal reporting section, the program is an extension of an existing program. No application was required for the 13.6 percent increase in SNAP benefits allotted to individuals. § The federal government did not award SNAP funds to Social Services under the Recovery Act; it provided these funds directly to individuals receiving benefits. ll Social Services’ application for the TANF Contingency Fund grant did not contain a specific amount. # In a letter dated May 18, 2009, the federal government notified Social Services that it had approved Social Services’ application, that California qualified for $246.4 million in funding, and that it should receive a notice of grant award shortly. ** As of May 18, 2009, Social Services has not received a notice of grant award. Therefore, it has not received or expended the funds. 38 California State Auditor Report 2009‑611.1 June 2009 The mission of Social Services is to serve, aid, and protect needy and vulnerable children and adults in ways that strengthen and preserve families, encourage personal responsibility, and foster independence. Social Services accomplishes its mission through the operation and oversight of a variety of programs that provide cash assistance, social services, disability evaluation, community care licensing, and other services. According to its lead audits coordinator, Social Services has set up a work group to manage the issues associated with implementing programs included in the Recovery Act for which Social Services may receive funds. This work group includes individuals who are the point of contact for their respective branch or division regarding Recovery Act funds. This group is not formal and does not meet regularly. Rather, whenever Recovery Act issues arise, members of the work group are informed and address the aspects of the issues their respective branch or division is responsible for. Further, the deputy director of the administration division stated that Social Services also participates in weekly informal meetings with the California Health and Human Services Agency (CHHSA) representative on the Task Force. These weekly update meetings include other state departments that report to CHHSA and provide an opportunity to disseminate and discuss Recovery Act‑related information and topics that either may affect CHHSA departments or are of general interest to the group. Existing Internal Controls That Social Services Intends to Use in Administering Recovery Act Funding Are Weak As we reported in our most recent Social Services stated that overall it intends to use existing internal Single Audit report covering fiscal controls to administer Recovery Act funding. However, as shown in year 2007–08, Social Services has Table 9, with respect to the TANF program, our review of internal no way of assuring that counties control weaknesses previously identified in our Single Audit report are spending federal funds only covering fiscal year 2007–08 revealed two weaknesses related to on allowable activities and costs subrecipient monitoring and one related to activities allowed and because it does not require the allowable costs that may affect Social Services’ ability to administer counties to submit detailed Recovery Act funding. For example, we reported that its processes supporting documentation for their for reviewing and authorizing counties’ expense and assistance expense and assistance claims, nor claims for the TANF program do not provide reasonable assurance did it conduct any on-site visits to that federal funds were expended only for allowable activities and validate the claims. costs. Specifically, Social Services does not require the counties to submit detailed supporting documentation for their expense and assistance claims, nor did it conduct any on‑site visits to the counties to review their supporting documentation for their expense and assistance claims in fiscal year 2007–08. Without such procedures, Social Services has no way of assuring that counties are spending federal funds only on allowable activities and costs. California State Auditor Report 2009‑611.1 39 June 2009 9 elbaT eht rednU eroM ro noilliM 05$ evieceR ot detcepxE erA tahT secivreS laicoS fo tnemtrapeD eht ta smargorP laredeF rof sessenkaeW lortnoC lanretnI tiduA elgniS 01–9002 dna 90–8002 sraeY lacsiF rof 9002 fo tcA tnemtsevnieR dna yrevoceR naciremA )snoilliM ni sralloD( DeifitneDi saW ssenkaeW lortnoC lanretni erehW aera s’margorP yrevoCer fo tnuoma yrevoCer fo tnuoma fo golataC etats eht sDnuf tCa etats eht sDnuf tCa tneiPiCerbus hsaC /DeWolla seitivitCa CitsemoD lareDef ni evieCer ot stCePxe ni evieCer ot stCePxe slatot gnirotinom gnitroPer ytilibigile tnemeganam stsoC elbaWolla rebmun eCnatsissa 01–9002 raey laCsif 90–8002 raey laCsif margorP lareDef noitirtuN latnemelppuS eht ni esaercnI stfieneb )PANS( margorP ecnatsissA * * * * * * 155.01 0.065$ 0.041$ )margorp spmats doof( —slaudividni elbarenluv rof ecnatsissA yraropmeT rof dnuF ycnegremE )FNAT( seilimaF ydeeN rof ecnatsissA 3 2 0 0 0 1 †417.39 9.632 8.021 )dnuF ycnegnitnoC FNAT( margorP 3 2 0 0 0 1 9.697$ 8.062$ slatoT eht rof tropeR tiduA ecnailpmoC laredeF dna etatS dna lortnoC lanretnI :ainrofilaC fo etatS ’stiduA etatS fo uaeruB ;9002 ,31 lirpA fo sa ,vog.ac.yrevocer//:ptth ,etis beW latroP yrevoceR cimonocE ainrofilaC :secruoS .)ADFC( ecnatsissA citsemoD laredeF fo golataC eht dna ;9002 yaM ,200‑8002 tropeR ,)tiduA elgniS( 8002 ,03 enuJ dednE raeY lacsiF sA .slortnoc lanretni ni sessenkaew ro seussi ecnailpmoc yna yfitnedi ton did ew margorp eht detidua ew emit tsal eht esuaceb 80–7002 raey lacsfi gnirevoc tiduA elgniS ruo ni dedulcni ton saw margorp sihT * .90–8002 raey lacsfi gnirevoc tiduA elgniS ruo ni dedulcni si margorp eht ,revewoH .ksir‑wol sa margorp eht defiissalc ew ,80–7002 raey lacsfi ni ,tluser a lliw ti esuaceb margorp siht rof rebmun ADFC wen a deussi tnemnrevog laredef ehT .80–7002 raey lacsfi gnirevoc troper tiduA elgniS ruo htiw eerga ton lliw margorp siht rof rebmun ADFC laredef ehT † .855.39 rebmun ADFC si ,FNAT ,detidua ew margorp eht ,80–7002 raey lacsfi gnirevoc troper tiduA elgniS eht nI .9002 fo tcA tnemtsevnieR dna yrevoceR naciremA eht rednu gnidnuf eviecer 40 California State Auditor Report 2009‑611.1 June 2009 At the time that the Single Audit was published, Social Services responded that it did not concur with our conclusion regarding this weakness and that our recommendations were based on an incomplete review of the process it used. Further, Social Services stated that our description did not correctly represent the rationale used to stop the requirement for counties to submit supporting documentation with their assistance claims. Social Services explained that requiring such documentation did not add value to the processing of automated claims; however, it did not provide us with evidence to support its point of view. Instead, Social Services relied on an automated claim process that does nothing more than perform edit checks to ensure that the counties did not charge expenditures to improper aid or program codes and line items, that they did not exceed certain dollar amounts, and that they had the required staff sign the claim. Consequently, the automated claim process does not allow Social Services to determine if the counties have charged only allowable activities and costs. As of May 19 2009, the chief of the employment and eligibility branch confirmed that Social Services still does not concur with this finding. The U.S. Department of Health and Human Services’ Office of In a September 2008 report, Inspector General’s (OIG) report illustrates that Social Services’ the U.S Department of Health reliance on its automated claim process alone cannot ensure the and Human Services’ Office of counties’ assistance claims include only allowable activities or Inspector General estimated that costs. According to its September 2008 report titled Review of Social Services made improper Improper Temporary Assistance for Needy Families Basic Assistance payments of $91.6 million during Payments in California for April 1, 2006, through March 31, 2007, the period reviewed. the OIG estimated that Social Services made improper payments of $91.6 million (federal share only) during the period reviewed. To comply with Task Force guidance to separately track Recovery Act funds, Social Services is in the process of implementing separate accounts to distinguish Recovery Act funds from other federal funds coming to California. Social Services requested the State Controller to establish a new account for the receipt of funds from the TANF Contingency Fund, a program expected to receive funds under the Recovery Act. Further, Social Services also provided separate program cost accounts to distinguish Recovery Act expenditures for the TANF Contingency Fund. However, for the Recovery Act transparency provisions with respect to the Supplemental Nutrition Assistance Program (SNAP) benefits increase, the federal government informed Social Services that rather than place the burden on the states to have two or more sets of accounting records, the federal agency will determine a rate to use to segregate regular and Recovery Act benefits. California State Auditor Report 2009‑611.1 41 June 2009 Social Services May Be Exempt From the Recovery Act’s Section 1512 Reporting Requirements Regarding the SNAP benefits increase, on June 12, 2009, Social Services received confirmation from the federal government that States are not required to submit modified FNS‑46 reports for the Recovery Act. Further, Recovery Act funds will be tracked through a process in which the federal government will determine a percentage rate to apply to daily drawdowns of program funds to segregate regular and Recovery Act benefits. For the TANF Contingency Fund, Social Services senior assistant chief counsel told us that Section 1512 of the Recovery Act does not require Social Services to create a recipient report for the Recovery Act funding provided to the program. Further, according to the assistant branch manager for the estimates bureau, OMB verbally agreed with Social Services’ interpretation that the TANF Contingency Fund is not subject to reporting under Section 1512 of the Recovery Act. Additionally, on June 9, 2009, a representative of the ACF confirmed that the TANF Contingency Fund program is not subject to Section 1512 reporting requirements. Although the Section 1512 reporting requirements do not apply to the TANF Contingency Fund, the ACF representative added that the OMB might have additional requirements. Social Services told us that in light of the response from ACF, it believes it has received authoritative federal guidance that the TANF Contingency Fund is not subject to Recovery Act Section 1512 reporting requirements. Table A.4 in Appendix A presents, by programs expected to receive $50 million or more in fiscal year 2008–09, an assessment of Social Services’ preparedness to administer funding under the Recovery Act for each program. Table B in Appendix B presents, by OMB Circular A‑133 compliance requirement, the status of actions Social Services has taken to correct certain internal control weaknesses reported in the Single Audit covering fiscal year 2007–08. As shown in Appendix B, Social Services is in the process of taking corrective action for one internal control weakness and has taken minimal or no action to address the reamining two. Social Services provided comments at our exit conference recommending specific changes to the report. We made those changes we considered necessary. 42 California State Auditor Report 2009‑611.1 June 2009 Recommendations We recommend that to strengthen the State’s preparedness to administer Recovery Act funding, the Task Force should do the following: • Continue in its leadership role in seeking guidance from the OMB and other pertinent federal agencies. In addition, the Task Force should coordinate its efforts to determine which state departments are waiting for guidance, the federal agencies from which the state departments are seeking guidance, and the status of such requests. • Continue to raise concerns with the OMB and other federal agencies regarding Section 1512 reporting requirements. • Establish a process to ensure that state departments with known internal control weaknesses take the necessary steps to promptly correct such deficiencies. This process should also include a mechanism to track the status of departments’ implementation of corrective action plans developed as a result of audits, reviews, or analyses conducted by the State Auditor’s Office (State Auditor), Finance, the U.S. Government Accountability Office (GAO), or each department’s respective federal inspector general. • Provide specific guidance to state departments, including the following: • Steps departments should take to coordinate with the State Controller in establishing unique account codes to track the receipt of Recovery Act funds separately from other federal funds. • Topics departments should discuss with their respective staff when training them on how to administer Recovery Act funding. • Examples of language departments should include in their terms and conditions of grant awards or contracts to assure that subrecipients, if required, are aware of specific Recovery Act provisions, particularly Section 1512 reporting requirements. California State Auditor Report 2009‑611.1 43 June 2009 State departments should do the following: • Promptly correct internal control deficiencies, including those identified during the Single Audit covering fiscal year 2007–08 and through other audits, reviews, or analyses conducted by state and federal agencies, such as the State Auditor, Finance, the GAO, and each federal agency’s respective inspector general. • Establish a process to track its progress in implementing any corrective action plans developed as a result of audits, reviews, or analyses conducted by the State Auditor, Finance, the GAO, or each federal agency’s respective inspector general. • Work with the Task Force to ensure that grants and contracts include specific language that informs subrecipients of the Recovery Act’s provisions, including Section 1512 reporting requirements, if required. • Modify policies and procedures to ensure that they reflect specific Recovery Act provisions. • Provide staff with appropriate training to ensure they are aware of new policies and procedures necessary to administer Recovery Act funding. 44 California State Auditor Report 2009‑611.1 June 2009 We prepared this report under the authority vested in the California State Auditor by Section 8546.5 of the California Government Code. Respectfully submitted, ELAINE M. HOWLE, CPA State Auditor Date: June 24, 2009 Staff: Steven A. Cummins, CPA, Audit Principal Dale A. Carlson, MPA, CGFM Jerry A. Lewis Grant Parks, MBA Jason Beckstrom, MPA Sarah Rachael Black, MBA Ralph M. Flynn, JD Jared B. Gaynor, JD Julie M. Hemenway Andrew Jun Lee Rosa Reyes Tracy Yarlott, MPP Legal Counsel: Scott A. Baxter, Esq. For questions regarding the contents of this report, please contact Margarita Fernández, Chief of Public Affairs, at (916) 445‑0255. California State Auditor Report 2009-611.1 45 June 2009 Appendix A StAtuS of StAte DepARtmentS pRepAReDneSS to ADminiSteR AmeRiCAn ReCoveRy AnD ReinveStment ACt of 2009 funDing Tables A.1 through A.4 on the following pages provide a summary of our assessment of the preparedness of the four departments we evaluated for this report to administer the American Recovery and Reinvestment Act of 2009 (Recovery Act). We assessed each departments’ ability to administer programs for which it has or is expected to receive or be awarded $50 million or more under the Recovery Act for fiscal year 2008–09. Generally, as shown in Figure A, none of the four departments are entirely ready to administer Recovery Act funding. Each department is expected to receive Recovery Act funds for anywhere from one to seven programs. Although all four departments have made progress toward implementing the steps necessary to administer Recovery Act funding, they are still waiting for further guidance from the federal government on Section 1512 reporting requirements before they will be fully ready to properly administer these funds. In addition, all departments need to strengthen controls to mitigate the risk that Recovery Act funds will be used inappropriately. For example, we reported 30 internal control weaknesses in our Single Audit report covering fiscal year 2007–08 related to certain U.S. Office of Management and Budget (OMB) Circular A-133 compliance requirements and federal programs associated with the four departments we assessed. Based on our limited testing during this analysis, it appears that only four of the 30 weaknesses have been fully corrected. This is of concern because all of these weaknesses could affect the successful administration of the Recovery Act funding if not promptly corrected. Figure A State Departments’ Overall Preparedness to Administer the American Recovery and Reinvestment Act of 2009 Funds     Prepared Not Prepared Department Department of Health of Education Care Services Employment Development Department Department of Social Services Source: Bureau of State Audits’ analysis of the four departments analyzed for this report. Note: The ranking system of colors and symbols is fully defined in the following pages. 46 California State Auditor Report 2009-611.1 June 2009 To assess their preparedness to administer Recovery Act funding, we developed a questionnaire for the four departments we visited to complete based on the potential risks identified in the April 3, 2009, implementing guidance for the Recovery Act issued by the OMB. To verify the information the departments included in their responses to the questionnaire, we interviewed key personnel at the departments and reviewed relevant documents pertaining to processes or procedures already in use, developed, or being drafted to administer Recovery Act funding. Each table provides summary information for the departments and the respective federal programs for which they expect to receive funding under the Recovery Act by the end of fiscal year 2008–09. We used the following ranking system consisting of four colors and symbols to indicate the departments’ preparedness with respect to each program risk area:  : • Documentation was provided to support the department’s assertions. • Internal control weaknesses have been corrected. • Guidance has been received and implemented. • Guidance is deemed not necessary, and appropriate action to prepare for receipt of Recovery Act funds has taken place. t : • Documentation was not provided to support the department’s assertions. • The federal program was not audited during the past two fiscal years. Therefore, we are not sure if internal controls are adequate. • Corrective action has been taken or the department is in the process of correcting the majority of internal control weaknesses. • No guidance is necessary, but the department is still in the process of taking action to prepare for receipt of Recovery Act funds. • Guidance has been received and the department is in the process of implementing such guidance. California State Auditor Report 2009-611.1 47 June 2009  : • Documentation was not provided to support the department’s assertions. • The department has not taken corrective action or corrected the majority of the internal control weaknesses. • The department has stated that it has asked for guidance, but has no support to demonstrate that it has done so. • The department has provided support for its request for guidance and is still waiting to receive such guidance. • No guidance is necessary, but the department has not taken any action to prepare for receipt of Recovery Act funds.  : • Documentation was not provided to support the department’s assertions. • The department has taken minimal or no action to correct identified internal control weaknesses. • The department has not requested guidance. • Proposed implementation of provisions will not be effective or timely. NA = Not applicable. We applied the lowest ranking color symbol when more than one condition was present. For example, if the department provided documentation to support its assertion about what it has done or what it plans to do to prepare to administer Recovery Act funding and it did not have any internal control weaknesses to correct, we would rank it with a green symbol. However, if in the same scenario the department is also awaiting guidance from the federal government, we would rank it with an orange symbol. Thus, even though the department provided documentation to support its assertion, it would still be ranked with an orange symbol because it is still waiting for guidance. 48 California State Auditor Report 2009-611.1 June 2009 1.A elbaT ro evieceR ot stcepxE tI hcihW rof smargorP rof sdnuF 9002 fo tcA tnemtsevnieR dna yrevoceR naciremA eht retsinimdA ot ssenderaperP s’noitacudE fo tnemtrapeD ehT 90–8002 raeY lacsiF rof eroM ro noilliM 05$ dedrawA eB loohcS dna SeicneGa noitacude lacol ot StnarG—i eltit ,tnarG evitnecni ecnaniF ,tnarG deteGrat( tnemevorpmi —Snoitacolla etatS—dnuF noitazilibatS lacSiF etatS StnarG noitacude laicepS—b trap—aedi )tnarG tnemevorpmi loohcS dna cu/uSc dna 21-K Fo noitarotSer ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac 193.48 rebmun 983.48 rebmun 493.48 rebmun KSir marGorp Fo aera ssenderaperP llarevO fo ecnerrucco tneuqerf tsom eht no desaB  ecnerrucco tneuqerf tsom eht no desaB  fo ecnerrucco tneuqerf tsom eht no desaB  ,rotinom ,kcart ot ssenderaperp llarevO sraeppa noitacudE ,woleb lobmys roloc eht noitacudE ,woleb lobmys roloc eht fo fo tnemtrapeD eht ,woleb lobmys roloc eht dna yrevoceR naciremA no troper dna eht tnemelpmi ot deraperp yletaredom tnemelpmi ot deraperp yletaredom sraeppa yletaredom sraeppa )noitacudE( noitacudE )tcA yrevoceR( 9002 fo tcA tnemtsevnieR —AEDI eht rof tcA yrevoceR eht fo snoisivorp rof tcA yrevoceR eht fo snoisivorp eht eht fo snoisivorp eht tnemelpmi ot deraperp yrevoceR eht htiw ylpmoc ot dna sdnuf .margorp stnarg noitacude laiceps—B traP lanoitacude lacol ot stnarg—I eltiT eht noitazilibatS lacsiF etatS eht rof tcA yrevoceR .snoisivorp s’tcA detegrat( tnemevorpmi loohcs dna seicnega 21-K fo noitarotser—snoitacolla etats—dnuF loohcs dna ,tnarg evitnecni ecnanfi ,tnarg .margorp CU/USC dna .margorp )tnarg tnemevorpmi latipaC namuH noitacude laiceps sti fo rotcerid eht ot gnidroccA t lacsfi loohcs sti fo rotcerid eht ot gnidroccA t ycilop lacsfi sti fo rotcerid eht ot gnidroccA t eganam ot stsixe lennosrep fo level tneicffius A tneicffius a evah ton seod noitacudE ,noisivid evah ton seod noitacudE ,noisivid secivres tneicffius a evah ton seod noitacudE ,noisivid .tcA yrevoceR eht ni dedulcni smargorp eht dedulcni smargorp eganam ot lennosrep fo level eganam ot lennosrep fo level tneicffius a dedulcni smargorp eganam ot lennosrep fo level did tcA yrevoceR eht dna ,tcA yrevoceR eht ni dna ,tcA yrevoceR eht ni dedulcni smargorp did tcA yrevoceR eht dna ,tcA yrevoceR eht ni evitartsinimda lanoitidda rof gnidnuf edivorp ton rof gnidnuf edivorp ton did tcA yrevoceR eht evitartsinimda lanoitidda rof gnidnuf edivorp ton ti ,noitacudE ot gnidrocca ,revewoH .daolkrow ,revewoH .daolkrow evitartsinimda lanoitidda ,noitacudE ot gnidrocca ,revewoH .daolkrow llfiluf ot ffats rof redro ni sksat dengissaer sah dengissaer sah ti ,noitacudE ot gnidrocca ot ffats rof redro ni sksat dengissaer sah ti detaicossa seitilibisnopser dna seitud eht dna seitud eht llfiluf ot ffats rof redro ni sksat detaicossa seitilibisnopser dna seitud eht llfiluf detimil eht ot euD .tcA yrevoceR eht htiw .tcA yrevoceR eht htiw detaicossa seitilibisnopser detimil eht ot euD .tcA yrevoceR eht htiw siht taht seveileb noitacudE ,elbaliava secruoser noitacudE ,elbaliava secruoser detimil eht ot euD siht taht seveileb noitacudE ,elbaliava secruoser yaw tneicffie tsom eht saw sksat fo tnemngissaer saw sksat fo tnemngissaer siht taht seveileb yaw tneicffie tsom eht saw sksat fo tnemngissaer noitacudE .gnidnuf tcA yrevoceR eganam ot yrevoceR eganam ot yaw tneicffie tsom eht noitacudE .gnidnuf tcA yrevoceR eganam ot era snoitazitiroirper dna daolkrow taht detats daolkrow taht detats noitacudE .gnidnuf tcA era snoitazitiroirper dna daolkrow taht detats .detnemucod syawla ton tub ,dessucsid ton tub ,dessucsid era snoitazitiroirper dna .detnemucod syawla ton tub ,dessucsid .detnemucod syawla California State Auditor Report 2009-611.1 49 June 2009 loohcS dna SeicneGa noitacude lacol ot StnarG—i eltit ,tnarG evitnecni ecnaniF ,tnarG deteGrat( tnemevorpmi —Snoitacolla etatS—dnuF noitazilibatS lacSiF etatS StnarG noitacude laicepS—b trap—aedi )tnarG tnemevorpmi loohcS dna cu/uSc dna 21-K Fo noitarotSer ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac 193.48 rebmun 983.48 rebmun 493.48 rebmun KSir marGorp Fo aera noitacudE taht demrfinoc ew hguohtlA  noitacudE taht demrfinoc ew hguohtlA  sah noitacudE taht demrfinoc ew hguohtlA  ylevitceffe ot deniart yletauqeda si ffatS gnitroper s’tcA yrevoceR eht dessucsid sah gnitroper s’tcA yrevoceR eht dessucsid sah 2151 noitceS s’tcA yrevoceR eht dessucsid .snosivorp s’tcA yrevoceR eht tnemelpmi rehtehw raelcnu si ti ,ffats sti htiw stnemeriuqer rehtehw raelcnu si ti ,ffats sti htiw stnemeriuqer si ti ,ffats sti htiw stnemeriuqer gnitroper ylevitceffe ot deniart yletauqeda si ffats ylevitceffe ot deniart yletauqeda si ffats ot deniart yletauqeda si ffats rehtehw raelcnu snoisivorp s’tcA yrevoceR eht fo lla tnemelpmi snoisivorp s’tcA yrevoceR eht fo lla tnemelpmi s’tcA yrevoceR eht fo lla tnemelpmi ylevitceffe ton sah ti ,noitacudE ot gnidrocca esuaceb hguohtla ,noitacudE ot gnidrocca esuaceb ,noitacudE ot gnidrocca esuaceb snoisivorp morf detseuqer ti ecnadiug eht deviecer tey ton sah ti ,ecnadiug emos deviecer sah ti ti ecnadiug eht deviecer tey ton sah ti gnitroper tcA yrevoceR gnidrager BMO eht morf detseuqer ti ecnadiug eht deviecer tey tnemeganaM fo ecffiO eht morf detseuqer ,9002 ,61 lirpA no ,sselehtreveN .stnemeriuqer gnitroper tcA yrevoceR gnidrager BMO eht tcA yrevoceR gnidrager )BMO( tegduB dna ffats sti edivorp ot gniteem a dleh noitacudE ,9002 ,61 lirpA no ,sselehtreveN .stnemeriuqer no ,sselehtreveN .stnemeriuqer gnitroper tuoba wenk ti tahw fo weivrevo na htiw ffats sti edivorp ot gniteem a dleh noitacudE ot gniteem a dleh noitacudE ,9002 ,61 lirpA .stnemeriuqer gnitroper tcA yrevoceR eht eht tuoba wenk ti tahw fo weivrevo na htiw tahw fo weivrevo na htiw ffats sti edivorp eht derevoc noitacudE gniteem siht gniruD gniruD .stnemeriuqer gnitroper tcA yrevoceR gnitroper tcA yrevoceR eht tuoba wenk ti 2151 noitceS rednu stnemeriuqer gnitroper gnitroper eht derevoc noitacudE gniteem siht noitacudE gniteem siht gniruD .stnemeriuqer noitacudE ,yllanoitiddA .tcA yrevoceR eht fo eht fo 2151 noitceS rednu stnemeriuqer rednu stnemeriuqer gnitroper eht derevoc laitini s’EOD eht fo yrammus a deviecer sah noitacudE ,9002 ,1 yaM nO .tcA yrevoceR ,yllanoitiddA .tcA yrevoceR eht fo 2151 noitceS .OSSCC eht morf ecnadiug tcA yrevoceR tuoba BMO eht ot stnemmoc sti dettimbus fo licnuoC eht morf deviecer sah noitacudE rednu stroper rof stnemele atad dradnats eht yrammus a )OSSCC( srecffiO loohcS etatS feihC eht ot dettimbus noitacudE ,9002 ,1 yaM nO ,9002 ,4 enuJ fo sa ,revewoH .2151 noitceS eht morf ecnadiug tcA yrevoceR laitini eht fo atad dradnats eht tuoba stnemmoc sti BMO dna esnopser a gnitiawa llits si noitacudE .)EOD( noitacudE fo tnemtrapeD .S.U .2151 noitceS rednu stroper rof stnemele eht gnidrager BMO eht morf ecnadiug rehtruf llits si noitacudE ,9002 ,4 enuJ fo sa ,revewoH .stnemeriuqer gnitroper s’tcA yrevoceR ,deweiver sah ti ,noitacudE ot gnidroccA ecnadiug rehtruf dna esnopser a gnitiawa eht etis beW sti no detsop dna ,detubirtsid s’tcA yrevoceR eht gnidrager BMO eht morf sah ti hguohtla ,noitacudE ot gnidroccA .margorp siht rof ecnadiug 9002 lirpA s’EOD .stnemeriuqer gnitroper fo esu eht no ecnadiug emos deviecer ot gnitiaw si ti ,sdnuf tcA yrevoceR I eltiT sti dettimbus noitacudE ,9002 ,1 yaM nO laredef eht morf ecnadiug etelpmoc eviecer dradnats eht tuoba BMO eht ot stnemmoc .sdnuf I eltiT fo esu eht no tnemnrevog .2151 noitceS rednu stroper rof stnemele atad s’EOD eht fo yrammus a deviecer sah noitacudE llits si noitacudE ,9002 ,4 enuJ fo sa ,revewoH .OSSCC eht morf ecnadiug tcA yrevoceR laitini ecnadiug rehtruf dna esnopser a gnitiawa 9002 lirpA s’EOD fo ypoc a sah osla noitacudE s’tcA yrevoceR eht gnidrager BMO eht morf elbaliava edam sdnuf I eltiT eht no ecnadiug .stnemeriuqer gnitroper .tcA yrevoceR eht rednu . . . egap txen no deunitnoc 50 California State Auditor Report 2009-611.1 June 2009 loohcS dna SeicneGa noitacude lacol ot StnarG—i eltit ,tnarG evitnecni ecnaniF ,tnarG deteGrat( tnemevorpmi —Snoitacolla etatS—dnuF noitazilibatS lacSiF etatS StnarG noitacude laicepS—b trap—aedi )tnarG tnemevorpmi loohcS dna cu/uSc dna 21-K Fo noitarotSer ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac 193.48 rebmun 983.48 rebmun 493.48 rebmun KSir marGorp Fo aera smetsyS lanoitarepO dna laicnaniF ecruoseR fo tsiL retsaM sti fo weiver a no desaB  ecruoseR fo tsiL retsaM sti fo weiver a no desaB  ecruoseR fo tsiL retsaM sti fo weiver a no desaB  elbahsiugnitsid ylraelc era sdnuf tcA yrevoceR etarapes dehsilbatse sah noitacudE ,sedoC etarapes dehsilbatse sah noitacudE ,sedoC etarapes dehsilbatse sah noitacudE ,sedoC gnisu yb dehsiugnitsid ,elpmaxe rof( tnarg tcA yrevoceR eht rof sedoc ecruoser tnarg tcA yrevoceR eht rof sedoc ecruoser tnarg tcA yrevoceR eht rof sedoc ecruoser .)stnuocca etarapes eht nihtiw refiitnedi euqinu a gnisu sdrawa eht nihtiw refiitnedi euqinu a gnisu sdrawa eht nihtiw refiitnedi euqinu a gnisu sdrawa a sedivorp SCAS ,noitacudE ot gnidroccA .SCAS a sedivorp SCAS ,noitacudE ot gnidroccA .SCAS .)SCAS( erutcurts edoc tnuocca dezidradnats .tamrof gnitroper laicnanfi mrofinu ,ediwetats .tamrof gnitroper laicnanfi mrofinu ,ediwetats a sedivorp SCAS ,noitacudE ot gnidroccA euqinu a gningissa yb taht seveileb noitacudE euqinu a gningissa yb taht seveileb noitacudE .tamrof gnitroper laicnanfi mrofinu ,ediwetats defiitnedi ylisae eb lliw sdnuf ,SCAS ni refiitnedi defiitnedi ylisae eb lliw sdnuf ,SCAS ni refiitnedi euqinu a gningissa yb taht seveileb noitacudE ot gnidrocca ,oslA .sdnuf tcA yrevoceR sa ot gnidrocca ,oslA .sdnuf tcA yrevoceR sa defiitnedi ylisae eb lliw sdnuf ,SCAS ni refiitnedi dna tcejorp dehsilbatse sah ti ,noitacudE dna tcejorp dehsilbatse sah ti ,noitacudE ot gnidrocca ,oslA .sdnuf tcA yrevoceR sa .tnarg hcae rof stnuocca tsoc margorp .tnarg hcae rof stnuocca tsoc margorp dna tcejorp dehsilbatse sah ti ,noitacudE .tnarg hcae rof stnuocca tsoc margorp noitacude laiceps eht fo rotcerid s’noitacudE  dna lacsfi eht fo rotcerid s’noitacudE  noisivid ycilop lacsfi eht fo rotcerid s’noitacudE  era smetsys lanoitarepo dna laicnaniF laicnanfi gnitsixe eht taht seveileb noisivid eht taht seveileb noisivid secivres evitartsinimda dna laicnanfi gnitsixe eht taht seveileb yrevoceR lortnoc dna eganam ot derugfinoc ot derugfinoc era smetsys lanoitarepo dna era smetsys lanoitarepo dna laicnanfi gnitsixe eganam ot elba eb lliw smetsys lanoitarepo .sdnuf tcA sdnuf tcA yrevoceR lortnoc dna eganam tcA yrevoceR lortnoc dna eganam ot derugfinoc ,elpmaxe roF .sdnuf tcA yrevoceR lortnoc dna a tneserper sdnuf tcA yrevoceR esuaceb a tneserper sdnuf tcA yrevoceR esuaceb sdnuf detats noisivid ycilop lacsfi eht fo rotcerid eht fo tnuoma llarevo eht fo egatnecrep llams sdnuf fo tnuoma llarevo eht fo egatnecrep llams dnuora seganam yltnerruc noitacudE taht ,rehtruF .eganam smetsys s’noitacudE sdnuf I eltiT ,rehtruF .eganam smetsys s’noitacudE taht eht fo emos dna ,smargorp lacirogetac 001 si gnidnuf tcA yrevoceR noitacude laiceps rof gnidnuf lanoitidda si gnidnuf tcA yrevoceR si smargorp esoht fo 04 ylhguor rof ytixelpmoc smargorp gnitsixe rof gnidnuf lanoitidda sessecorp evah ydaerla taht smargorp gnitsixe .wal etats ni segnahc tnecer ot eud yawa gniog dna ,ecalp ni sessecorp evah ydaerla taht eht rof desu eb lliw sessecorp esoht dna ,ecalp ni ycilop lacsfi eht fo rotcerid eht ot gnidroccA yrevoceR eht rof desu eb lliw sessecorp esoht .sdnuf tcA yrevoceR tuoba stneserper tcA yrevoceR eht ,noisivid .sdnuf tcA esaercni eht ,tluser a sa ,dna smargorp erom xis .ronim si snoitcasnart fo rebmun latot eht ni lacol noitacude laiceps ,noitacudE ot gnidroccA t .sAEL elbigile ot sdnuf snoitroppa noitacudE AN ycilop lacsfi sti fo rotcerid eht ot gnidroccA AN troppus smetsys lanoitarepo dna laicnaniF sdnuf eseht rof ylppa ton od )sAPLES( saera nalp noitacudE ,sdnuf eseht rof ylppa sAEL hguohtlA elbigile ot sdnuf snoitroppa noitacudE ,noisivid ,stnarg ,stcartnoc fo emulov ni esaercni eht .alumrof a aiv stnarg dedrawa era yeht esuaceb eht drawa ot tcartnoc a otni retne ton seod hguohtlA .)sAEL( seicnega lanoitacude lacol .snaol dna tnes neeb evah stnemeerga dna srettel tnarG .sAEL ot sdnuf ton seod noitacudE ,sdnuf eseht rof ylppa sAEL eseht ,noitacudE ot gnidrocca ,dna sAPLES ot .sAEL ot sdnuf etubirtsid ot tcartnoc a otni retne ylesrevda ton evah snoitcasnart lanoitidda .smetsys lanoitarepo ro laicnanfi sti detcapmi California State Auditor Report 2009-611.1 51 June 2009 loohcS dna SeicneGa noitacude lacol ot StnarG—i eltit ,tnarG evitnecni ecnaniF ,tnarG deteGrat( tnemevorpmi —Snoitacolla etatS—dnuF noitazilibatS lacSiF etatS StnarG noitacude laicepS—b trap—aedi )tnarG tnemevorpmi loohcS dna cu/uSc dna 21-K Fo noitarotSer ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac 193.48 rebmun 983.48 rebmun 493.48 rebmun KSir marGorp Fo aera esubA dna ,etsaW ,duarF laiceps s’noitacudE fo rotcerid eht ot gnidroccA  s’noitacudE fo rotcerid eht ot gnidroccA  lacsfi s’noitacudE fo rotcerid eht ot gnidroccA  dezirohtua rof desu era sdnuf tcA yrevoceR serudecorp tidua gnitsixe ,noisivid noitacude tidua gnitsixe ,noisivid secivres lacsfi loohcs lliw serudecorp tidua gnitsixe ,noisivid ycilop ,etsaw ,duarf rof laitnetop eht dna ,sesoprup desu gnieb era sdnuf taht yfirev ot desu eb lliw sdnuf taht yfirev ot desu eb lliw serudecorp desu gnieb era sdnuf taht yfirev ot desu eb detagitim dna deziminim era esuba dna ,rorre dna ,sesoprup etairporppa dna dezirohtua rof etairporppa dna dezirohtua rof desu gnieb era dna ,sesoprup etairporppa dna dezirohtua rof dewolla seitivitca ot detaler slortnoc lanretni( rorre ,etsaw ,duarf laitnetop yfitnedi dna timil ,duarf laitnetop yfitnedi dna timil dna ,sesoprup ,rorre ,etsaw ,duarf laitnetop yfitnedi dna timil .stsoc elbawolla dna srotinom ti ,noitacudE ot gnidroccA .esuba dna ,noitacudE ot gnidroccA .esuba dna rorre ,etsaw srotinom ti ,noitacudE ot gnidroccA .esuba dna htiw smargorp noisivid noitacude laiceps sti smargorp laredef dna etats rof sAEL srotinom ti lacsfi dna smargorp laredef dna etats rof sAEL gnidroccA .ffats noisivid 07 yletamixorppa dna MPC eht hguorht ecnailpmoc lacsfi dna margorp lacirogetac eht hguorht ecnailpmoc siht ,80–7002 raey lacsfi rof ,noitacudE ot ot gnidrocca ,revewoH .sessecorp gnitidua .sessecorp gnitidua dna )MPC( gnirotinom sweiver noitacfiirev etis-no sedulcni gnirotinom ylno AEL hcae srotinom MPC eht ,noitacudE MPC eht ,noitacudE ot gnidrocca ,revewoH ssecorp s’noitacudE .sAPLES 721 eht fo 51 fo .sraey ruof yreve ecno .sraey ruof yreve ecno ylno AEL hcae srotinom fo stsisnoc yltrap weiver rof sAPLES tceles ot ,ylraey detcelloc atad ecnamrofrep gniweiver eht fo rotcerid eht ot gnidrocca ,oslA lacsfi eht fo rotcerid eht ot gnidrocca ,oslA detcudnoc era hcihw sweiver fles sAPLES dna s’noitacudE ,noisivid secivres lacsfi loohcs tneipicerbus tnerruc s’noitacudE ,noisivid ycilop sAPLES wef os esuaceB .sraey ruof yreve ecno desab si gnirotinom tneipicerbus tnerruc gnitroper tcaf-eht-retfa no desab si gnirotinom taht sraeppa ti ,raey hcae deweiver era tneuqesbus dna gnitroper tcaf-eht-retfa no ksed dna stisiv etis aiv sweiver tneuqesbus dna eb ton yam ssecorp gnirotinom s’noitacudE .sweiver ksed dna stisiv etis aiv sweiver lacsfi eht fo rotcerid eht ,revoeroM .sweiver .sdnuf tcA yrevoceR rof tneicffius lacsfi loohcs eht fo rotcerid eht ,revoeroM deen lliw noitacudE seveileb noisivid ycilop deen lliw noitacudE seveileb noisivid secivres ecnadiug laredef eht fi secruoser lanoitidda gnirotinom dna tidua gnitsixe sti taht erusne oT ecnadiug laredef eht fi secruoser lanoitidda fo gnirotinom seriuqer gnitiawa si ti taht enil wen siht rof evitceffe era serudecorp fo gnirotinom seriuqer gnitiawa si ti taht eht sa )sAEL ,elpmaxe rof( stneipicerbus lla tcerroc ylluf tsum noitacudE ,gnidnuf fo eht sa )sAEL ,elpmaxe rof( stneipicerbus lla ,gnirrucco era serutidnepxe dna seitivitca lanretni gnirotinom tneipicerbus eerht eht ,gnirrucco era serutidnepxe dna seitivitca ehT .ylretrauq sa yltneuqerf sa ylbissop elgniS eht ni detroper sessenkaew lortnoc rotcerid ehT .ylretrauq sa yltneuqerf sa ylbissop detats noisivid ycilop lacsfi eht fo rotcerid laiceps rof 80–7002 raey lacsfi gnirevoc tiduA detats noisivid secivres lacsfi loohcs eht fo sa ,stseuqer reviaw timbus lliw noitacudE taht eviecer ot stcepxe ti smargorp noitacude sa ,stseuqer reviaw timbus lliw noitacudE taht ssecca ot ,tcA yrevoceR eht rednu elbawolla 90–8002 ni sraey lacsfi rof sdnuf tcA yrevoceR ssecca ot ,tcA yrevoceR eht rednu elbawolla ,noitidda nI .srallod evitartsinimda lanoitidda gnitnemelpmi llits si noitacudE .01–9002 dna ,noitidda nI .srallod evitartsinimda lanoitidda ycilop lacsfi eht fo rotcerid eht ot gnidrocca lanretni eerht eht fo owt rof noitca evitcerroc sti lacsfi loohcs eht fo rotcerid eht ot gnidrocca tnemtrapeD eht deen lliw noitacudE ,noisivid .detroper sessenkaew lortnoc ecnaniF deen lliw noitacudE ,noisivid secivres htob ot erutalsigeL eht dna )ecnaniF( ecnaniF fo erutidnepxe wolla htob ot erutalsigeL eht dna dna srallod lanoitidda fo erutidnepxe wolla eht fo erawa si ti taht detats noitacudE evah taht stuc erotser dna srallod lanoitidda fo laredef ot edam neeb evah taht stuc erotser roF .stnemeriuqer dna sevitcejbo tcA yrevoceR srallod evitartsinimda laredef ot edam neeb tegdub etats eht hguorht srallod evitartsinimda morf ecnadiug egap-22 a deviecer ti ,elpmaxe hcihw ,ssecorp tegdub etats eht hguorht ot ytiliba s’noitacudE netaerht hcihw ,ssecorp s’EOD eht fo yrammus egap-evfi a dna EOD eht tnerruc eht od ot ytiliba s’noitacudE netaerht .gnirotinom fo level tnerruc eht od eht fo esoprup ehT .OSSCC eht morf ecnadiug .gnirotinom fo level noitamrofni edivorp ot saw ecnadiug s’EOD fo gnitroper dna esu ,noitacolla eht tuoba .sdnuf tcA yrevoceR ,B traP ,noitacudE laicepS . . . egap txen no deunitnoc 52 California State Auditor Report 2009-611.1 June 2009 loohcS dna SeicneGa noitacude lacol ot StnarG—i eltit ,tnarG evitnecni ecnaniF ,tnarG deteGrat( tnemevorpmi —Snoitacolla etatS—dnuF noitazilibatS lacSiF etatS StnarG noitacude laicepS—b trap—aedi )tnarG tnemevorpmi loohcS dna cu/uSc dna 21-K Fo noitarotSer ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac 193.48 rebmun 983.48 rebmun 493.48 rebmun KSir marGorp Fo aera gnirotinom dna tidua gnitsixe sti taht erusne oT gnirotinom dna tidua gnitsixe sti taht erusne oT .egap suoiverp morf deunitnoC enil wen siht rof evitceffe era serudecorp enil wen siht rof evitceffe era serudecorp tcerroc ylluf tsum noitacudE ,gnidnuf fo tcerroc ylluf tsum noitacudE ,gnidnuf fo dezirohtua rof desu era sdnuf tcA yrevoceR lanretni gnirotinom tneipicerbus owt eht lanretni gnirotinom tneipicerbus xis eht ,duarf rof laitnetop eht dna ,sesoprup elgniS eht ni detroper sessenkaew lortnoc elgniS eht ni detroper sessenkaew lortnoc deziminim era esuba dna ,rorre ,etsaw I eltiT eht rof 80–7002 raey lacsfi gnirevoc tiduA smargorp rof 80–7002 raey lacsfi gnirevoc tiduA detagitim dna tcA yrevoceR eviecer ot stcepxe ti margorp ni rof sdnuf tcA yrevoceR eviecer ot stcepxe ti dewolla seitivitca ot detaler slortnoc lanretni( .01–9002 dna 90–8002 sraey lacsfi ni rof sdnuf si noitacudE .01–9002 dna 90–8002 sraey lacsfi .)dewollanu ro evitcerroc sti gnitnemelpmi llits si noitacudE evfi rof noitca evitcerroc sti gnitnemelpmi llits lortnoc lanretni eht fo htob rof noitca .detroper sessenkaew lortnoc lanretni xis eht fo .detroper sessenkaew ot noitca nekat sah noitacudE ,yllaniF deviecer sah ti taht detats osla noitacudE eht sdnatsrednu dna swonk ti taht erusne yrevoceR I eltiT fo esu eht no ecnadiug emos ,sesu dezirohtua eht gnidulcni ,stnemeriuqer egap-14 a deviecer ti ,elpmaxe roF .sdnuf tcA ot gnidroccA .sdnuf tcA yrevoceR eseht fo a dna EOD eht morf tnemucod ecnadiug nrael ot desu ti snaem yramirp eht ,noitacudE ecnadiug s’EOD eht fo yrammus egap-evfi eseht rof stnemeriuqer tcA yrevoceR eht fo s’EOD eht fo esoprup ehT .OSSCC eht morf ;EOD eht htiw sllac ecnerefnoc saw sdnuf eht tuoba noitamrofni edivorp ot saw ecnadiug owt dna ,ranibew a ,sliam-e ,sllac ecnerefnoc ,A traP ,I eltiT fo gnitroper dna ,esu ,noitacolla ecnerefnoc ;nosiail laredef sti htiw sgniniart .sdnuf tcA yrevoceR dedivorp lairetam nettirw dna htiw sllac rehto dna sgniteem dna ;OSSCC eht yb ot gnitiaw si ti ,noitacudE ot gnidrocca ,yllaniF sevitatneserper htiw dedeen sa noitacinummoc laredef eht morf ecnadiug etelpmoc eviecer ecffiO eht gnidulcni ,ecffiO s’ronrevoG eht fo .sdnuf I eltiT fo esu eht no tnemnrevog eht dna )ESO( noitacudE fo yraterceS eht fo .hcraeseR dna gninnalP fo ecffiO s’ronrevoG si ti taht smrfinoc ti ,noitacudE ot gnidroccA margorp siht fo stnemeriuqer eht gniteem dna nosiail laredef sti ot snoitseuq gnisop yb tcatnoc dna hcraeser ot nosiail eht gniksa a ni gnitapicitrap yb etairporppa sa EOD eht ,ESO htiw ,9002 ,03 lirpA no llac ecnerefnoc weiver ot ffats EOD s’margorp siht dna ,ecnaniF .stnemeriuqer gnitroper ssucsid dna ,deweiver sah ti ,noitacudE ot gnidroccA s’EOD ,etis beW sti no detsop dna ,detubirtsid .margorp siht rof ecnadiug 9002 lirpA California State Auditor Report 2009-611.1 53 June 2009 loohcS dna SeicneGa noitacude lacol ot StnarG—i eltit ,tnarG evitnecni ecnaniF ,tnarG deteGrat( tnemevorpmi —Snoitacolla etatS—dnuF noitazilibatS lacSiF etatS StnarG noitacude laicepS—b trap—aedi )tnarG tnemevorpmi loohcS dna cu/uSc dna 21-K Fo noitarotSer ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac 193.48 rebmun 983.48 rebmun 493.48 rebmun KSir marGorp Fo aera sessecorP dna seiciloP eht fo erawa si ti ,noitacudE ot gnidroccA  ot gnitiaw si ti ,noitacudE ot gnidroccA  detaroprocni ton sah ti ,noitacudE ot gnidroccA  era stnemeriuqer tcA yrevoceR cfiicepS stnemeriuqer dna sevitcejbo dnuf tcA yrevoceR laredef eht morf ecnadiug etelpmoc eviecer dna sevitcejbo dnuf tcA yrevoceR cfiiceps .seicilop tnemtraped otni detaroprocni etaroprocni lliw ti sisab gniogno na no dna dna sdnuf I eltiT fo esu eht no tnemnrevog seicilop tnemtraped otni stnemeriuqer ylluf ot seicilop tnemtraped otni meht rehtruf edivorp ot tnemnrevog laredef eht rof noitacfiiralc rehtruf rof gnitiaw si ti esuaceb .margorp siht tnemelpmi gnitroper eht no noitacfiiralc dna ecnadiug dna sevitcejbo eht no BMO eht morf meht etaroprocni lliw ti erofeb stnemeriuqer otni detaroprocni eb ot deen taht stnemeriuqer .ycilop tnemtraped otni .seicilop s’noitacudE sah ti taht detats osla noitacudE ,revewoH I eltiT fo esu eht no ecnadiug emos deviecer a deviecer ti ,elpmaxe roF .sdnuf tcA yrevoceR dna EOD eht morf tnemucod ecnadiug egap-14 ecnadiug s’EOD eht fo yrammus egap-evfi a s’EOD eht fo esoprup ehT .OSSCC eht morf eht tuoba noitamrofni edivorp ot saw ecnadiug ,A traP ,I eltiT fo gnitroper dna ,esu ,noitacolla .sdnuf tcA yrevoceR hsac a demrof sah ti ,noitacudE ot gnidroccA t hsac a demrof sah ti ,noitacudE ot gnidroccA  hsac a demrof sah ti ,noitacudE ot gnidroccA  eht edivorp seicilop latnemtraped nettirW fo ssecorp eht ni si taht ecrof ksat tnemeganam fo ssecorp eht ni si taht ecrof ksat tnemeganam fo ssecorp eht ni si taht ecrof ksat tnemeganam hsac gnitseuqer )1( :serudecorp gniwollof tnemeganam hsac s’tnemtraped eht gnivorpmi tnemeganam hsac s’tnemtraped eht gnivorpmi tnemeganam hsac s’tnemtraped eht gnivorpmi ylevitartsinimda si sa esolc sa secnavda si ti taht detats noitacudE .sdnuf laredef revo si ti taht detats noitacudE .sdnuf laredef revo ti taht detats noitacudE .sdnuf laredef revo gnirotinom )2( ;syaltuo hsac lautca ot elbissop .maet tnemeganam ksir s’EOD eht htiw gnikrow .maet tnemeganam ksir s’EOD eht htiw gnikrow tnemeganam ksir s’EOD eht htiw gnikrow si dna ;seitivitca tnemeganam hsac fo tnemeganam hsac a detaerc sah ecrof ksat ehT tnemeganam hsac a detaerc sah ecrof ksat ehT tnemelpmi ot elba neeb ton sah ti tub ,maet sgninrae tseretni ssecxe fo tnemyaper )3( a htiw ecnemmoc lliw taht nalp tnemevorpmi a htiw ecnemmoc lliw taht nalp tnemevorpmi rof serudecorp tnemeganam hsac etelpmoc deriuqer nehw noitacilppa tnemeganam hsac a ,margorp tolip noitacilppa tnemeganam hsac a ,margorp tolip hsac a detaerc sah ecrof ksat ehT .smargorp lla ot detaler slortnoc lanretni( rof trahc wofl ssecorp tnemnoitroppa dna rof trahc wofl ssecorp tnemnoitroppa dna nigeb lliw taht nalp tnemevorpmi tnemeganam .)tnemeganam hsac gnirotinom tnemeganam hsac a ,tolip eht gnirotinom tnemeganam hsac a ,tolip eht tnemeganam hsac a ,margorp tolip a htiw hsac a dna ,tolip eht rof trahc wofl ssecorp hsac a dna ,tolip eht rof trahc wofl ssecorp ssecorp tnemnoitroppa dna noitacilppa .tolip eht rof enilemit tnemeganam .tolip eht rof enilemit tnemeganam tnemeganam hsac a ,tolip eht rof trahc wofl dna ,tolip eht rof trahc wofl ssecorp gnirotinom .tolip eht rof enilemit tnemeganam hsac a . . . egap txen no deunitnoc 54 California State Auditor Report 2009-611.1 June 2009 loohcS dna SeicneGa noitacude lacol ot StnarG—i eltit ,tnarG evitnecni ecnaniF ,tnarG deteGrat( tnemevorpmi —Snoitacolla etatS—dnuF noitazilibatS lacSiF etatS StnarG noitacude laicepS—b trap—aedi )tnarG tnemevorpmi loohcS dna cu/uSc dna 21-K Fo noitarotSer ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac 193.48 rebmun 983.48 rebmun 493.48 rebmun KSir marGorp Fo aera gnirevoc troper tiduA elgniS ruo ,revewoH eht fo owt detcerroc ylluf ton sah noitacudE eht fo eerht detcerroc ylluf ton sah noitacudE .egap suoiverp morf deunitnoC hsac yna edulcni ton did 80–7002 raey lacsfi detroper sessenkaew tnemeganam hsac eerht ni detroper sessenkaew tnemeganam hsac evfi noitacude laiceps rof sgnidnfi tnemeganam 80–7002 raey lacsfi gnirevoc tiduA elgniS eht ni 80–7002 raey lacsfi gnirevoc tiduA elgniS eht eht edivorp seicilop latnemtraped nettirW .setats ot stnarg sessenkaew owt eht fO .sAEL ot stnarg I eltiT rof sdnuf tcA yrevoceR eviecer lliw ti smargorp rof gnitseuqer rof serudecorp )1( :gniwollof eht ni si ti ,detcerroc ylluf ton sah noitacudE fO .01–9002 dna 90–8002 sraey lacsfi ni rof ylevitartsinimda si sa esolc sa secnavda hsac seergasid ti ,revewoH .eno gnitcerroc fo ssecorp ylluf ton sah noitacudE sessenkaew eerht eht )2( ;syaltuo hsac lautca ot elbissop ton sah ti ,tluser a sA .eno rehto eht htiw .eno gnitcerroc fo ssecorp eht ni si ti ,detcerroc ;seitivitca tnemeganam hsac fo gnirotinom ew sessenkaew lortnoc lanretni eht detcerroc a sA .owt rehto eht htiw seergasid ti ,revewoH tseretni ssecxe fo tnemyaper )3( dna eud erew seicneicfied esoht esuaceB .detroper lanretni owt eseht detcerroc ton sah ti ,tluser deriuqer nehw sgninrae serudecorp dna sessecorp eht ni sessenkaew ot seicneicfied esoht esuaceB .sessenkaew lortnoc ot detaler slortnoc lanretni( gniganam rof esu ot snalp noitacudE taht dna sessecorp eht ni sessenkaew ot eud erew .)tnemeganam hsac ralimis taht elbissop si ti ,sdnuf tcA yrevoceR rof esu ot snalp noitacudE taht serudecorp yrevoceR fo esu sti htiw rucco dluoc smelborp elbissop si ti ,sdnuf tcA yrevoceR gniganam .sdnuf tcA esu sti htiw rucco dluoc smelborp ralimis taht .sdnuf tcA yrevoceR fo fo stneipicerbus lla ,noitacudE ot gnidroccA  deviecer sah noitacudE taht demrfinoc eW  si ti ygolodohtem eht taht detats noitacudE  neeb evah serudecorp dna seicilop nettirW elbigile era gnidnuf noitacude laiceps raluger morf sdnuf I eltiT rof ecnadiug ytilibigile sAEL elbigile ot sdnuf eseht etubirtsid ot gnisu gnikam rof noitcerid edivorp ot dehsilbatse .gnidnuf tcA yrevoceR noitacude laiceps rof deweiver ti detats noitacudE .EOD eht siht demrfinoc eW .ecnaniF yb devorppa saw snoitanimreted ytilibigile gnitnemucod dna nehw ecnadiug eht wollof lliw dna s’margorp siht gniweiver yb ygolodohtem stnarg dnuf tcA yrevoceR rof .ytilibigile gninimreted .etiS beW s’noitacudE no snoitairporppa .)ytilibigile ot detaler slortnoc lanretni( laiceps sti fo rotcerid eht ot gnidroccA  dna loohcs sti fo rotcerid eht ot gnidroccA  s’noitacudE fo rotcerid eht ot gnidroccA  ot ecalp ni era sessecorp nalp noitca evitcerroC wollof lliw ffats noitacudE ,noisivid noitacude lliw ffats noitacudE ,noisivid tnemevorpmi gnitsixe wollof lliw ffats ,noisivid ycilop lacsfi defiitnedi sgnidnfi tidua yna evloser yltpmorp ot sessecorp nalp noitca evitcerroc gnitsixe sessecorp nalp noitca evitcerroc gnitsixe wollof yltpmorp ot sessecorp nalp noitca evitcerroc ot ytiliba s’tnemtraped eht tcapmi yam taht defiitnedi sgnidnfi tidua yna evloser yltpmorp sgnidnfi tidua yna evloser yltpmorp ot taht defiitnedi sgnidnfi tidua yna evloser .tcA yrevoceR eht tnemelpmi yllufsseccus yllufsseccus ot ytiliba sti tcapmi yam taht ot ytiliba sti tcapmi yam taht defiitnedi yllufsseccus ot ytiliba s’noitacudE tcapmi yam .margorp laredef siht tnemelpmi .margorp laredef siht tnemelpmi yllufsseccus .margorp laredef siht tnemelpmi seod tnemucod ssecorp noituloser tidua ehT seod tnemucod ssecorp noituloser tidua ehT seod tnemucod ssecorp noituloser tidua ehT .tcA yrevoceR eht fo noitnem yna edulcni ton .tcA yrevoceR eht fo noitnem yna edulcni ton .tcA yrevoceR eht fo noitnem yna edulcni ton esuaceb ,noitacudE ot gnidrocca ,revewoH esuaceb ,noitacudE ot gnidrocca ,revewoH esuaceb ,noitacudE ot gnidrocca ,revewoH ,sdnuf laredef lla secnerefer tnemucod eht ,sdnuf laredef lla secnerefer tnemucod eht ,sdnuf laredef lla secnerefer tnemucod eht .yllauqe ylppa dluow sdnuf tcA yrevoceR .yllauqe ylppa dluow sdnuf tcA yrevoceR .yllauqe ylppa dluow sdnuf tcA yrevoceR lanretni 21 fo latot a defiitnedi ew ,eromrehtruF lanretni 21 fo latot a defiitnedi ew ,eromrehtruF lanretni 21 fo latot a defiitnedi ew ,revewoH troper tiduA elgniS eht ni sessenkaew lortnoc gnirevoc tiduA elgniS eht ni sessenkaew lortnoc troper tiduA elgniS eht ni sessenkaew lortnoc .noitacudE rof 80–7002 raey lacsfi gnirevoc no desaB .noitacudE rof 80–7002 raey lacsfi .noitacudE rof 80–7002 raey lacsfi gnirevoc raeppa eerht ylno ,gnitset detimil ruo no desaB evah ot raeppa eerht ylno ,gnitset detimil ruo raeppa eerht ylno ,gnitset detimil ruo no desaB nrecnoc fo si sihT .detcerroc neeb evah ot eht esuaceb nrecnoc fo si sihT .detcerroc neeb nrecnoc fo si sihT .detcerroc neeb evah ot gnitsixe ot etaler sessenkaew eht esuaceb dna sessecorp gnitsixe ot detaler sessenkaew gnitsixe ot etaler sessenkaew eht esuaceb noitacudE taht serudecorp dna sessecorp sti rof esu ot snalp noitacudE taht serudecorp noitacudE taht serudecorp dna sessecorp yrevoceR fo noitartsinimda sti rof esu ot snalp .sdnuf tcA yrevoceR fo noitartsinimda yrevoceR fo noitartsinimda sti rof esu ot snalp .sdnuf tcA .sdnuf tcA California State Auditor Report 2009-611.1 55 June 2009 loohcS dna SeicneGa noitacude lacol ot StnarG—i eltit ,tnarG evitnecni ecnaniF ,tnarG deteGrat( tnemevorpmi —Snoitacolla etatS—dnuF noitazilibatS lacSiF etatS StnarG noitacude laicepS—b trap—aedi )tnarG tnemevorpmi loohcS dna cu/uSc dna 21-K Fo noitarotSer ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac 193.48 rebmun 983.48 rebmun 493.48 rebmun KSir marGorp Fo aera ,B traP ,AEDI sti ni taht demrfinoc eW  eht rof tnemnoitroppa tsrfi eht fo eciton sti nI  mrof noitacilppa s’noitacudE taht demrfinoc eW  ecnadiug dna ,snoitidnoc ,stnemeriuqer weN ot noitacfiiton drawa tnarg ,116 noitceS lacsfi rof ,A traP ,I eltiT rof sdnuf tcA yrevoceR fo tsil a ot eerga ot )sAEL( stneipicerbus seriuqer stneipicerbus eht ot dedivorp neeb evah eht detacinummoc noitacudE ,stneipicerbus noitacudE taht demrfinoc ew ,0102–9002 raey yrevoceR eseht rof seilppa ti nehw secnarussa .sdnuf tcA yrevoceR gnidrager snoitidnoc esehT .tnarg eht fo snoitidnoc ,ytilibigile rof snoisivorp eht sAEL dedivorp eht ot secnerefer emos sedulcni taht sdnuf tcA sesu elbawolla s’tcA yrevoceR eht dedulcni eseht ot detaler gnitroper dna ,sdnuf fo esu .snoitidnoc ro snoisivorp s’tcA yrevoceR rof stnemeriuqer gnitroper 2151 noitceS dna .sdnuf tcA yrevoceR .sdnuf eseht s’noitacudE fo rotcerid eht ot gnidroccA etis beW sti no noitamrofni sedivorp noitacudE tnemtimmoc s’AEL na ,noisivid ycilop lacsfi etis beW sti no noitamrofni sedivorp noitacudE tcA yrevoceR eht yb detcapmi smargorp eht rof tpiecer fo noitidnoc a si secnarussa eht ot tcA yrevoceR eht yb detcapmi smargorp eht rof yrevoceR rof etis beW eht ot sAEL stcerid dna gnitiawa si noitacudE ,revewoH .sdnuf fo yrevoceR rof etis beW eht ot sAEL stcerid dna .ecnadiug tcA gnidrager BMO eht morf ecnadiug rehtruf gnitiawa si noitacudE ,revewoH .ecnadiug tcA rednu stnemeriuqer gnitroper ’stneipicerbus gnidrager BMO eht morf ecnadiug rehtruf rehtruf gnitiawa si noitacudE ,revewoH .tcA yrevoceR eht fo 2151 noitceS rednu stnemeriuqer gnitroper ’stneipicerbus gnidrager BMO eht morf ecnadiug .tcA yrevoceR eht fo 2151 noitceS rednu stnemeriuqer gnitroper ’stneipicerbus noitamrofni setadpu noitacudE ,esiwrehtO .tcA yrevoceR eht fo 2151 noitceS sti no snoisivorp s’tcA yrevoceR eht ot detaler stcerid dna elbaliava semoceb ti sa etis beW .ecnadiug tcA yrevoceR rof etis beW eht ot sAEL stcartnoC/noitisiuqcA .slasoporp rof stseuqer on era erehT AN .slasoporp rof stseuqer on era erehT AN .slasoporp rof stseuqer on era erehT AN rednu deussi slasoporp rof stseuqer weN yrassecen eht niatnoc sevitaitini tcA yrevoceR eht fo snoisivorp eht yfsitas ot egaugnal .tcA yrevoceR tcA yrevoceR eseht ,noitacudE ot gnidroccA AN esu ton seod ti ,noitacudE ot gnidroccA AN esu ton seod ti ,noitacudE ot gnidroccA AN sdnuf tcA yrevoceR gnisu stcartnoC eviecer sAPLES lla dna ,nevird alumrof era sdnuf ,daetsnI .sdnuf eseht drawa ot stcartnoc ,daetsnI .sdnuf eseht drawa ot stcartnoc dna ,riaf ,tpmorp a ni dedrawa era rof ylppa ot evah ton od sAPLES ehT .gnidnuf noitacudE dna ,ylppa ot deriuqer era sAEL noitacudE dna ,ylppa ot deriuqer era sAEL .rennam elbanosaer ,noitacudE ot gnidrocca ,dna ,gnidnuf eht gnitsixe sti hguorht sdnuf eht etubirtsid lliw gnitsixe sti htiw sdnuf eht etubirtsid lliw rof tcartnoc a otni retne ot evah ton od yeht eht ot gnidroccA .ssecorp tnemnoitroppa detats osla noitacudE .ssecorp tnemnoitroppa lliw ti ,noitacudE ot gnidroccA .gnidnuf eht tnemevorpmi dna loohcs s’noitacudE fo rotcerid desab eb lliw AEL hcae ot dedrawa gnidnuf taht sti htiw sdnuf tcA yrevoceR eseht etubirtsid elbigile lla ot dedrawa eb lliw gnidnuf ,noisivid etats ni snoitcuder tnecer fo tnuoma eht nopu eht serusne hcihw ,ssecorp tnarg gnitsixe taht gnitats mrof enil-no na tuo llfi )1 taht sAEL noitacudE .tcirtsid hcae yb derrucni gnidnuf dna ,riaf ,tpmorp a ni dedrawa era sdnuf na evah )2 dna ,sdnuf eht eviecer ot tnaw yeht nac ti ,ygolodohtem siht gnisu yb taht seveileb .rennam elbanosaer detats osla rotcerid ehT .nalp AEL devorppa ,riaf ,tpmorp a ni dedrawa era sdnuf taht erusne AEL hcae rof tnuoma tnemnoitroppa eht taht .rennam elbanosaer dna gniwohs noitatnemucod dedivorp noitacudE dedivorp salumrof eht no yltcirts desab eb lliw osla tI .gnidnuf tnarg etaluclac ot ssecorp eht .EOD eht yb rof ygolodohtem eht dedivorp noitacudE drawa tnarg eht fo noitatnemucod dedivorp dedivorp osla tI .sdnuf eseht gnitacolla .APLES hcae rof stnuoma gniwohs noitatnemucod dedivorp noitacudE yranimilerp eht fo noitatnemucod .snoitacolla gnitaluclac no ecnadiug s’EOD eht .sAEL rof stnuoma noitairporppa yranimilerp rof noitatnemucod dedivorp osla tI stnemyap dna stnemeltitne tcA yrevoceR I eltiT .AEL hcae rof . . . egap txen no deunitnoc 56 California State Auditor Report 2009-611.1 June 2009 loohcS dna SeicneGa noitacude lacol ot StnarG—i eltit ,tnarG evitnecni ecnaniF ,tnarG deteGrat( tnemevorpmi —Snoitacolla etatS—dnuF noitazilibatS lacSiF etatS StnarG noitacude laicepS—b trap—aedi )tnarG tnemevorpmi loohcS dna cu/uSc dna 21-K Fo noitarotSer ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac 193.48 rebmun 983.48 rebmun 493.48 rebmun KSir marGorp Fo aera esu ton seod ti ,noitacudE ot gnidroccA AN esu ton seod ti ,noitacudE ot gnidroccA AN esu ton seod ti ,noitacudE ot gnidroccA AN yrevoceR gnisu dedrawa stcartnoc weN .sdnuf eseht drawa ot stcartnoc .sdnuf eseht drawa ot stcartnoc .sdnuf eseht drawa ot stcartnoc dna smret cfiiceps eht evah sdnuf tcA .deriuqer sesualc laiceps s’noitacudE fo rotcerid eht ot gnidroccA  loohcs s’noitacudE fo rotcerid eht ot gnidroccA  ycilop lacsfi sti fo rotcerid eht ot gnidroccA  diova tcA yrevoceR eht rednu dednuf stcejorP eseht htiw dednuf stcejorp ,noisivid noitacude htiw dednuf stcejorp ,noisivid secivres lacsfi eht ta stcejorp rotinom lliw noitacudE ,noisivid .snurrevo tsoc dna syaled yrassecennu eht ta derotinom eb lliw sdnuf tcA yrevoceR ta derotinom eb lliw sdnuf tcA yrevoceR eseht lliw ti ,noitacudE ot gnidrocca ,oslA .level lacol dna syaled yrassecennu diova ot level lacol dna syaled yrassecennu diova ot level lacol eht level-etats eriuqer lliw dna ssecorp MPC sti esu ,noitacudE ot gnidrocca ,oslA .snurrevo tsoc ti ,noitacudE ot gnidrocca ,oslA .snurrevo tsoc dna syaled yrassecennu diova ot gnitroper noisivid noitacude laiceps sti srotinom ti etats eriuqer lliw dna ssecorp MPC sti esu lliw .snurrevo tsoc .ffats noisivid 07 yletamixorppa htiw smargorp dna syaled yrassecennu diova ot gnitroper level .snurrevo tsoc ssecorp MPC eht rednu ,dessucsid ylsuoiverp sA ,80–7002 raey lacsfi rof ,noitacudE ot gnidroccA .sraey ruof yreve ecno ylno detisiv era sAEL noitacfiirev etis-no dedulcni gnirotinom siht ylno detisiv era sAEL ,dessucsid ylsuoiverp sA s’noitacudE .sAPLES 721 eht fo 51 fo sweiver .ssecorp MPC eht rednu sraey ruof yreve ecno yltrap weiver rof sAPLES tceles ot ssecorp atad ecnamrofrep gniweiver fo stsisnoc sweiver fles sAPLES dna ,ylraey detcelloc .sraey ruof yreve ecno detcudnoc era hcihw ,raey hcae deweiver era sAPLES wef os esuaceB ssecorp gnirotinom s’noitacudE taht sraeppa ti .sdnuf tcA yrevoceR rof tneicffius eb ton yam esu ton seod ti ,noitacudE ot gnidroccA AN esu ton seod ti ,noitacudE ot gnidroccA AN esu ton seod ti ,noitacudE ot gnidroccA AN sdnuf tcA yrevoceR gnisu dedrawa stcartnoC eht ,revewoH .sdnuf eseht drawa ot stcartnoc ,revewoH .sdnuf eseht drawa ot stcartnoc ,revewoH .sdnuf eseht drawa ot stcartnoc .cilbup eht ot tnerapsnart era detats noisivid noitacude laiceps eht fo rotcerid tnemevorpmi dna loohcs eht fo rotcerid eht detats noisivid ycilop lacsfi eht fo rotcerid eht yrevoceR gnikam no snalp noitacudE taht gnikam no snalp noitacudE taht detats noisivid yrevoceR gnikam no snalp noitacudE taht sdnuf eseht yaw eht si hcihw ,stnarg tcA eht si hcihw ,stnemnoitroppa tcA yrevoceR eseht yaw eht si hcihw ,stnemnoitroppa tcA yb cilbup eht ot tnerapsnart ,dedrawa era ot tnerapsnart ,dedrawa era sdnuf eseht yaw cilbup eht ot tnerapsnart ,dedrawa era sdnuf demrfinoc eW .etis beW sti no meht gnitsop eW. etis beW sti no meht gnitsop yb cilbup eht demrfinoc eW .etis beW sti no meht gnitsop yb eht gniweiver yb noitressa s’rotcerid eht gniweiver yb noitressa s’rotcerid eht demrfinoc eht gniweiver yb noitressa s’rotcerid eht .etis beW s’noitacudE no stnemnoitroppa .etis beW s’noitacudE no stnemnoitroppa eht .etis beW s’noitacudE no stnemnoitroppa California State Auditor Report 2009-611.1 57 June 2009 loohcS dna SeicneGa noitacude lacol ot StnarG—i eltit ,tnarG evitnecni ecnaniF ,tnarG deteGrat( tnemevorpmi —Snoitacolla etatS—dnuF noitazilibatS lacSiF etatS StnarG noitacude laicepS—b trap—aedi )tnarG tnemevorpmi loohcS dna cu/uSc dna 21-K Fo noitarotSer ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac 193.48 rebmun 983.48 rebmun 493.48 rebmun KSir marGorp Fo aera esu ton seod ti ,noitacudE ot gnidroccA AN esu ton seod ti ,noitacudE ot gnidroccA AN esu ton seod ti ,noitacudE ot gnidroccA AN sdnuf tcA yrevoceR fo stfieneb cilbup ehT gnidrocca ,oslA .sdnuf eseht drawa ot stcartnoc gnidrocca ,oslA .sdnuf eseht drawa ot stcartnoc gnidrocca ,oslA .sdnuf eseht drawa ot stcartnoc ,ylraelc detroper era tcartnoc rednu desu ecnadiug rehtruf gnitiawa si ti ,noitacudE ot ecnadiug rehtruf gnitiawa si ti ,noitacudE ot ecnadiug rehtruf gnitiawa si ti ,noitacudE ot .rennam ylemit a ni dna ,yletarucca 2151 noitceS no BMO eht morf noitacfiiralc dna 2151 noitceS no BMO eht morf noitacfiiralc dna 2151 noitceS no BMO eht morf noitacfiiralc dna .sdnuf eht rof stnemeriuqer gnitroper .sdnuf eht rof stnemeriuqer gnitroper .sdnuf eseht rof stnemeriuqer gnitroper rehtruf seviecer ti ecno taht detats noitacudE rehtruf seviecer ti ecno taht detats noitacudE rotcerid eht ot gnidrocca ,sselehtreveN eht troper ot nalp a poleved lliw ti ,ecnadiug eht troper ot nalp a poleved lliw ti ,ecnadiug ecno ,noisivid ycilop lacsfi s’noitacudE fo yrevoceR eht fo esu eht fo stfieneb cilbup yrevoceR eseht fo esu eht fo stfieneb cilbup noitacudE ,ecnadiug rehtruf seviecer ti .sdnuf tcA .sdnuf tcA ,raelc edivorp lliw sAEL taht setapicitna hcihw ,noitamrofni ylemit dna ,etarucca eht fo stfieneb cilbup eht etartsnomed lliw dna srehcaet fo noitneter eht gnidulcni ,sdnuf esiwrehto evah dluow taht ffats detacfiitrec etats ot eud seitud rieht fo deveiler neeb .snoitcuder tegdub ytilibatnuoccA dna ycnerapsnarT lanretni na sah ti ,noitacudE ot gnidroccA t lanretni na sah ti ,noitacudE ot gnidroccA t lanretni na sah ti ,noitacudE ot gnidroccA t ot dehsilbatse neeb sah ydob ecnanrevog A llarevo eht eganam lliw taht ecalp ni puorg llarevo eht eganam lliw taht ecalp ni puorg llarevo eht eganam lliw taht ecalp ni puorg eht fo noitatnemelpmi llarevo eht eganam gnidnuf tcA yrevoceR eht fo noitatnemelpmi gnidnuf tcA yrevoceR eht fo noitatnemelpmi gnidnuf tcA yrevoceR eht fo noitatnemelpmi .tcA yrevoceR .seviecer ti .seviecer ti .seviecer ti stsisnoc puorg lanretni sti taht detats noitacudE stsisnoc puorg lanretni sti taht detats noitacudE stsisnoc puorg lanretni sti taht detats noitacudE morf tnemeganam level-pot dna sevitucexe fo morf tnemeganam level-pot dna sevitucexe fo morf tnemeganam level-pot dna sevitucexe fo .noitacudE fo sehcnarb tnereffid .noitacudE fo sehcnarb tnereffid .noitacudE fo sehcnarb tnereffid su dedivorp noitacudE hguohtlA su dedivorp noitacudE hguohtlA su dedivorp noitacudE hguohtlA ti ,puorg lanretni sti fo noitatnemucod ti ,puorg lanretni sti fo noitatnemucod ti ,puorg lanretni sti fo noitatnemucod tnemtraped a naht erom gnihton fo detsisnoc tnemtraped a naht erom gnihton fo detsisnoc tnemtraped a naht erom gnihton fo detsisnoc eht fo eman eht htiw trahc lanoitazinagro eht fo eman eht htiw trahc lanoitazinagro eht fo eman eht htiw trahc lanoitazinagro .dethgilhgih puorg sti fo trap era ohw ffats .dethgilhgih puorg sti fo trap era ohw ffats .dethgilhgih puorg sti fo trap era ohw ffats edivorp ot elbanu saw noitacudE ,tluser a sA edivorp ot elbanu saw noitacudE ,tluser a sA edivorp ot elbanu saw noitacudE ,tluser a sA troppus ot noitatnemucod etauqeda troppus ot noitatnemucod etauqeda troppus ot noitatnemucod etauqeda .noitressa sti .noitressa sti .noitressa sti . . . egap txen no deunitnoc 58 California State Auditor Report 2009-611.1 June 2009 loohcS dna SeicneGa noitacude lacol ot StnarG—i eltit ,tnarG evitnecni ecnaniF ,tnarG deteGrat( tnemevorpmi —Snoitacolla etatS—dnuF noitazilibatS lacSiF etatS StnarG noitacude laicepS—b trap—aedi )tnarG tnemevorpmi loohcS dna cu/uSc dna 21-K Fo noitarotSer ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac 193.48 rebmun 983.48 rebmun 493.48 rebmun KSir marGorp Fo aera ycilop lacsfi sti fo rotcerid eht ot gnidroccA  ycilop lacsfi sti fo rotcerid eht ot gnidroccA  ycilop lacsfi sti rotcerid eht ot gnidroccA  taht stnemele atad dradnats etairporppa ehT morf noitacfiiralc gnitiawa si noitacudE ,noisivid morf noitacfiiralc gnitiawa si noitacudE ,noisivid morf noitacfiiralc gnitiawa si noitacudE ,noisivid detagergga dna ,defiissalc ,derutpac eb tsum deriuqer stnemele atad dradnats no BMO eht deriuqer stnemele atad dradnats no BMO eht deriuqer stnemele atad dradnats no BMO eht yrevoceR teem ot gnitroper dna sisylana rof .stroper ylretrauq ediw-tcA yrevoceR eht rof .stroper ylretrauq ediw-tcA yrevoceR eht rof stroper ylretrauq ediw-tcA yrevoceR eht rof 2151 noitceS rednu stnemeriuqer tcA noitacfiiralc hcus litnu ,noitacudE ot gnidroccA noitacfiiralc hcus litnu ,noitacudE ot gnidroccA noitacfiiralc hcus litnu ,noitacudE ot gnidroccA .defiitnedi era gnitsixe eht rehtehw raelcnu si ti ,elbaliava si gnitsixe eht rehtehw raelcnu si ti ,elbaliava si gnitsixe eht rehtehw raelcnu si ti ,elbaliava si yrevoceR eht troppus nac ssecorp gnitroper yrevoceR eht troppus nac ssecorp gnitroper yrevoceR eht troppus nac ssecorp gnitroper .stnemeriuqer gnitroper 2151 noitceS s’tcA .stnemeriuqer gnitroper 2151 noitceS s’tcA .stnemeriuqer gnitroper 2151 noitceS s’tcA noitacudE ,9002 ,1 yaM no ,elpmaxe roF noitacudE ,9002 ,1 yaM no ,elpmaxe roF noitacudE ,9002 ,1 yaM no ,elpmaxe roF gnikees BMO eht ot stnemmoc dettimbus gnikees BMO eht ot stnemmoc dettimbus gnikees BMO eht ot stnemmoc dettimbus gnitroper 2151 noitceS fo noitacfiiralc gnitroper 2151 noitceS fo noitacfiiralc gnitroper 2151 noitceS fo noitacfiiralc eht tuoba snrecnoc gniciov dna stnemeriuqer eht tuoba snrecnoc gniciov dna stnemeriuqer tuoba snrecnoc sti gniciov dna stnemeriuqer gnidrocca ,yllacfiicepS .stnemeriuqer gnitroper gnidrocca ,yllacfiicepS .stnemeriuqer gnitroper ,yllacfiicepS .stnemeriuqer gnitroper eht ,ainrofilaC ni tsixe sAEL 000,1 revo ,noitacudE ot ,ainrofilaC ni tsixe sAEL 000,1 revo ,noitacudE ot ni tsixe sAEL 000,1 revo ,noitacudE ot gnidrocca .sdnuf tcA yrevoceR eviecer lliw hcihw fo tsom .sdnuf tcA yrevoceR eviecer lliw hcihw fo tsom yrevoceR eviecer lliw hcihw fo tsom ,ainrofilaC fo ytilitu eht tuoba denrecnoc si noitacudE fo ytilitu eht tuoba denrecnoc si noitacudE tuoba denrecnoc si noitacudE .sdnuf tcA s’AEL hcae no noitamrofni evitarran ylretrauq s’AEL hcae no noitamrofni evitarran ylretrauq noitamrofni evitarran ylretrauq fo ytilitu eht noitacudE .sdnuf tcA yrevoceR fo esu dennalp noitacudE .sdnuf tcA yrevoceR fo esu dennalp tcA yrevoceR fo esu dennalp s’AEL hcae no gnitroper ylretrauq eht taht detats osla gnitroper ylretrauq eht taht detats osla ylretrauq eht taht detats osla noitacudE .sdnuf hcae fo esolc eht retfa syad 01 fo senildaed hcae fo esolc eht retfa syad 01 fo senildaed fo esolc eht retfa syad 01 fo senildaed gnitroper etats ro AEL rof emit yna fi ,elttil evael retrauq etats ro AEL rof emit yna fi ,elttil evael retrauq ro AEL rof emit yna fi ,elttil evael retrauq hcae .atad fo noitcerroc dna weiver .atad fo noitcerroc dna weiver .atad fo noitcerroc dna weiver etats dah ti ,9002 ,4 enuJ fo sa taht detats noitacudE dah ti ,9002 ,4 enuJ fo sa taht detats noitacudE dah ti ,9002 ,4 enuJ fo sa taht detats noitacudE .BMO eht morf esnopser a deviecer tey ton .BMO eht morf esnopser a deviecer tey ton .BMO eht morf esnopser a deviecer tey ton snrecnoc s’noitacudE fo emos ,eromrehtruF snrecnoc s’noitacudE fo emos ,eromrehtruF snrecnoc s’noitacudE fo emos ,eromrehtruF hguorht BMO eht ot detacinummoc osla erew hguorht BMO eht ot detacinummoc osla erew hguorht BMO eht ot detacinummoc osla erew eht ot gnidrocca ,elpmaxe roF .ecroF ksaT eht eht ot gnidrocca ,elpmaxe roF .ecroF ksaT eht ksaT sulumitS cimonocE laredeF ainrofilaC eht evitarran seriuqer ecnadiug BMO ,ecroF ksaT evitarran seriuqer ecnadiug BMO ,ecroF ksaT ot gnidrocca ,elpmaxe roF )ecroF ksaT( ecroF .ytivitca dna erutidnepxe hcae fo snoitpircsed .ytivitca dna erutidnepxe hcae fo snoitpircsed evitarran seriuqer ecnadiug BMO ,ecroF ksaT eht eht gnimussa taht detats osla ecroF ksaT ehT eht gnimussa taht detats osla ecroF ksaT ehT .ytivitca dna erutidnepxe hcae fo snoitpircsed morf noitamrofni siht gniriuqer eb lliw etatS morf noitamrofni siht gniriuqer eb lliw etatS eht gnimussa taht detats osla ecroF ksaT ehT 000,1 fo ssecxe ni ,ainrofilaC ni AEL yreve 000,1 fo ssecxe ni ,ainrofilaC ni AEL yreve morf noitamrofni siht gniriuqer eb lliw etatS deen dluow snoitpircsed evitarran etarapes deen dluow snoitpircsed evitarran etarapes 000,1 fo ssecxe ni ,ainrofilaC ni AEL yreve ot sa raelcnu si ecroF ksaT ehT .delipmoc eb ot ot sa raelcnu si ecroF ksaT ehT .delipmoc eb ot deen dluow snoitpircsed evitarran etarapes ni liated fo level siht fo ytilitu eht ro tamrof eht ni liated fo level siht fo ytilitu eht ro tamrof eht ot sa raelcnu si ecroF ksaT ehT .delipmoc eb ot .mrof evitarran .mrof evitarran ni liated fo level siht fo ytilitu eht ro tamrof eht .mrof evitarran California State Auditor Report 2009-611.1 59 June 2009 loohcS dna SeicneGa noitacude lacol ot StnarG—i eltit ,tnarG evitnecni ecnaniF ,tnarG deteGrat( tnemevorpmi —Snoitacolla etatS—dnuF noitazilibatS lacSiF etatS StnarG noitacude laicepS—b trap—aedi )tnarG tnemevorpmi loohcS dna cu/uSc dna 21-K Fo noitarotSer ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac 193.48 rebmun 983.48 rebmun 493.48 rebmun KSir marGorp Fo aera snoitagitsevni dna stidua eht ot gnidroccA  snoitagitsevni dna stidua eht ot gnidroccA  snoitagitsevni dna stidua eht ot gnidroccA  tcelloc ot ecalp ni era smsinahcem gnitropeR dehsilbatse ton sah noitacudE ,rotcerid dehsilbatse ton sah noitacudE ,rotcerid dehsilbatse ton sah noitacudE ,rotcerid teem ot stneipicerbus morf atad deriuqer eht erutidnepxe tcelloc ot smsinahcem gnitroper erutidnepxe tcelloc ot smsinahcem gnitroper erutidnepxe tcelloc ot smsinahcem gnitroper .snoisivorp ycnerapsnart s’tcA yrevoceR eht stneipicerbus sti morf atad ecnamrofrep dna stneipicerbus sti morf atad ecnamrofrep dna stneipicerbus sti morf atad ecnamrofrep dna stnemeriuqer gnitroper 2151 noitceS teem ot stnemeriuqer gnitroper 2151 noitceS teem ot stnemeriuqer gnitroper 2151 noitceS teem ot noitacudE hguohtlA .tcA yrevoceR eht fo noitacudE hguohtlA .tcA yrevoceR eht fo noitacudE hguohtlA .tcA yrevoceR eht fo tcA yrevoceR no noitacfiiralc detseuqer sah tcA yrevoceR no noitacfiiralc detseuqer sah tcA yrevoceR no noitacfiiralc detseuqer sah gnirrab taht seveileb ti ,stnemeriuqer gnitroper gnirrab taht seveileb ti ,stnemeriuqer gnitroper gnirrab taht seveileb ti ,stnemeriuqer gnitroper yticapac eht sah ti ,seitixelpmoc neeserofnu yna yticapac eht sah ti ,seitixelpmoc neeserofnu yna yticapac eht sah ti ,seitixelpmoc neeserofnu yna gnitsixe ot sedargpu dna snoitacfiidom ekam ot gnitsixe ot sedargpu dna snoitacfiidom ekam ot gnitsixe ot sedargpu dna snoitacfiidom ekam ot eht sserdda ot tneicffius eb dluohs taht smetsys eht sserdda ot tneicffius eb dluohs taht smetsys eht sserdda ot tneicffius eb dluohs taht smetsys nevig si ti sa gnol sa snoisivorp s’tcA yrevoceR nevig si ti sa gnol sa snoisivorp s’tcA yrevoceR nevig si ti sa gnol sa snoisivorp s’tcA yrevoceR .secruoser dna emit elbanosaer .secruoser dna emit elbanosaer .secruoser dna emit elbanosaer dettimbus stnemmoc ni detats ecroF ksaT ehT dettimbus stnemmoc ni detats ecroF ksaT ehT dettimbus stnemmoc ni detats ecroF ksaT ehT fo stnemele atad dradnats taht BMO eht ot fo stnemele atad dradnats taht BMO eht ot fo stnemele atad dradnats taht BMO eht ot eht eriuqer ylno ot raeppa tcA yrevoceR eht eht eriuqer ylno ot raeppa tcA yrevoceR eht eht eriuqer ylno ot raeppa tcA yrevoceR eht s’tcA yrevoceR eht htiw ylpmoc ot tneipicer s’tcA yrevoceR eht htiw ylpmoc ot tneipicer s’tcA yrevoceR eht htiw ylpmoc ot tneipicer a sA .stnemeriuqer gnitroper 2151 noitceS a sA .stnemeriuqer gnitroper 2151 noitceS a sA .stnemeriuqer gnitroper 2151 noitceS detacolla sdnuf ,seveileb ecroF ksaT eht ,tluser detacolla sdnuf ,seveileb ecroF ksaT eht ,tluser detacolla sdnuf ,seveileb ecroF ksaT eht ,tluser tlucffiid ti ekam lliw sAEL ot etatS eht hguorht tlucffiid ti ekam lliw sAEL ot etatS eht hguorht tlucffiid ti ekam lliw sAEL ot etatS eht hguorht 2151 noitceS ecrofne ot elbissopmi ton fi 2151 noitceS ecrofne ot elbissopmi ton fi 2151 noitceS ecrofne ot elbissopmi ton fi rof( stneipicerbus no stnemeriuqer gnitroper rof( stneipicerbus no stnemeriuqer gnitroper rof( stneipicerbus no stnemeriuqer gnitroper ecroF ksaT ehT .ainrofilaC ni )sAEL ,elpmaxe ecroF ksaT ehT .ainrofilaC ni )sAEL ,elpmaxe ecroF ksaT ehT .ainrofilaC ni )sAEL ,elpmaxe noitutitsnoC s’ainrofilaC taht yas ot no tnew noitutitsnoc s’ainrofilaC taht yas ot no tnew noitutitsnoc s’ainrofilaC taht yas ot no tnew wal laredef fo ssecxe ni snoisivorp lla seriuqer wal laredef fo ssecxe ni snoisivorp lla seriuqer wal laredef fo ssecxe ni snoisivorp lla seriuqer ,suhT .etatS eht yb dednuf tnecrep 001 eb ot ,suhT .etatS eht yb dednuf tnecrep 001 eb ot ,suhT .etatS eht yb dednuf tnecrep 001 eb ot yllacsfi eb ton dluow ti seveileb ecroF ksaT eht yllacsfi eb ton dluow ti seveileb ecroF ksaT eht yllacsfi eb ton dluow ti seveileb ecroF ksaT eht edivorp ot sAEL eriuqer ot etatS eht rof lacitcarp edivorp ot sAEL eriuqer ot etatS eht rof lacitcarp edivorp ot sAEL eriuqer ot etatS eht rof lacitcarp .stnemele atad dradnats eht htiw ti .stnemele atad dradnats eht htiw ti .stnemele atad dradnats eht htiw ti sti dettimbus noitacudE ,9002 ,1 yaM nO sti dettimbus noitacudE ,9002 ,1 yaM nO sti dettimbus noitacudE ,9002 ,1 yaM nO 2151 noitceS rehto dna siht tuoba snrecnoc 2151 noitceS rehto dna siht tuoba snrecnoc 2151 noitceS rehto dna siht tuoba snrecnoc eht ot stnemeriuqer gnitroper tcA yrevoceR eht ot stnemeriuqer gnitroper tcA yrevoceR eht ot stnemeriuqer gnitroper tcA yrevoceR ton sah noitacudE ,9002 ,4 enuJ fo sA .BMO ton sah noitacudE ,9002 ,4 enuJ fo sA .BMO ton sah noitacudE ,9002 ,4 enuJ fo sA .BMO .snrecnoc sti ot esnopser a deviecer .snrecnoc sti ot esnopser a deviecer .snrecnoc sti ot esnopser a deviecer taht sAEL lla ,noitacudE ot gnidrocca ,revewoH sAEL lla ,noitacudE ot gnidrocca ,revewoH sAEL lla ,noitacudE ot gnidrocca ,revewoH ot deriuqer erew drawa tnarg eht detpecca ot deriuqer erew sdnuf eseht rof deilppa taht ot deriuqer erew sdnuf eseht rof deilppa taht gnitroper laitnetop yna htiw ylpmoc ot eerga gnitroper laitnetop yna htiw ylpmoc ot eerga gnitroper laitnetop yna htiw ylpmoc ot eerga .gnidnuf siht rof stnemeriuqer .gnidnuf siht rof stnemeriuqer .gnidnuf siht rof stnemeriuqer . . . egap txen no deunitnoc 60 California State Auditor Report 2009-611.1 June 2009 loohcS dna SeicneGa noitacude lacol ot StnarG—i eltit ,tnarG evitnecni ecnaniF ,tnarG deteGrat( tnemevorpmi —Snoitacolla etatS—dnuF noitazilibatS lacSiF etatS StnarG noitacude laicepS—b trap—aedi )tnarG tnemevorpmi loohcS dna cu/uSc dna 21-K Fo noitarotSer ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac 193.48 rebmun 983.48 rebmun 493.48 rebmun KSir marGorp Fo aera lanretni na sah ti ,noitacudE ot gnidroccA  lanretni na sah ti ,noitacudE ot gnidroccA  lanretni na sah ti ,noitacudE ot gnidroccA  tcA yrevoceR eht rednu dehsilbup stropeR kcehc ot sessecorp poleved lliw taht puorg kcehc ot sessecorp poleved lliw taht puorg kcehc ot sessecorp poleved lliw taht puorg ycarucca rof devorppa dna deweiver era yrevoceR fo ssenetelpmoc dna ycarucca rof yrevoceR fo ssenetelpmoc dna ycarucca rof yrevoceR fo ssenetelpmoc dna ycarucca rof detaler slortnoc lanretni( ssenetelpmoc dna lanretni eht taht detats noitacudE .stroper tcA lanretni eht taht detats noitacudE .stroper tcA lanretni eht taht detats noitacudE .stroper tcA .)gnitroper ot BMO eht morf noitacfiiralc gnitiawa si puorg BMO eht morf noitacfiiralc gnitiawa si puorg BMO eht morf noitacfiiralc gnitiawa si puorg stnemeriuqer gnitroper 2151 noitceS no stnemeriuqer gnitroper 2151 noitceS no stnemeriuqer gnitroper 2151 noitceS no rof kcehc ot sessecorp spoleved ti erofeb rof kcehc ot sessecorp spoleved ti erofeb rof kcehc ot sessecorp spoleved ti erofeb roF .noitamrofni fo ssenetelpmoc dna ycarucca roF .noitamrofni fo ssenetelpmoc dna ycarucca roF .noitamrofni fo ssenetelpmoc dna ycarucca no noitacfiiralc gnitiawa si noitacudE ,elpmaxe no noitacfiiralc gnitiawa si noitacudE ,elpmaxe no noitacfiiralc gnitiawa si noitacudE ,elpmaxe sti rof stnemeriuqer gnitroper 2151 noitceS sti rof stnemeriuqer gnitroper 2151 noitceS sti rof stnemeriuqer gnitroper 2151 noitceS gnitroper ni )sAEL ,elpmaxe rof( stneipicerbus gnitroper ni )sAEL ,elpmaxe rof( stneipicerbus gnitroper ni )sAEL ,elpmaxe rof( stneipicerbus gnitroper 2151 noitceS dna noitacudE ot gnitroper 2151 noitceS dna noitacudE ot gnitroper 2151 noitceS dna noitacudE ot eht troper ot noitacudE rof stnemeriuqer eht troper ot noitacudE rof stnemeriuqer eht troper ot noitacudE rof stnemeriuqer .tnemnrevog laredef eht ot noitamrofni .tnemnrevog laredef eht ot noitamrofni .tnemnrevog laredef eht ot noitamrofni yna evah ton seod ti ,noitacudE ot gnidroccA yna evah ton seod ti ,noitacudE ot gnidroccA yna evah ton seod ti ,noitacudE ot gnidroccA taht noitressa sti troppus ot noitatnemucod taht noitressa sti troppus ot noitatnemucod taht noitressa sti troppus ot noitatnemucod .dehsilbatse neeb sah puorg a hcus .dehsilbatse neeb sah puorg a hcus .dehsilbatse neeb sah puorg a hcus eud era stroper tcA yrevoceR hguohtlA  eud era stroper tcA yrevoceR hguohtlA  syad 01 eud era stroper tcA yrevoceR hguohtlA  .sisab ylemit a no deraperp era stropeR radnelac hcae fo dne eht retfa syad 01 radnelac hcae fo dne eht retfa syad 01 ti ,retrauq radnelac hcae fo dne eht retfa ton thgim noitacudE taht sraeppa ti ,retrauq ton thgim noitacudE taht sraeppa ti ,retrauq deraperp eb ton thgim noitacudE taht sraeppa a no stroper eseht timbus ot deraperp eb a no stroper eseht timbus ot deraperp eb .sisab ylemit a no stroper eseht timbus ot seod ti ,noitacudE ot gnidroccA .sisab ylemit seod ti ,noitacudE ot gnidroccA .sisab ylemit wonk tey ton seod ti ,noitacudE ot gnidroccA eb lliw ti stroper fo sepyt eht wonk tey ton eb lliw ti stroper fo sepyt eht wonk tey ton ot deriuqer eb lliw ti stroper fo sepyt eht etats ot tlucffiid si ti os ,eraperp ot deriuqer etats ot tlucffiid si ti os ,eraperp ot deriuqer ti rehtehw etats ot tlucffiid si ti os ,eraperp .sisab ylemit a no meht eraperp lliw ti rehtehw .sisab ylemit a no meht eraperp lliw ti rehtehw .sisab ylemit a no meht eraperp ot elba eb lliw syad 01 gnitroper taht detats osla noitacudE syad 01 gnitroper taht detats osla noitacudE syad 01 gnitroper taht detats osla noitacudE eguh a eb dluow retrauq hcae fo dne eht retfa eguh a eb dluow retrauq hcae fo dne eht retfa eguh a eb dluow retrauq hcae fo dne eht retfa fo rebmun egral eht gniredisnoc daolkrow fo rebmun egral eht gniredisnoc daolkrow fo rebmun egral eht gniredisnoc daolkrow nevig dna sdnuf tcA yrevoceR gniviecer sAEL nevig dna sdnuf tcA yrevoceR gniviecer sAEL nevig dna sdnuf tcA yrevoceR gniviecer sAEL no troper yltnerruc ton seod noitacudE taht no troper yltnerruc ton seod noitacudE taht no troper yltnerruc ton seod noitacudE taht ti ,noitacudE ot gnidroccA .sisab ylretrauq a ti ,noitacudE ot gnidroccA .sisab ylretrauq a ti ,noitacudE ot gnidroccA .sisab ylretrauq a gnibircsed noitatnemucod yna evah ton seod gnibircsed noitatnemucod yna evah ton seod gnibircsed noitatnemucod yna evah ton seod a no stroper timbus ot elba eb dluow ti woh a no stroper timbus ot elba eb dluow ti woh a no stroper timbus ot elba eb dluow ti woh eht tahw wonk ton seod ti esuaceb sisab ylemit eht tahw wonk ton seod ti esuaceb sisab ylemit eht tahw wonk ton seod ti esuaceb sisab ylemit rof eb lliw stnemeriuqer gnitroper 2151 noitceS rof eb lliw stnemeriuqer gnitroper 2151 noitceS rof eb lliw stnemeriuqer gnitroper 2151 noitceS .tcA yrevoceR eht .tcA yrevoceR eht .tcA yrevoceR eht BMO eht demrofni noitacudE ,9002 ,1 yaM nO BMO eht demrofni noitacudE ,9002 ,1 yaM nO BMO eht demrofni noitacudE ,9002 ,1 yaM nO syad 01 fo enildaed gnitroper ylretrauq eht taht syad 01 fo enildaed gnitroper ylretrauq eht taht syad 01 fo enildaed gnitroper ylretrauq eht taht ,elttil sevael retrauq hcae fo esolc eht retfa ,elttil sevael retrauq hcae fo esolc eht retfa ,elttil sevael retrauq hcae fo esolc eht retfa atad tcerroc dna weiver ot ti rof emit yna fi atad tcerroc dna weiver ot ti rof emit yna fi atad tcerroc dna weiver ot ti rof emit yna fi ton sah noitacudE ,9002 ,4 enuJ fo sA .detroper ton sah noitacudE ,9002 ,4 enuJ fo sA .detroper ton sah noitacudE ,9002 ,4 enuJ fo sA .detroper .snrecnoc sti ot esnopser a deviecer .snrecnoc sti ot esnopser a deviecer .snrecnoc sti ot esnopser a deviecer California State Auditor Report 2009-611.1 61 June 2009 loohcS dna SeicneGa noitacude lacol ot StnarG—i eltit ,tnarG evitnecni ecnaniF ,tnarG deteGrat( tnemevorpmi —Snoitacolla etatS—dnuF noitazilibatS lacSiF etatS StnarG noitacude laicepS—b trap—aedi )tnarG tnemevorpmi loohcS dna cu/uSc dna 21-K Fo noitarotSer ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac 193.48 rebmun 983.48 rebmun 493.48 rebmun KSir marGorp Fo aera laiceps s’noitacudE fo rotcerid eht ot gnidroccA  sAEL srotinom ti ,noitacudE ot gnidroccA  srotinom ti ,noitacudE ot gnidroccA  srotinom ylraluger tnemtraped ehT serudecorp tidua gnitsixe ,noisivid noitacude lacsfi dna smargorp laredef dna etats rof etatS rof )sAEL ,elpmaxe rof( stneipicerbus laredef htiw ecnailpmoc tneipicerbus desu gnieb era sdnuf taht yfirev ot desu eb lliw gnitidua dna MPC eht hguorht ecnailpmoc ecnailpmoc lacsfi dna smargorp laredef dna stnemeriuqer margorp dna ,sesoprup etairporppa dna dezirohtua rof hcae srotinom MPC eht ,revewoH .sessecorp .sessecorp gnitidua dna MPC eht hguorht ot detaler slortnoc lanretni( ,rorre ,etsaw ,duarf laitnetop yfitnedi dna timil yeht hguohtlA .sraey ruof yreve ecno ylno AEL ecno ylno AEL hcae srotinom MPC eht ,revewoH .)gnirotinom tneipicerbus srotinom ti ,noitacudE ot gnidroccA .esuba dna drawa-eht-gnirud etauqeda sa yfilauq ton od yfilauq ton od yeht hguohtlA .sraey ruof yreve htiw smargorp noisivid noitacude laiceps sti osla AEL eht taht deton noitacudE ,gnirotinom ,gnirotinom drawa-eht-gnirud etauqeda sa gnidroccA .ffats noisivid 07 yletamixorppa stidua esehT .stidua 331-A BMO launna eviecer eviecer osla sAEL eht taht deton noitacudE siht ,80–7002 raey lacsfi rof ,noitacudE ot noitacudE ot dettimbus eb ot deriuqer era era stidua esehT .stidua 331-A BMO launna sweiver noitacfiirev etis-no sedulcni gnirotinom gnieb raey lacsfi eht retfa shtnom enin nihtiw nihtiw noitacudE ot dettimbus eb ot deriuqer ssecorp s’noitacudE .sAPLES 721 eht fo 51 fo 331-A BMO eht esuaceb yltneuqesnoC .detidua .detidua gnieb raey lacsfi eht retfa shtnom enin fo stsisnoc yltrap weiver rof sAPLES tceles ot ydaerla evah sdnuf eht retfa enod era stidua stidua 331-A BMO eht esuaceb yltneuqesnoC ,ylraey detcelloc atad ecnamrofrep gniweiver eht yfsitas ot gnihton od yeht ,tneps neeb ydaerla evah sdnuf eht retfa demrofrep era detcudnoc era hcihw sweiver fles sAPLES dna .tnemeriuqer gnirotinom drawa eht-gnirud eht yfsitas ot gnihton od yeht ,tneps neeb sAPLES wef os esuaceB .sraey ruof yreve ecno .tnemeriuqer gnirotinom drawa eht-gnirud taht sraeppa ti ,raey hcae deweiver era loohcs sti fo rotcerid eht ot gnidrocca ,oslA eb ton yam ssecorp gnirotinom s’noitacudE tnerruc s’noitacudE ,noisivid secivres lacsfi lacsfi sti fo rotcerid eht ot gnidrocca ,oslA .sdnuf tcA yrevoceR rof tneicffius no desab si gnirotinom tneipicerbus tneipicerbus tnerruc s’noitacudE ,noisivid ycilop tneuqesbus dna gnitroper tcaf-eht-retfa gnitroper tcaf-eht-retfa no desab si gnirotinom gnirotinom dna tidua gnitsixe sti taht erusne oT .sweiver ksed dna stisiv etis aiv sweiver ksed dna stisiv etis aiv sweiver tneuqesbus dna fo enil wen siht rof evitceffe era serudecorp lacsfi loohcs eht fo rotcerid eht ,revoeroM lacsfi eht fo rotcerid eht ,revoeroM .sweiver eht tcerroc ylluf tsum noitacudE ,gnidnuf deen lliw noitacudE seveileb noisivid secivres deen lliw noitacudE seveileb noisivid ycilop lortnoc lanretni gnirotinom tneipicerbus eerht ecnadiug laredef eht fi secruoser lanoitidda ecnadiug laredef eht fi secruoser lanoitidda elgniS 80–7002 eht ni detroper sessenkaew fo gnirotinom seriuqer gnitiawa si ti taht fo gnirotinom seriuqer gnitiawa si ti taht stcepxe ti smargorp noitacude laiceps rof tiduA eht sa )sAEL ,elpmaxe rof( stneipicerbus lla eht sa )sAEL ,elpmaxe rof( stneipicerbus lla lacsfi ni rof sdnuf tcA yrevoceR eviecer ot ,gnirrucco era serutidnepxe dna seitivitca ,gnirrucco era serutidnepxe dna seitivitca llits si noitacudE .01–9002 dna 90–8002 sraey rotcerid ehT .ylretrauq sa yltneuqerf sa ylbissop ehT .ylretrauq sa yltneuqerf sa ylbissop fo owt rof noitca evitcerroc sti gnitnemelpmi detats noisivid secivres lacsfi loohcs eht fo detats noisivid ycilop lacsfi eht fo rotcerid detroper sessenkaew lortnoc lanretni eerht eht sa ,stseuqer reviaw timbus lliw noitacudE taht sa ,stseuqer reviaw timbus lliw noitacudE taht .setats ot stnarg noitacude laiceps rof ssecca ot ,tcA yrevoceR eht rednu elbawolla ssecca ot ,tcA yrevoceR eht rednu elbawolla ,noitidda nI .srallod evitartsinimda lanoitidda ,noitidda nI .srallod evitartsinimda lanoitidda lacsfi loohcs eht fo rotcerid eht ot gnidrocca ycilop lacsfi eht fo rotcerid eht ot gnidrocca ecnaniF deen lliw noitacudE ,noisivid secivres dna ecnaniF deen lliw noitacudE ,noisivid . . . egap txen no deunitnoc 62 California State Auditor Report 2009-611.1 June 2009 loohcS dna SeicneGa noitacude lacol ot StnarG—i eltit ,tnarG evitnecni ecnaniF ,tnarG deteGrat( tnemevorpmi —Snoitacolla etatS—dnuF noitazilibatS lacSiF etatS StnarG noitacude laicepS—b trap—aedi )tnarG tnemevorpmi loohcS dna cu/uSc dna 21-K Fo noitarotSer ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac 193.48 rebmun 983.48 rebmun 493.48 rebmun KSir marGorp Fo aera erutidnepxe wolla htob ot erutalsigeL eht dna fo erutidnepxe wolla htob ot erutalsigeL eht .egap suoiverp morf deunitnoC evah taht stuc erotser dna srallod lanoitidda fo evah taht stuc erotser dna srallod lanoitidda srallod evitartsinimda laredef ot edam neeb srallod evitartsinimda laredef ot edam neeb srotinom ylraluger tnemtraped ehT hcihw ,ssecorp tegdub etats eht hguorht hcihw ,ssecorp tegdub etats eht hguorht laredef htiw ecnailpmoc tneipicerbus tnerruc eht od ot ytiliba s’noitacudE snetaerht tnerruc eht od ot ytiliba s’noitacudE snetaerht stnemeriuqer margorp .gnirotinom fo level .gnirotinom fo level ot detaler slortnoc lanretni( .)gnirotinom tneipicerbus serudecorp tidua gnitsixe sti taht erusne oT era serudecorp tidua gnitsixe sti taht erusne oT gnimoc sdnuf tcA yrevoceR rof evitceffe era noitacudE ,gnidnuf fo enil wen siht rof evitceffe ylluf tsum noitacudE ,margorp I eltiT siht otni tneipicerbus xis eht tcerroc ylluf tsum gnirotinom tneipicerbus owt eht tcerroc sessenkaew lortnoc lanretni gnirotinom eht ni detroper sessenkaew lortnoc lanretni rof tiduA elgniS 80–7002 eht ni detroper smargorp I eltiT eht rof tiduA elgniS 80–7002 tcA yrevoceR eviecer ot detcepxe si ti smargorp ni rof sdnuf tcA yrevoceR eviecer ot stcepxe ti .01–9002 dna 90–8002 sraey lacsfi ni rof sdnuf si noitacudE .01–9002 dna 90–8002 sraey lacsfi evitcerroc sti gnitnemelpmi llits si noitacudE htob rof noitca evitcerroc sti gnitnemelpmi llits lortnoc lanretni xis eht fo evfi rof noitca .detroper sessenkaew lortnoc lanretni eht fo .detroper sessenkaew snoisivorp gnitnemelpmi rof poleved lliw ro depoleved sah dna esu ni sah ydaerla noitacudE serudecorp dna sessecorp ot gniniatrep stnemucod tnaveler fo weiver ,lennosrep noitacudE yek fo sweivretnI :secruoS .tcA yrevoceR eht fo .74 dna 64 segap ot refer dnegel eht fo snoitpircsed deliated roF :etoN .elbacilppa toN = AN .deraperP =  .deraperp yltsoM = t  .deraperp yletaredoM = .deraperp toN =  California State Auditor Report 2009-611.1 63 June 2009 Table A.2 The Department of Health Care Services’ Preparedness to Administer the American Recovery and Reinvestment Act of 2009 Funds for the Program for Which It Expects to Receive or Be Awarded $50 Million or More for Fiscal Year 2008–09 temporary increaSe oF medicaid Federal medical aSSiStance percentaGeS (Fmap) area oF proGram riSK cataloG oF Federal domeStic aSSiStance number 93.778 Overall Preparedness Overall preparedness to track, monitor, t Based on the most frequent occurence of the color symbols below, the Department and report on the American Recovery and of Health Care Services (Health Care Services) appears mostly prepared to implement Reinvestment Act of 2009 (Recovery Act) the provisions of the Recovery Act for the temporary increase of FMAP. funds and to comply with the Recovery Act’s provisions. Human Capital A sufficient level of personnel exists to manage t According to its associate director, Health Care Services’ management has the programs included in the Recovery Act. determined it currently has a sufficient level of personnel to manage the increased FMAP funding. Although Health Care Services did not perform a written analysis to support its conclusions, the associate director stated that discussions took place within Health Care Services to determine its resource needs. Health Care Services based its conclusion on these informal assessments and past experiences when it received similar increases in federal funding and the resources needed to manage the accounting of funds. Staff is adequately trained to effectively t The chief of its accounting section indicated that Health Care Services’ staff is implement the Recovery Act’s provisons. adequately trained to implement the provisions of the Recovery Act because there have been several meetings on the topic. When we asked for notes or minutes from these meetings, the chief of the accounting section explained such documentation does not exist. According to Health Care Services’ associate director, while there has been no formal training for implementing the Recovery Act’s provisions, there have been regular meetings to provide guidance to staff on changes resulting from the FMAP increase. The associate director also stated that Health Care Services engaged in several phone calls with the Centers for Medicare and Medicaid Services (CMS), a part of the U.S. Department of Health and Human Services, to discuss the FMAP provisions and the tracking of payments. The chief of the accounting section provided a series of e-mails regarding various meetings between Health Care Services and CMS as support for her statement. Financial and Operational Systems Recovery Act funds are clearly distinguishable t According to the chief of its accounting section, Health Care Services currently does (for example, distinguished by using not use accounts within its automated accounting system to track its Recovery Act separate accounts). funds separately from regular FMAP funds. However, the chief of the accounting section stated that Health Care Services complies with the provision by drawing down and tracking Recovery Act FMAP funds separately outside of its normal accounting system. She also stated that Health Care Services manually calculates increases to FMAP under the Recovery Act. Finally, she stated that Health Care Services has made changes to its accounting system, and it expects to implement the changes on July 1, 2009. Financial and operational systems are t According to the chief of its accounting section, Health Care Services’ internal configured to manage and control Recovery accounting system is not currently configured to calculate the increased FMAP Act funds. funding provided by the Recovery Act. However, the chief of the accounting section stated that Health Care Services expects to have it operable and in use by July 1, 2009. She also stated that in the meantime, Health Care Services is manually producing the calculations for the increased percentage and has several binders of receipts and expenditures to comply with the tracking and monitoring of the funds. As a whole, the associate director believes that Health Care Services’ existing processes will be sufficient for handling the changes made by the Recovery Act. continued on next page . . . 64 California State Auditor Report 2009-611.1 June 2009 temporary increaSe oF medicaid Federal medical aSSiStance percentaGeS (Fmap) area oF proGram riSK cataloG oF Federal domeStic aSSiStance number 93.778 Financial and operational systems support t Health Care Services believes that the Recovery Act will not result in an increase in the increase in volume of contracts, grants, the volume of contracts, grants, and loans, because the increased federal funding and loans. has only resulted in a net decrease in the State’s General Fund contributions, and payments for services rendered have not changed. Health Care Services did not perform a formal written analysis to support how it came to this conclusion. According to its associate director, it is likely that Health Care Services will see increases in enrollment and claims as a result of the poor economy. Fraud, Waste, and Abuse Recovery Act funds are used for authorized t The associate director believes that Health Care Services’ existing internal controls for purposes, and the potential for fraud, waste, preventing unauthorized use of FMAP funds will be sufficient for the increased FMAP error, and abuse are minimized and mitigated funds because the Recovery Act does not appear to make significant changes to the (internal controls related to activities allowed existing FMAP program. The associate director stated that no formal written analysis and allowable costs). was performed to assess whether Health Care Services’ existing level of internal controls would be adequate to ensure the proper use of Recovery Act funds. Instead, Health Care Services based its conclusion on many internal discussions that focused on the provisions that were changed by the Recovery Act. However, upon review of the, State of California: Internal Control and State and Federal Compliance Audit Report for the Fiscal Year Ended June 30, 2008, Report 2008-002, May 2009 (Single Audit covering fiscal year 2007–08), we identified four internal control weaknesses regarding allowable activities for Health Care Services. As of May 2009, Health Care Services indicated that it had partially implemented corrective action plans for three of these weaknesses. Health Care Services indicated that it had modified its computer system to address the fourth weakness regarding the timeliness of its reporting to drug manufacturers. Health Care Services believes its efforts will effectively address the weakness when it mails future reports sometime after June 2009; however, it is unable to validate its claim. Policies and Processes Specific Recovery Act provisions are  Health Care Services provided documents showing that it assessed whether it incorporated into department policies. needed to incorporate the changes in eligibility provisions into its policies. Health Care Services has written policies regarding eligibility. Further, Health Care Services has informed counties of applicable FMAP changes under the Recovery Act. For instance, Health Care Services informed county welfare directors, county welfare administrative officers, and other county officials that because the State amended its law to implement the Recovery Act FMAP, counties must implement changes in their procedures. Written departmental policies provide the NA The chief of Health Care Services’ accounting section stated that Health Care Services following procedures for: (1) requesting cash reviews its accounts every Wednesday and Friday as part of its drawdown process. advances as close as is administratively possible The procedures for this process include generating a cash management report for to actual cash outlays; (2) monitoring of cash supervisory review. management activities; and (3) repayment of excess interest earnings when required The deputy director of administration at Health Care Services stated that cash (internal controls related to cash management). advances do not apply to Recovery Act funding. Health Care Services does not issue advances on Medi-Cal payments, and it coordinates any draw of federal funds with the State Controller’s Office (State Controller) to ensure that claim schedules are paid by the State Controller the day after federal funds are deposited in the state treasury. He also explained that the Department of Finance (Finance) calculates any interest owed and coordinates repayment with the federal government. No internal control weaknesses for cash management were identified during the Single Audit covering fiscal year 2007–08. California State Auditor Report 2009-611.1 65 June 2009 temporary increaSe oF medicaid Federal medical aSSiStance percentaGeS (Fmap) area oF proGram riSK cataloG oF Federal domeStic aSSiStance number 93.778 Written policies and procedures have been t Health Care Services has written policies regarding eligibility. CMS provided Health established to provide direction for making Care Services with information and answers to frequently asked questions and documenting eligibility determinations for regarding eligibility provisions for Recovery Act FMAP. Further, Health Care Services Recovery Act fund grants has informed counties of applicable FMAP changes under the Recovery Act. For (internal controls related to eligibility). instance, Health Care Services informed county welfare directors, county welfare administrative officers, and other county officials that because the State amended its law to implement the Recovery Act FMAP, counties must implement changes in their procedures. However, upon review of the Single Audit covering fiscal year 2007–08, we identified four internal control weaknesses regarding eligibility at Health Care Services. As of May 2009, Health Care Services indicated that it had partially implemented its corrective action plans for these findings. Corrective action plan processes are in place to t According to its associate director, Health Care Services makes every effort to promptly resolve any audit findings identified promptly resolve audit findings and comply with audit recommendations. She stated that may impact the department’s ability to that final audit reports are distributed to appropriate parties within Health Care successfully implement the Recovery Act. Services, including executive staff and program staff responsible for implementing recommendations. Health Care Services’ policies support this statement. One provision of these policies states that its audit coordinator is responsible for ensuring the timely completion of status reports related to implementation of recommendations. Of the 11 deficiencies identified in the Single Audit covering fiscal year 2007–08 related to control weaknesses for the FMAP Health Care Services is in the process of correcting all 11. New requirements, conditions, and guidance  Health Care Services has informed counties and other subrecipients in writing of have been provided to the subrecipients applicable FMAP changes under the Recovery Act. For instance, Health Care Services regarding Recovery Act funds. informed county welfare directors, county welfare administrative officers, and other county officials that because the State amended its law to implement the Recovery Act FMAP, counties must implement changes in their procedures. Health Care Services also e-mailed instructions providing examples of how to track expenditures of the increased FMAP separate from the regular FMAP and provided invoice formatting advice to state agencies with which Health Care Services has interagency agreements. Acquisition/Contracts New requests for proposals issued under NA The associate director indicated that no new requests for proposals specific Recovery Act initiatives contain the necessary to Recovery Act funding have been issued. She also believes that the Recovery Act language to satisfy the provisions of the changes do not apply to Health Care Services’ contracting practices for FMAP. Health Recovery Act. Care Services has not conducted a formal written analysis to support this conclusion. Contracts using Recovery Act funds are awarded NA The associate director is unaware of any contracts that have been entered into in a prompt, fair, and reasonable manner. specific to Recovery Act funding. She also believes that the Recovery Act changes do not apply to Health Care Services’ contracting practices for FMAP. Health Care Services has not conducted a formal written analysis to support this conclusion. New contracts awarded using Recovery Act NA The associate director believes that the Recovery Act changes do not apply to Health funds have the specific terms and clauses Care Services’ contracting practices for FMAP. Health Care Services has not conducted required. a formal written analysis to support this conclusion. Projects funded under the Recovery Act avoid NA The associate director believes that the Recovery Act changes do not apply to Health unnecessary delays and cost overruns. Care Services’ contracting practices for FMAP. Health Care Services has not conducted a formal written analysis to support this conclusion. Contracts awarded using Recovery Act funds are NA As previously stated, the associate director is unaware of any contracts that have been transparent to the public. entered into specific to Recovery Act funding. However, she also believes that the Recovery Act changes do not apply to Health Care Services’ contracting practices for FMAP. Health Care Services has not conducted a formal written analysis to support this conclusion. continued on next page . . . 66 California State Auditor Report 2009-611.1 June 2009 temporary increaSe oF medicaid Federal medical aSSiStance percentaGeS (Fmap) area oF proGram riSK cataloG oF Federal domeStic aSSiStance number 93.778 The public benefits of Recovery Act funds used  The associate director stated that Health Care Services believes that Medicaid, which under contract are reported clearly, accurately, is partially funded by FMAP, qualifies as an entitlement program, and therefore, would and in a timely manner. not be subject to the Recovery Act’s Section 1512 reporting requirements unless the OMB states otherwise. Health Care Services is awaiting clarification about which federal programs are considered entitlement or mandatory programs. Transparency and Accountability A governance body has been established to  According to its associate director, Health Care Services has established department manage the overall implementation of the leads for managing implementation of the Recovery Act. These leads are the associate Recovery Act. director and the deputy director of administration. The appropriate standard data elements that  The associate director stated that Health Care Services believes that Medicaid, which must be captured, classified, and aggregated is partially funded by FMAP, qualifies as an entitlement program, and therefore, would for analysis and reporting to meet Recovery Act not be subject to the Recovery Act’s Section 1512 reporting requirements unless requirements under Section 1512 are identified. the OMB states otherwise. Health Care Services is awaiting clarification about which federal programs are considered entitlement or mandatory programs. Reporting mechanisms are in place to collect the  The associate director stated that Health Care Services believes that Medicaid, which required data from subrecipients to meet the is partially funded by FMAP, qualifies as an entitlement program, and therefore, would Recovery Act’s transparency provisions. not be subject to the Recovery Act’s Section 1512 reporting requirements unless the OMB states otherwise. Health Care Services is awaiting clarification about which federal programs are considered entitlement or mandatory programs. Reports published under the Recovery Act  The associate director stated that Health Care Services believes that Medicaid, which are reviewed and approved for accuracy is partially funded by FMAP, qualifies as an entitlement program, and therefore, would and completeness (internal controls related not be subject to the Recovery Act’s Section 1512 reporting requirements unless to reporting). the OMB states otherwise. Health Care Services is awaiting clarification about which federal programs are considered entitlement or mandatory programs. Reports are prepared on a timely basis.  The associate director stated that Health Care Services believes that Medicaid, which is partially funded by FMAP, qualifies as an entitlement program, and therefore, would not be subject to the Recovery Act’s Section 1512 reporting requirements unless the OMB states otherwise. Health Care Services is awaiting clarification about which federal programs are considered entitlement or mandatory programs. The department regularly monitors subrecipient t According to Health Care Services’ associate director, it has engaged in discussions compliance with federal program requirements with the contracted agencies regarding how they need to account for services (internal controls related to subject to the increased FMAP because the federal government is requiring states subrecipient monitoring). to track and account for services that are subject to both the regular FMAP and the increased FMAP. The Single Audit covering fiscal year 2007–08 identified two internal control weaknesses regarding subrecipient monitoring for Health Care Services. As of May 2009, Health Care Services indicated that it partially implemented its corrective action plan for one weakness and the other was fully corrected. However, our analysis found that this weakness has not been fully corrected because Health Care Services did not amend all of its contracts to include federal award information. Instead, Health Care Services only implemented our recommendation on new and recently amended contracts. Health Care Services believes the weakness will be fully corrected when the remaining contracts expire on June 30, 2009. Sources: Interviews of key Health Care Services personnel; and review of relevant documents pertaining to processes and procedures Health Care Service already has in use, has developed, or will develop for implementing provisions of the Recovery Act. Note: For detailed descriptions of the legend refer to pages 46 and 47. NA = Not applicable.  = Prepared. t = Mostly prepared.  = Moderately prepared.  = Not prepared. California State Auditor Report 2009-611.1 67 June 2009 1.3.A elbaT rof smargorP rof sdnuF 9002 fo tcA tnemtsevnieR dna yrevoceR naciremA eht retsinimdA ot ssenderaperP s’tnemtrapeD tnempoleveD tnemyolpmE ehT 90–8002 raeY lacsiF rof eroM ro noilliM 05$ dedrawA eB ro evieceR ot detcepxE sI tI hcihW SreKroW detacolSid—tca tnemtSevni ecroFKroW SecivreS htuoy—tca tnemtSevni ecroFKroW SecivreS KroW tluda—tca tnemtSevni ecroFKroW ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac 062.71 rebmun 952.71 rebmun 852.71 rebmun KSir marGorp Fo aera ssenderaperP llarevO eht fo ecnerrucco tneuqerf tsom eht no desaB  eht fo ecnerrucco tneuqerf tsom eht no desaB  fo ecnerrucco tneuqerf tsom eht no desaB  ,rotinom ,kcart ot ssenderaperp llarevO yletaredom sraeppa DDE ,woleb slobmys roloc yletaredom sraeppa DDE ,woleb slobmys roloc tnemyolpmE eht ,woleb slobmys roloc eht dna yrevoceR naciremA no troper dna eht fo snoisivorp eht tnemelpmi ot deraperp eht fo snoisivorp eht tnemelpmi ot deraperp sraeppa )DDE( tnemtrapeD tnempoleveD )tcA yrevoceR( 9002 fo tcA tnemtsevnieR tnemtsevnI ecrofkroW eht rof tcA yrevoceR tnemtsevnI ecrofkroW eht rof tcA yrevoceR tnemelpmi ot deraperp yletaredom yrevoceR eht htiw ylpmoc ot dna sdnuf .margorP srekroW detacolsiD—tcA .margorP secivreS htuoY—tcA rof tcA yrevoceR eht fo snoisivorp eht .snoisivorp s’tcA tludA—tcA tnemtsevnI ecrofkroW eht .margorP secivreS kroW latipaC namuH ta reganam noitartsinimda dna tegdub A t DDE ta reganam noitartsinimda dna tegdub A t ta reganam noitartsinimda dna tegdub A t eganam ot stsixe lennosrep fo level tneicffius A lennosrep fo level tnerruc eht taht detats DDE si lennosrep fo level tnerruc eht taht detats lennosrep fo level tnerruc eht taht detats DDE .tcA yrevoceR eht ni dedulcni smargorp eht tcA yrevoceR eht eganam ot tneicffius si sdnuf tcA yrevoceR eht eganam ot tneicffius tcA yrevoceR eht eganam ot tneicffius si eht ,yllanoitiddA .margorp AIW siht rof sdnuf ytuped eht ,yllanoitiddA .margorp AIW siht rof tcA tnemtsevnI ecrofkroW siht rof sdnuf weiver margorp s’DDE fo rotcerid ytuped hcnarb weiver margorp s’DDE fo rotcerid ytuped eht ,yllanoitiddA .margorp )AIW( yrevoceR eht ,DDE rof taht deton hcnarb saw tcA yrevoceR eht ,DDE rof taht deton hcnarb weiver margorp s’DDE fo rotcerid tnemgua ot msinahcem a sa desu saw tcA gnidnuf tnemgua ot msinahcem a sa desu saw tcA yrevoceR eht ,DDE rof taht deton rehtruf eH .smargorp gnitsixe-erp rof gnidnuf detats rehtruf eH .smargorp gnitsixe-erp rof gnidnuf tnemgua ot msinahcem a sa desu yrevoceR eht ,sesac tsom ni taht detats rehtie tcA yrevoceR eht ,sesac tsom ni taht detats rehtruf eH .smargorp gnitsixe-erp rof laredef gnitsixe yfidom ton did rehtie tcA ro smargorp laredef gnitsixe yfidom ton did rehtie tcA yrevoceR eht ,sesac tsom ni taht segnahc detimil yrev edam ti ro smargorp ton did taht segnahc detimil yrev edam ti ro smargorp laredef gnitsixe yfidom ton did gnitsixe ot snoitacfiidom eriuqer ton did taht ,ssessecorp gnitsixe ot snoitacfiidom eriuqer ton did taht segnahc detimil yrev edam ti ,revewoH .seicilop ro ,serudecorp ,ssessecorp retal deton sa ,revewoH .seicilop ro ,serudecorp ,ssessecorp gnitsixe ot snoitacfiidom eriuqer ydaerla sah DDE ,elbat siht ni retal deton sa eno detcerider ydaerla sah DDE ,elbat siht ni deton sa ,revewoH .seicilop ro ,serudecorp ot noitisop rotidua emit-lluf eno detcerider ecnailpmoc eht ot noitisop rotidua emit-lluf detcerider ydaerla sah DDE ,elbat siht ni retal snalp dna noitces gnirotinom ecnailpmoc eht tcerider ot snalp dna noitces gnirotinom eht ot noitisop rotidua emit-lluf eno eht ot seeyolpme lanoitidda eerht tcerider ot noitces eht ot seeyolpme lanoitidda eerht ot snalp dna noitces gnirotinom ecnailpmoc esoprup ehT .9002 ,1 yluJ naht retal on noitces fo esoprup ehT .9002 ,1 yluJ naht retal on eht ot seeyolpme lanoitidda eerht tcerider eht ni tsissa ot si ffats eseht gnitcerider fo eht ni tsissa ot si ffats eseht gnitcerider esoprup ehT .9002 ,1 yluJ naht retal on noitces .sdnuf AIW fo stneipicerbus fo gnirotinom .sdnuf AIW fo stneipicerbus fo gnirotinom eht ni tsissa ot si ffats eseht gnitcerider fo sah DDE taht detats rotcerid ytuped eht ,yllaniF sah DDE taht detats rotcerid ytuped eht ,yllaniF .sdnuf AIW fo stneipicerbus fo gnirotinom ot ytirohtua noitisop dna tegdub detseuqer ot ytirohtua noitisop dna tegdub detseuqer sah DDE taht detats rotcerid ytuped eht ,yllaniF ,sreganam owt ,stsylana 11 lanoitidda na erih ,sreganam owt ,stsylana 11 lanoitidda na erih ot ytirohtua noitisop dna tegdub detseuqer eht htiw tsissa ot ffats troppus eno dna eht htiw tsissa ot ffats troppus eno dna ,sreganam owt ,stsylana 11 lanoitidda na erih ew ,eroferehT .sweiver gnirotinom ecnailpmoc ew ,eroferehT .sweiver gnirotinom ecnailpmoc eht htiw tsissa ot ffats troppus eno dna eht taht noitressa s’DDE etipsed taht edulcnoc eht taht noitressa s’DDE etipsed taht edulcnoc ew ,eroferehT .sweiver gnirotinom ecnailpmoc no segnahc ,yna fi ,wef sesopmi tcA yrevoceR no segnahc ,yna fi ,wef sesopmi tcA yrevoceR eht taht noitressa s’DDE etipsed taht edulcnoc evah ton seod yltnerruc DDE ,margorp AIW eht evah ton seod yltnerruc DDE ,margorp AIW eht no segnahc ,yna fi ,wef sesopmi tcA yrevoceR .margorp eht eganam ylluf ot ffats tneicffius .margorp eht eganam ylluf ot ffats tneicffius evah ton seod yltnerruc DDE ,margorp AIW eht .margorp eht eganam ylluf ot ffats tneicffius . . . egap txen no deunitnoc 68 California State Auditor Report 2009-611.1 June 2009 SreKroW detacolSid—tca tnemtSevni ecroFKroW SecivreS htuoy—tca tnemtSevni ecroFKroW SecivreS KroW tluda—tca tnemtSevni ecroFKroW ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac 062.71 rebmun 952.71 rebmun 852.71 rebmun KSir marGorp Fo aera eht fo rotcerid ytuped eht ot gnidroccA  eht fo rotcerid ytuped eht ot gnidroccA  eht fo rotcerid ytuped eht ot gnidroccA  ylevitceffe ot deniart yletauqeda si ffatS deraperp si ffats DDE ,hcnarb weiver margorp deraperp si ffats DDE ,hcnarb weiver margorp deraperp si ffats DDE ,hcnarb weiver margorp .snosivorp s’tcA yrevoceR eht tnemelpmi sdnuf eht sa ,sdnuf tcA yrevoceR tnemelpmi ot sdnuf eht sa ,sdnuf tcA yrevoceR tnemelpmi ot sdnuf eht sa ,sdnuf tcA yrevoceR tnemelpmi ot seviecer DDE sdnuf laredef tnemgua ylpmis seviecer DDE sdnuf laredef tnemgua ylpmis seviecer DDE sdnuf laredef tnemgua ylpmis .sretsinimda yltnerruc ti smargorp rof yllaunna .sretsinimda yltnerruc ti smargorp rof yllaunna .sretsinimda yltnerruc ti smargorp rof yllaunna htiw ,taht detats rehtruf rotcerid ytuped ehT htiw ,taht detats rehtruf rotcerid ytuped ehT htiw ,taht detats rehtruf rotcerid ytuped ehT snoisivorp s’tcA yrevoceR eht ,snoitpecxe wef snoisivorp s’tcA yrevoceR eht ,snoitpecxe wef snoisivorp s’tcA yrevoceR eht ,snoitpecxe wef siht rof snoisivorp gnitsixe htiw edicnioc siht rof snoisivorp gnitsixe htiw edicnioc siht rof snoisivorp gnitsixe htiw edicnioc stsacbew dednetta sah ffats DDE .margorp ecnadiug lanoitidda eb yam erehT .margorp stsacbew dednetta sah ffats DDE .margorp ;ecnadiug rehtruf niatbo ot LOD yb detneserp htuoy remmus a rof yrassecen gniniart dna robaL fo tnemtrapeD .S.U eht yb detneserp demrofni ylerem evah stsacbew eht ,revewoh dna ,margorp gnitsixe na ton si taht margorp ,revewoh ;ecnadiug rehtruf niatbo ot )LOD( DDE .gnimochtrof eb lliw ecnadiug taht DDE gnipoleved yltnerruc si ti taht setats DDE taht DDE demrofni ylerem evah stsacbew eht noitamrofni wen sa ffats sti niart ot snalp tneipicerbus rof ffats niart ot mulucirruc ot snalp DDE .gnimochtrof eb lliw ecnadiug semoceb sdnuf tcA yrevoceR gnidrager DDE .margorp siht fo gnirotinom ecnailpmoc gnidrager noitamrofni wen sa ffats sti niart .elbaliava yb detneserp stsacbew dednetta sah ffats .elbaliava semoceb sdnuf tcA yrevoceR ,revewoh ;ecnadiug rehtruf niatbo ot LOD taht DDE demrofni ylerem evah stsacbew eht ot snalp DDE .gnimochtrof eb lliw ecnadiug gnidrager noitamrofni wen sa ffats sti niart .elbaliava semoceb sdnuf tcA yrevoceR smetsyS lanoitarepO dna laicnaniF etarapes deraperp sah DDE taht demrfinoc eW  etarapes deraperp DDE taht demrfinoc eW  etarapes deraperp sah DDE taht demrfinoc eW  elbahsiugnitsid ylraelc era sdnuf tcA yrevoceR .sdnuf tcA yrevoceR rof tnuocca ot sedoc tnarg .sdnuf tcA yrevoceR rof tnuocca ot sedoc tnarg .sdnuf tcA yrevoceR rof tnuocca ot sedoc tnarg gnisu yb dehsiugnitsid ,elpmaxe rof( .)stnuocca etarapes margorp sti fo rotcerid ytuped eht ot gnidroccA t margorp sti fo rotcerid ytuped eht ot gnidroccA t margorp sti fo rotcerid ytuped eht ot gnidroccA t era smetsys lanoitarepo dna laicnaniF laicnanfi gnitsixe sah s’DDE ,hcnarb weiver laicnanfi gnitsixe sah s’DDE ,hcnarb weiver laicnanfi gnitsixe sah s’DDE ,hcnarb weiver yrevoceR lortnoc dna eganam ot derugfinoc tneicffius era taht smetsys lanoitarepo dna tneicffius era taht smetsys lanoitarepo dna tneicffius era taht smetsys lanoitarepo dna .sdnuf tcA hguohtlA .sdnuf tcA yrevoceR eganam ot hguohtlA .sdnuf tcA yrevoceR eganam ot hguohtlA .sdnuf tcA yrevoceR eganam ot gnitroppus noitatnemucod detseuqer ew gnitroppus noitatnemucod detseuqer ew gnitroppus noitatnemucod detseuqer ew edivorp ot elbanu saw DDE ,noitressa siht edivorp ot elbanu saw DDE ,noitressa siht edivorp ot elbanu saw DDE ,noitressa siht .troppus hcus .troppus hcus .troppus hcus gnitnuocca laicnanfi s’DDE taht defiirev eW  gnitnuocca laicnanfi s’DDE taht defiirev eW  gnitnuocca laicnanfi s’DDE taht defiirev eW  troppus smetsys lanoitarepo dna laicnaniF desaercni siht eganam ot elba si metsys desaercni siht eganam ot elba si metsys desaercni siht eganam ot elba si metsys ,stnarg ,stcartnoc fo emulov ni esaercni eht stroper laicnanfi laredef gniweiver yb daolkrow stroper laicnanfi laredef gniweiver yb daolkrow stroper laicnanfi laredef gniweiver yb daolkrow .snaol dna ,yllanoitiddA .sdnuf tcA yrevoceR rof deraperp ,yllanoitiddA .sdnuf tcA yrevoceR rof deraperp ,yllanoitiddA .sdnuf tcA yrevoceR rof deraperp detpecca erew stroper eseht taht deton ew detpecca erew stroper eseht taht deton ew detpecca erew stroper eseht taht deton ew .LOD yb .LOD yb .LOD yb California State Auditor Report 2009-611.1 69 June 2009 SreKroW detacolSid—tca tnemtSevni ecroFKroW SecivreS htuoy—tca tnemtSevni ecroFKroW SecivreS KroW tluda—tca tnemtSevni ecroFKroW ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac 062.71 rebmun 952.71 rebmun 852.71 rebmun KSir marGorp Fo aera esubA dna ,etsaW ,duarF dna tegdub eht ni reganam a ot gnidroccA  dna tegdub eht ni reganam a ot gnidroccA  dna tegdub eht ni reganam a ot gnidroccA  dezirohtua rof desu era sdnuf tcA yrevoceR gnitsixe esu lliw DDE ,puorg noitartsinimda gnitsixe esu lliw DDE ,puorg noitartsinimda gnitsixe esu lliw DDE ,puorg noitartsinimda ,etsaw ,duarf rof laitnetop eht dna ,sesoprup fo esu etairporppa erusne ot slortnoc lanretni fo esu etairporppa erusne ot slortnoc lanretni fo esu etairporppa erusne ot slortnoc lanretni detagitim dna deziminim era esuba dna ,rorre on dnuof ew ,yllanoitiddA .sdnuf tcA yrevoceR on dnuof ew ,yllanoitiddA .sdnuf tcA yrevoceR on dnuof ew ,yllanoitiddA .sdnuf tcA yrevoceR dewolla seitivitca ot detaler slortnoc lanretni( elbawollanu ro stsoc dewollasid fo secnatsni elbawollanu ro stsoc dewollasid fo secnatsni elbawollanu ro stsoc dewollasid fo secnatsni .)stsoc elbawolla dna lacsfi gnirevoc tiduA elgniS ruo gnirud seitivitca lacsfi gnirevoc tiduA elgniS ruo gnirud seitivitca lacsfi gnirevoc tiduA elgniS ruo gnirud seitivitca .ecalp ni erew slortnoc eseht nehw 80–7002 raey .ecalp ni erew slortnoc eseht nehw 80–7002 raey .ecalp ni erew slortnoc eseht nehw 80–7002 raey gniwohs noitatnemucod su dedivorp ffats DDE gniwohs noitatnemucod su dedivorp ffats DDE gniwohs noitatnemucod su dedivorp ffats DDE sOBC fo sweiver etis-no eerht detcudnoc ti taht fo sweiver etis-no eerht detcudnoc ti taht fo sweiver etis-no eerht detcudnoc ti taht na defiitnedi eW .90–8002 raey lacsfi gnirud ,revewoH .90-8002 raey lacsfi gnirud sOBC ,revewoH .90–8002 raey lacsfi gnirud sOBC tnecer tsom ruo ni ssenkaew lortnoc lanretni ssenkaew lortnoc lanretni na defiitnedi ew ssenkaew lortnoc lanretni na defiitnedi ew 80–7002 raey lacsfi gnirevoc tiduA elgniS gnirevoc tiduA elgniS tnecer tsom ruo ni gnirevoc tiduA elgniS tnecer tsom ruo ni fo gnirotinom tneipicerbus gnidrager tneipicerbus gnidrager 80–7002 raey lacsfi tneipicerbus gnidrager 80–7002 raey lacsfi )sOBC( snoitazinagro desab-ytinummoc snoitazinagro desab-ytinummoc fo gnirotinom snoitazinagro desab-ytinummoc fo gnirotinom eht fo enon ,yllacfiicepS .AIW rednu dednuf fo enon ,yllacfiicepS .AIW rednu dednuf )sOBC( fo enon ,yllacfiicepS .AIW rednu dednuf )sOBC( ni gnidnuf AIW laredef deviecer taht sOBC ni gnidnuf AIW laredef deviecer taht sOBC eht ni gnidnuf AIW laredef deviecer taht sOBC eht yb sweiver etis-no deviecer 80–7002 raey lacsfi yb sweiver etis-no deviecer 80–7002 raey lacsfi yb sweiver etis-no deviecer 80–7002 raey lacsfi ni noillim 5.38$ deviecer sOBC 83 ,latot nI .DDE ni noillim 5.38$ deviecer sOBC 83 ,latot nI .DDE ni noillim 5.38$ deviecer sOBC 83 ,latot nI .DDE .80–7002 raey lacsfi gnirud sdnuf AIW laredef .80–7002 raey lacsfi gnirud sdnuf AIW laredef .80–7002 raey lacsfi gnirud sdnuf AIW laredef latroP yrevoceR etatS eht ecnis ,eromrehtruF latroP yrevoceR etatS eht ecnis ,eromrehtruF latroP yrevoceR etatS eht ecnis ,eromrehtruF detamitse na eviecer lliw DDE taht swohs detamitse na eviecer lliw DDE taht swohs detamitse na eviecer lliw DDE taht swohs eht rof sdnuf tcA yrevoceR ni noillim 3.514$ eht rof sdnuf tcA yrevoceR ni noillim 3.514$ eht rof sdnuf tcA yrevoceR ni noillim 3.514$ ti ,enola 90–8002 raey lacsfi ni margorp AIW ti ,enola 90–8002 raey lacsfi ni margorp AIW ti ,enola 90–8002 raey lacsfi ni margorp AIW erom neve eviecer lliw sOBC eht taht ylekil si erom neve eviecer lliw sOBC eht taht ylekil si erom neve eviecer lliw sOBC eht taht ylekil si neve eb lliw ti ,eroferehT .sraey erutuf ni yenom neve eb lliw ti ,eroferehT .sraey erutuf ni yenom neve eb lliw ti ,eroferehT .sraey erutuf ni yenom .sweiver etis-no mrofrep DDE taht lacitirc erom .sweiver etis-no mrofrep DDE taht lacitirc erom .sweiver etis-no mrofrep DDE taht lacitirc erom sessecorP dna seiciloP dna tegdub eht ni reganam a ot gnidroccA  dna tegdub eht ni reganam a ot gnidroccA  dna tegdub eht ni reganam a ot gnidroccA  era snoisivorp tcA yrevoceR cfiicepS gnitsixe esu lliw DDE ,puorg noitartsinimda gnitsixe esu lliw DDE ,puorg noitartsinimda gnitsixe esu lliw DDE ,puorg noitartsinimda .seicilop tnemtraped otni detaroprocni gnitiawa si ti tub ,smetsys gnitroper laicnanfi gnitiawa si ti tub ,smetsys gnitroper laicnanfi gnitiawa si ti tub ,smetsys gnitroper laicnanfi gnitroper ecnamrofrep gninrecnoc ecnadiug gnitroper ecnamrofrep gninrecnoc ecnadiug gnitroper ecnamrofrep gninrecnoc ecnadiug yrevoceR eht fo 2151 noitceS rednu deriuqer yrevoceR eht fo 2151 noitceS rednu deriuqer yrevoceR eht fo 2151 noitceS rednu deriuqer ton sah DDE ,9002 ,03 lirpA fo sa ,dna tcA ton sah DDE ,9002 ,03 lirpA fo sa ,dna tcA ton sah DDE ,9002 ,03 lirpA fo sa ,dna tcA eht ot euqinu seicilop yna detnemelpmi eht ot euqinu seicilop yna detnemelpmi eht ot euqinu seicilop yna detnemelpmi .tcA yrevoceR .tcA yrevoceR .tcA yrevoceR . . . egap txen no deunitnoc 70 California State Auditor Report 2009-611.1 June 2009 SreKroW detacolSid—tca tnemtSevni ecroFKroW SecivreS htuoy—tca tnemtSevni ecroFKroW SecivreS KroW tluda—tca tnemtSevni ecroFKroW ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac 062.71 rebmun 952.71 rebmun 852.71 rebmun KSir marGorp Fo aera dna tegdub eht ni reganam a ot gnidroccA  dna tegdub eht ni reganam a ot gnidroccA  dna tegdub eht ni reganam a ot gnidroccA  eht edivorp seicilop latnemtraped nettirW gnitsixe esu lliw DDE ,puorg noitartsinimda gnitsixe esu lliw DDE ,puorg noitartsinimda gnitsixe esu lliw DDE ,puorg noitartsinimda hsac gnitseuqer )1( :serudecorp gniwollof reporp erusne ot sessecorp tnemeganam hsac reporp erusne ot sessecorp tnemeganam hsac erusne ot sessecorp tnemeganam hsac ylevitartsinimda si sa esolc sa secnavda eW .sdnuf tcA yrevoceR fo nwodward hsac eW .sdnuf tcA yrevoceR fo nwodward hsac .sdnuf tcA yrevoceR fo nwodward hsac reporp gnirotinom )2( ;syaltuo hsac lautca ot elbissop hsac AIW nettirw s’DDE fo seipoc deniatbo osla hsac AIW nettirw s’DDE fo seipoc deniatbo osla nettirw s’DDE fo seipoc deniatbo osla eW dna ;seitivitca tnemeganam hsac fo did ew ,yllanoitiddA .serudecorp tnemeganam did ew ,yllanoitiddA .serudecorp tnemeganam hsac )AIW( 8991 fo tcA tnemtsevnI ecrofkroW sgninrae tseretni ssecxe fo tnemyaper )3( lortnoc tnemeganam hsac yna yfitnedi ton lortnoc tnemeganam hsac yna yfitnedi ton did ew ,yllanoitiddA .serudecorp tnemeganam deriuqer nehw gnirevoc tiduA elgniS ruo gnirud sessenkaew gnirevoc tiduA elgniS ruo gnirud sessenkaew lortnoc tnemeganam hsac yna yfitnedi ton ot detaler slortnoc lanretni( .80–7002 raey lacsfi .80–7002 raey lacsfi gnirevoc tiduA elgniS ruo gnirud sessenkaew .)tnemeganam hsac .80–7002 raey lacsfi sah DDE ,feihc gnitnuocca sti ot gnidroccA t ytilibigile esuaceb taht ecnedive dnuof eW  DDE ,gnitnuocca fo feihc eht ot gnidroccA t neeb evah serudecorp dna seicilop nettirW senilediug ytilibigile wen yna deussi ton remmus htuoy AIW eht rof stnemeriuqer senilediug ytilibigile wen yna deussi ton sah gnikam rof noitcerid edivorp ot dehsilbatse ytilibigile ecnis gnidnuf tcA yrevoceR rof ylthgils dehsilbatse sah DDE ,degnahc margorp ytilibigile esuaceb gnidnuf tcA yrevoceR rof snoitanimreted ytilibigile gnitnemucod dna senilediug gnitsixe no desab si noitanimreted rof serudecorp dna slortnoc ytilibigile defiidom senilediug gnitsixe no desab si noitanimreted stnarg tcA yrevoceR rof detseuqer ew hguohtlA .sdnuf AIW rof .sdnuf remmus htuoy AIW tcA yrevoceR detseuqer ew hguohtlA .sdnuf AIW rof .)ytilibigile ot detaler slortnoc lanretni( DDE ,noitressa siht gnitroppus noitatnemucod DDE ,noitressa siht gnitroppus noitatnemucod .troppus hcus edivorp ot elbanu saw .troppus hcus edivorp ot elbanu saw ni sessecorp noitca evitcerroc gnitsixe sah DDE t ni sessecorp noitca evitcerroc gnitsixe sah DDE t ni sessecorp noitca evitcerroc gnitsixe sah DDE t ot ecalp ni era sessecorp nalp noitca evitcerroC 80–7002 raey lacsfi ruo gnirud ,revewoH .ecalp 80–7002 raey lacsfi ruo gnirud ,revewoH .ecalp 80–7002 raey lacsfi ruo gnirud ,revewoH .ecalp defiitnedi sgnidnfi tidua yna evloser yltpmorp deton ew ,margorp AIW eht fo tiduA elgniS deton ew ,margorp AIW eht fo tiduA elgniS deton ew ,margorp AIW eht fo tiduA elgniS ot ytiliba s’tnemtraped eht tcapmi yam taht a eussi ton did DDE erehw ecnatsni eno a eussi ton did DDE erehw ecnatsni eno a eussi ton did DDE erehw ecnatsni eno .tcA yrevoceR eht tnemelpmi yllufsseccus sgnidnfi tidua no noisiced tnemeganam sgnidnfi tidua no noisiced tnemeganam sgnidnfi tidua no noisiced tnemeganam BMO fo tpiecer s’etatS eht fo shtnom xis nihtiw BMO fo tpiecer s’etatS eht fo shtnom xis nihtiw BMO fo tpiecer s’etatS eht fo shtnom xis nihtiw taht yb deriuqer sa ,stroper tidua 331-A ralucriC taht yb deriuqer sa ,stroper tidua 331-A ralucriC taht yb deriuqer sa ,stroper tidua 331-A ralucriC ot detubirtta eb nac yaled eht fo traP .ralucric ot detubirtta eb nac yaled eht fo traP .ralucric ot detubirtta eb nac yaled eht fo traP .ralucric tidua eht seviecer hcihw ,rellortnoC etatS eht tidua eht seviecer hcihw ,rellortnoC etatS eht ,)rellortnoC etatS( ecffiO s’rellortnoC etatS eht ot troper eht timbus ton did dna tsrfi stroper ot troper eht timbus ton did dna tsrfi stroper did dna tsrfi stroper tidua eht seviecer hcihw shtnom flah-eno dna owt naht erom litnu DDE shtnom flah-eno dna owt naht erom litnu DDE naht erom litnu DDE ot troper eht timbus ton tnemeganam a esuaceB .deviecer saw ti retfa tnemeganam a esuaceB .deviecer saw ti retfa .deviecer saw ti retfa shtnom flah-eno dna owt deriuqer eht nihtiw etelpmoc ton saw noisiced deriuqer eht nihtiw etelpmoc ton saw noisiced ton saw noisiced tnemeganam a esuaceB seititne taht erusne tonnac DDE ,emarfemit seititne taht erusne tonnac DDE ,emarf emit DDE ,emarf emit deriuqer eht nihtiw etelpmoc sessenkaew detcerroc sdnuf laredef gniviecer sessenkaew detcerroc sdnuf laredef gniviecer laredef gniviecer seititne taht erusne tonnac seititne ,yltneuqesnoC .rennam ylemit a ni seititne ,yltneuqesnoC .rennam ylemit a ni .rennam ylemit a ni sessenkaew detcerroc sdnuf htiw ecnailpmoc fo tuo eb ot eunitnoc yam htiw ecnailpmoc fo tuo eb ot eunitnoc yam tuo eb ot eunitnoc yam seititne ,yltneuqesnoC .stnemeriuqer laredef .stnemeriuqer laredef .stnemeriuqer laredef htiw ecnailpmoc fo lacol ot ecnadiug dedivorp sah DDE  lacol ot ecnadiug dedivorp sah DDE  lacol ot ecnadiug dedivorp sah DDE  ecnadiug dna ,snoitidnoc ,stnemeriuqer weN gnidrocca tub ,sdraob tnemtsevni ecrofkrow gnidrocca tub ,sdraob tnemtsevni ecrofkrow gnidrocca tub ,sdraob tnemtsevni ecrofkrow stneipicerbus eht ot dedivorp neeb evah ,reganam noitartsinimda dna tegdub a ot ,reganam noitartsinimda dna tegdub a ot ,reganam noitartsinimda dna tegdub a ot .sdnuf tcA yrevoceR gnidrager LOD morf ecnadiug rof gnitiaw llits si DDE LOD morf ecnadiug rof gnitiaw llits si DDE LOD morf ecnadiug rof gnitiaw llits si DDE 2151 noitceS tcA yrevoceR gnidrager 2151 noitceS tcA yrevoceR gnidrager 2151 noitceS tcA yrevoceR gnidrager .stnemeriuqer gnitroper .stnemeriuqer gnitroper .stnemeriuqer gnitroper California State Auditor Report 2009-611.1 71 June 2009 SreKroW detacolSid—tca tnemtSevni ecroFKroW SecivreS htuoy—tca tnemtSevni ecroFKroW SecivreS KroW tluda—tca tnemtSevni ecroFKroW ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac 062.71 rebmun 952.71 rebmun 852.71 rebmun KSir marGorp Fo aera stcartnoC/noitisiuqcA dna tegdub eht ni reganam a ot gnidroccA  sti ot egaugnal dedda DDE hguohtlA  dna tegdub eht ni reganam a ot gnidroccA  rednu deussi slasoporp rof stseuqer weN gnidda no snalp DDE ,puorg noitartsinimda eht ot gnirrefer lasoporp rof snoitaticilos gnidda no snalp DDE ,puorg noitartsinimda yrassecen eht niatnoc sevitaitini tcA yrevoceR ot tcA yrevoceR eht gnidrager noitamrofni wen on dedivorp egaugnal eht ,tcA yrevoceR ot tcA yrevoceR eht gnidrager noitamrofni wen eht fo snoisivorp eht yfsitas ot egaugnal sah DDE ,revewoh ;lasoporp rof snoitaticilos sti yrevoceR eht fo snoisivorp eht tuoba scfiiceps ton sah DDE tub ,lasoporp rof snoitaticilos sti .tcA yrevoceR .snoitaticilos hcus yna deussi tey ton .tcA .snoitaticilos hcus yna deussi tey ot tnausrup AIW rednu stcartnoc sdrawa DDE t ot tnausrup AIW rednu stcartnoc sdrawa DDE t ot tnausrup AIW rednu stcartnoc sdrawa DDE t sdnuf tcA yrevoceR gnisu stcartnoC – 022-501 waL cilbuP( 2392 noitceS .C.S.U 92 – 022-501 waL cilbuP( 2392 noitceS .C.S.U 92 – 022-501 waL cilbuP( 2392 noitceS .C.S.U 92 dna ,riaf ,tpmorp a ni dedrawa era hcihw ,)281 noitceS tcA tnemtsevnI ecrofkroW hcihw ,)281 noitceS tcA tnemtsevnI ecrofkroW hcihw ,)281 noitceS tcA tnemtsevnI ecrofkroW .rennam elbanosaer eht dna sdnuf fo noitacolla tpmorp seriuqer eht dna sdnuf fo noitacolla tpmorp seriuqer eht dna sdnuf fo noitacolla tpmorp seriuqer sdnuf rof atad elbaliava tnecer tsom eht fo esu sdnuf rof atad elbaliava tnecer tsom eht fo esu sdnuf rof atad elbaliava tnecer tsom eht fo esu stcartnoc dedrawa ydaerla sah DDE .noitubirtsid stcartnoc dedrawa ydaerla sah DDE .noitubirtsid stcartnoc dedrawa ydaerla sah DDE .noitubirtsid tnausrup sdnuf tcA yrevoceR htiw dednuf tnausrup sdnuf tcA yrevoceR htiw dednuf tnausrup sdnuf tcA yrevoceR htiw dednuf tnemtsevni ecrofkrow lacol ot wal siht ot tnemtsevni ecrofkrow lacol ot wal siht ot tnemtsevni ecrofkrow lacol ot wal siht ot dna tegdub a ot gnidrocca ,revewoh ;sdraob dna tegdub a ot gnidrocca ,revewoh ;sdraob dna tegdub a ot gnidrocca ,revewoh ;sdraob tey evah stcartnoc on ,reganam noitartsinimda tey evah stcartnoc on ,reganam noitartsinimda tey evah stcartnoc on ,reganam noitartsinimda 51 s’ronrevog eht ot tnausrup dedrawa neeb 51 s’ronrevog eht ot tnausrup dedrawa neeb 51 s’ronrevog eht ot tnausrup dedrawa neeb .sdnuf AIW yranoitercsid tnecrep .sdnuf AIW yranoitercsid tnecrep .sdnuf AIW yranoitercsid tnecrep taht stcartnoc dnema ton did DDE hguohtlA  taht stcartnoc dnema ton did DDE hguohtlA  taht stcartnoc dnema ton did DDE hguohtlA  yrevoceR gnisu dedrawa stcartnoc weN edulcni ot ,9002 ,03 enuJ no eripxe ot tes era edulcni ot ,9002 ,03 enuJ no eripxe ot tes era edulcni ot ,9002 ,03 enuJ no eripxe ot tes era dna smret cfiiceps eht evah sdnuf tcA htiw su dedivorp ti ,egaugnal tcA yrevoceR htiw su dedivorp ti ,egaugnal tcA yrevoceR htiw su dedivorp ti ,egaugnal tcA yrevoceR .deriuqer sesualc hcihw ,9002 ,1 yluJ evitceffe stcartnoc fo seipoc hcihw ,9002 ,1 yluJ evitceffe stcartnoc fo seipoc hcihw ,9002 ,1 yluJ evitceffe stcartnoc fo seipoc .sesualc cfiiceps tcA yrevoceR edulcni od .sesualc cfiiceps tcA yrevoceR edulcni od .sesualc cfiiceps tcA yrevoceR edulcni od dna tegdub eht ni reganam a ot gnidroccA  dna tegdub eht ni reganam a ot gnidroccA  dna tegdub eht ni reganam a ot gnidroccA  diova tcA yrevoceR eht rednu dednuf stcejorP ot gniyrt si DDE elihw ,puorg noitartsinimda ot gniyrt si DDE elihw ,puorg noitartsinimda ot gniyrt si DDE elihw ,puorg noitartsinimda .snurrevo tsoc dna syaled yrassecennu ,stcejorp tcA yrevoceR gnidnuf ni syaled diova ,stcejorp tcA yrevoceR gnidnuf ni syaled diova ,stcejorp tcA yrevoceR gnidnuf ni syaled diova gniniatbo seitlucffiid gnicneirepxe si ti gniniatbo seitlucffiid gnicneirepxe si ti gniniatbo seitlucffiid gnicneirepxe si ti yltneicffie ot redro ni ytirohtua gnidneps yltneicffie ot redro ni ytirohtua gnidneps yltneicffie ot redro ni ytirohtua gnidneps .seicnega lacol ot yenom detairporppa evom .seicnega lacol ot yenom detairporppa evom .seicnega lacol ot yenom detairporppa evom noitatnemucod detseuqer ew hguohtlA noitatnemucod detseuqer ew hguohtlA noitatnemucod detseuqer ew hguohtlA ot elbanu saw DDE ,noitressa siht gnitroppus ot elbanu saw DDE ,noitressa siht gnitroppus ot elbanu saw DDE ,noitressa siht gnitroppus .troppus hcus edivorp .troppus hcus edivorp .troppus hcus edivorp . . . egap txen no deunitnoc 72 California State Auditor Report 2009-611.1 June 2009 SreKroW detacolSid—tca tnemtSevni ecroFKroW SecivreS htuoy—tca tnemtSevni ecroFKroW SecivreS KroW tluda—tca tnemtSevni ecroFKroW ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac 062.71 rebmun 952.71 rebmun 852.71 rebmun KSir marGorp Fo aera dna tegdub eht ni reganam a ot gnidroccA t dna tegdub eht ni reganam a ot gnidroccA t dna tegdub eht ni reganam a ot gnidroccA t sdnuf tcA yrevoceR gnisu dedrawa stcartnoC sliated sedivorp DDE ,puorg noitartsinimda sliated sedivorp DDE ,puorg noitartsinimda sliated sedivorp DDE ,puorg noitartsinimda .cilbup eht ot tnerapsnart era decnuonna dna dedrawa eb ot stcartnoc fo decnuonna dna dedrawa eb ot stcartnoc fo decnuonna dna dedrawa eb ot stcartnoc fo ,ssecorp lasoporp rof noitaticilos eht hguorht ,ssecorp lasoporp rof noitaticilos eht hguorht ,ssecorp lasoporp rof noitaticilos eht hguorht AIW eht fo tnecrep 51 ylno ot seilppa hcihw AIW eht fo tnecrep 51 ylno ot seilppa hcihw AIW eht fo tnecrep 51 ylno ot seilppa hcihw reganam ehT .etis beW yrevoceR sti no ,gnidnuf reganam ehT .etis beW yrevoceR sti no ,gnidnuf reganam ehT .etis beW yrevoceR sti no ,gnidnuf emas eht edivorp dluow DDE taht deton osla emas eht edivorp dluow DDE taht deton osla emas eht edivorp dluow DDE taht deton osla noisulcni rof ecroF ksaT eht ot noitamrofni no noisulcni rof ecroF ksaT eht ot noitamrofni cimonocE laredeF ainrofilaC eht ot noitamrofni latroP yrevoceR cimonocE ainrofilaC eht no latroP yrevoceR cimonocE ainrofilaC etats eht noisulcni rof )ecroF ksaT( ecroF ksaT sulumitS ton seod DDE ,revewoH .detseuqer fi ,etis beW ton seod DDE ,revewoH .detseuqer fi ,etis beW latroP yrevoceR cimonocE ainrofilaC eht no alumrof yb nevig stcartnoc hsilbup yltnerruc alumrof yb nevig stcartnoc hsilbup yltnerruc ton seod DDE ,revewoH .detseuqer fi ,etis beW sti no sdraob tnemtsevni ecrofkrow lacol ot sti no sdraob tnemtsevni ecrofkrow lacol ot alumrof yb nevig stcartnoc hsilbup yltnerruc stcartnoc eseht taht tcaf eht etipsed etis beW stcartnoc eseht taht tcaf eht etipsed etis beW sti no sdraob tnemtsevni ecrofkrow lacol ot .gnidnuf AIW fo ytirojam tsav eht esirpmoc .gnidnuf AIW fo ytirojam tsav eht esirpmoc stcartnoc eseht taht tcaf eht etipsed etis beW .gnidnuf AIW fo ytirojam tsav eht esirpmoc dednuf smargorp fo snoitpircsed secalp DDE  dednuf smargorp fo snoitpircsed secalp DDE  dednuf smargorp fo snoitpircsed secalp DDE  sdnuf tcA yrevoceR fo stfieneb cilbup ehT tcA yrevoceR nwo sti no tcA yrevoceR eht rednu tcA yrevoceR nwo sti no tcA yrevoceR eht rednu tcA yrevoceR nwo sti no tcA yrevoceR eht rednu ,ylraelc detroper era tcartnoc rednu desu .yrevocer/vog.ac.dde.www ta detacol ,etis beW .yrevocer/vog.ac.dde.www ta detacol ,etis beW .yrevocer/vog.ac.dde.www ta detacol ,etis beW .rennam ylemit a ni dna ,yletarucca ytilibatnuoccA dna ycnerapsnarT DDE ,feihc gnitnuocca s’DDE ot gnidroccA t DDE ,feihc gnitnuocca s’DDE ot gnidroccA t DDE ,feihc gnitnuocca s’DDE ot gnidroccA t ot dehsilbatse neeb sah ydob ecnanrevog A ot puorg gnikrow laireganam a detaerc sah ot puorg gnikrow laireganam a detaerc sah ot puorg gnikrow laireganam a detaerc sah eht fo noitatnemelpmi llarevo eht eganam .tcA yrevoceR eht fo noitatnemelpmi eesrevo .tcA yrevoceR eht fo noitatnemelpmi eesrevo .tcA yrevoceR eht fo noitatnemelpmi eesrevo .tcA yrevoceR tnemtraped fo gnitsil a htiw su dedivorp DDE tnemtraped fo gnitsil a htiw su dedivorp DDE tnemtraped fo gnitsil a htiw su dedivorp DDE etapicitrap ohw strepxe margorp dna stcatnoc etapicitrap ohw strepxe margorp dna stcatnoc etapicitrap ohw strepxe margorp dna stcatnoc ,revewoh ;puorg gnikrow tcA yrevoceR sti ni ,revewoh ;puorg gnikrow tcA yrevoceR sti ni ,revewoh ;puorg gnikrow tcA yrevoceR sti ni lamrof yna edivorp ot elbanu saw DDE lamrof yna edivorp ot elbanu saw DDE lamrof yna edivorp ot elbanu saw DDE ro pihsrebmem s’puorg eht fo noitatnemucod ro pihsrebmem s’puorg eht fo noitatnemucod ro pihsrebmem s’puorg eht fo noitatnemucod .seitilibisnopser thgisrevo .seitilibisnopser thgisrevo .seitilibisnopser thgisrevo California State Auditor Report 2009-611.1 73 June 2009 SreKroW detacolSid—tca tnemtSevni ecroFKroW SecivreS htuoy—tca tnemtSevni ecroFKroW SecivreS KroW tluda—tca tnemtSevni ecroFKroW ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac 062.71 rebmun 952.71 rebmun 852.71 rebmun KSir marGorp Fo aera laicnanfi deriuqer tcelloc yltnerruc nac DDE  laicnanfi deriuqer tcelloc yltnerruc nac DDE  laicnanfi deriuqer tcelloc yltnerruc nac DDE  taht stnemele atad dradnats etairporppa ehT sa sdnuf tcA yrevoceR ot gnitaler atad sa sdnuf tcA yrevoceR ot gnitaler atad sa sdnuf tcA yrevoceR ot gnitaler atad detagergga dna ,defiissalc ,derutpac eb tsum stroper laicnanfi nur-yrd owt yb decnedive stroper laicnanfi nur-yrd owt yb decnedive stroper laicnanfi nur-yrd owt yb decnedive yrevoceR teem ot gnitroper dna sisylana rof eht yb detpecca dna ot dettimbus erew taht eht yb detpecca dna ot dettimbus erew taht eht yb detpecca dna ot dettimbus erew taht 2151 noitceS rednu stnemeriuqer tcA tegdub eht ni reganam a ot gnidroccA .LOD tegdub eht ni reganam a ot gnidroccA .LOD tegdub eht ni reganam a ot gnidroccA .LOD .defiitnedi era gnitiawa llits si DDE ,puorg noitartsinimda dna gnitiawa llits si DDE ,puorg noitartsinimda dna gnitiawa llits si DDE ,puorg noitartsinimda dna 2151 noitceS tcA yrevoceR rof ecnadiug 2151 noitceS tcA yrevoceR rof ecnadiug 2151 noitceS tcA yrevoceR rof ecnadiug noitaerc boj ot detaler stnemeriuqer gnitroper noitaerc boj ot detaler stnemeriuqer gnitroper noitaerc boj ot detaler stnemeriuqer gnitroper siht elihW .tnemnrevog laredef eht morf siht elihW .tnemnrevog laredef eht morf siht elihW .tnemnrevog laredef eht morf siht detseuqer sah ti taht setats reganam siht detseuqer sah ti taht setats reganam siht detseuqer sah ti taht setats reganam yna edivorp ot elbanu saw DDE ,ecnadiug yna edivorp ot elbanu saw DDE ,ecnadiug yna edivorp ot elbanu saw DDE ,ecnadiug .siht mrfinoc ot noitatnemucod .siht mrfinoc ot noitatnemucod .siht mrfinoc ot noitatnemucod laicnanfi deriuqer tcelloc yltnerruc nac DDE  laicnanfi deriuqer tcelloc yltnerruc nac DDE  laicnanfi deriuqer tcelloc yltnerruc nac DDE  tcelloc ot ecalp ni era smsinahcem gnitropeR sa ,sdnuf tcA yrevoceR ot gnitaler atad sa ,sdnuf tcA yrevoceR ot gnitaler atad sa ,sdnuf tcA yrevoceR ot gnitaler atad teem ot stneipicerbus morf atad deriuqer eht stroper laicnanfi nur-yrd owt yb decnedive stroper laicnanfi nur-yrd owt yb decnedive stroper laicnanfi nur-yrd owt yb decnedive .snoisivorp ycnerapsnart s’tcA yrevoceR eht eht yb tpecca dna ot dettimbus erew taht eht yb tpecca dna ot dettimbus erew taht eht yb tpecca dna ot dettimbus erew taht tegdub eht ni reganam a ot gnidroccA .LOD tegdub eht ni reganam a ot gnidroccA .LOD tegdub eht ni reganam a ot gnidroccA .LOD gnitiawa llits si ti ,puorg noitartsinimda dna gnitiawa llits si ti ,puorg noitartsinimda dna gnitiawa llits si ti ,puorg noitartsinimda dna 2151 noitceS tcA yrevoceR rof ecnadiug 2151 noitceS tcA yrevoceR rof ecnadiug 2151 noitceS tcA yrevoceR rof ecnadiug noitaerc boj ot detaler stnemeriuqer gnitroper noitaerc boj ot detaler stnemeriuqer gnitroper noitaerc boj ot detaler stnemeriuqer gnitroper siht elihW .tnemnrevog laredef eht morf siht elihW .tnemnrevog laredef eht morf siht elihW .tnemnrevog laredef eht morf siht detseuqer sah ti taht setats reganam siht detseuqer sah ti taht setats reganam siht detseuqer sah ti taht setats reganam yna edivorp ot elbanu saw DDE ,ecnadiug yna edivorp ot elbanu saw DDE ,ecnadiug yna edivorp ot elbanu saw DDE ,ecnadiug .siht mrfinoc ot noitatnemucod .siht mrfinoc ot noitatnemucod .siht mrfinoc ot noitatnemucod tegdub eht ni reganam a ot gnidroccA t tegdub eht ni reganam a ot gnidroccA t tegdub eht ni reganam a ot gnidroccA t tcA yrevoceR eht rednu dehsilbup stropeR secivres ffats a ,puorg noitartsinimda dna secivres ffats a ,puorg noitartsinimda dna secivres ffats a ,puorg noitartsinimda dna ycarucca rof devorppa dna deweiver era sevorppa dna sweiver yltnerruc II ro I reganam sevorppa dna sweiver yltnerruc II ro I reganam sevorppa dna sweiver yltnerruc II ro I reganam ssenetelpmoc dna detseuqer ew hguohtlA .stroper deriuqer lla detseuqer ew hguohtlA .stroper deriuqer lla detseuqer ew hguohtlA .stroper deriuqer lla .)gnitroper ot detaler slortnoc lanretni( DDE ,noitressa siht gnitroppus noitatnemucod DDE ,noitressa siht gnitroppus noitatnemucod DDE ,noitressa siht gnitroppus noitatnemucod ,revewoH .troppus hcus edivorp ot elbanu saw ,revewoH .troppus hcus edivorp ot elbanu saw ,revewoH .troppus hcus edivorp ot elbanu saw lortnoc lanretni desab-gnitroper a detset ew lortnoc lanretni desab-gnitroper a detset ew lortnoc lanretni desab-gnitroper a detset ew gnirevoc tiduA elgniS ruo ni dedulcni ycneicfied gnirevoc tiduA elgniS ruo ni dedulcni ycneicfied gnirevoc tiduA elgniS ruo ni dedulcni ycneicfied noitca evitcerroc fi ees ot 80–7002 raey lacsfi noitca evitcerroc fi ees ot 80–7002 raey lacsfi noitca evitcerroc fi ees ot 80–7002 raey lacsfi ,detset ew ecnatsni eno eht ni dna ,nekat saw ,detset ew ecnatsni eno eht ni dna ,nekat saw ,detset ew ecnatsni eno eht ni dna ,nekat saw deerga troper laredef eht no atad taht dnuof deerga troper laredef eht no atad taht dnuof deerga troper laredef eht no atad taht dnuof .noitatnemucod gnitroppus htiw .noitatnemucod gnitroppus htiw .noitatnemucod gnitroppus htiw . . . egap txen no deunitnoc 74 California State Auditor Report 2009-611.1 June 2009 SreKroW detacolSid—tca tnemtSevni ecroFKroW SecivreS htuoy—tca tnemtSevni ecroFKroW SecivreS KroW tluda—tca tnemtSevni ecroFKroW ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac 062.71 rebmun 952.71 rebmun 852.71 rebmun KSir marGorp Fo aera weiver margorp eht fo rotcerid ytuped ehT  weiver margorp eht fo rotcerid ytuped ehT  weiver margorp eht fo rotcerid ytuped ehT  .sisab ylemit a no deraperp era stropeR ot elba eb lliw DDE taht setats DDE ta hcnarb ot elba eb lliw DDE taht setats DDE ta hcnarb ot elba eb lliw DDE taht setats DDE ta hcnarb laicnanfi 2151 noitceS s’tcA yrevoceR eht teem laicnanfi 2151 noitceS s’tcA yrevoceR eht teem laicnanfi 2151 noitceS s’tcA yrevoceR eht teem fo syad 01 nihtiw stnemeriuqer gnitroper fo syad 01 nihtiw stnemeriuqer gnitroper fo syad 01 nihtiw stnemeriuqer gnitroper ”tfoS“ .atad ”tfos“ gnisu retrauq radnelac eht ”tfoS“ .atad ”tfos“ gnisu retrauq radnelac eht ”tfoS“ .atad ”tfos“ gnisu retrauq radnelac eht ,revewoH .atad detamitse si atad laicnanfi ,revewoH .atad detamitse si atad laicnanfi ,revewoH .atad detamitse si atad laicnanfi ti ecnadiug no noitressa siht gnisab si DDE ti ecnadiug no noitressa siht gnisab si DDE ti ecnadiug no noitressa siht gnisab si DDE eht taht setats LOD hcihw ni LOD morf deviecer eht taht setats LOD hcihw ni LOD morf deviecer eht taht setats LOD hcihw ni LOD morf deviecer laicnanfi lamron s’LOD si ecnadiug eht fo sucof laicnanfi lamron s’LOD si ecnadiug eht fo sucof laicnanfi lamron s’LOD si ecnadiug eht fo sucof fo 2151 noitceS rednu gnitroper ton ,stroper fo 2151 noitceS rednu gnitroper ton ,stroper fo 2151 noitceS rednu gnitroper ton ,stroper ti sekam LOD ,yllanoitiddA .tcA yrevoceR eht ti sekam LOD ,yllanoitiddA .tcA yrevoceR eht sekam LOD ,yllanoitiddA .tcA yrevoceR eht BMO eht taht tnemucod eht tuohguorht raelc BMO eht taht tnemucod eht tuohguorht raelc eht taht tnemucod eht tuohguorht raelc ti tcA yrevoceR gnipoleved rof elbisnopser si tcA yrevoceR gnipoleved rof elbisnopser si )BMO( tegduB dna tnemeganaM fo ecffiO .S.U yltnerruc si LOD taht dna ,senilediug gnitroper yltnerruc si LOD taht dna ,senilediug gnitroper tcA yrevoceR gnipoleved rof elbisnopser si ,eromrehtruF .BMO morf ecnadiug gnitiawa ,eromrehtruF .BMO morf ecnadiug gnitiawa yltnerruc si LOD taht dna ,senilediug gnitroper detats DDE ,ecnadiug siht gniviecer ot roirp detats DDE ,ecnadiug siht gniviecer ot roirp ,eromrehtruF .BMO morf ecnadiug gnitiawa ton dluoc metsys gnitnuocca tsoc sti taht ton dluoc metsys gnitnuocca tsoc sti taht detats DDE ,ecnadiug siht gniviecer ot roirp eht rednu gnitroper rof senildaed eht teem eht rednu gnitroper rof senildaed eht teem ton dluoc metsys gnitnuocca tsoc sti taht laicnanfi etats tnerruc esuaceb tcA yrevoceR laicnanfi etats tnerruc esuaceb tcA yrevoceR eht rednu gnitroper rof senildaed eht teem laredef roirp teem ot derugfinoc era smetsys laredef roirp teem ot derugfinoc era smetsys laicnanfi etats tnerruc esuaceb tcA yrevoceR syad 54 gnitroper rof senilediug gnitroper syad 54 gnitroper rof senilediug gnitroper laredef roirp teem ot derugfinoc era smetsys si DDE ,yllaniF .retrauq a fo dne eht retfa si DDE ,yllaniF .retrauq a fo dne eht retfa syad 54 gnitroper rof senilediug gnitroper ecnamrofrep cfiiceps eht ot sa niatrecnu ecnamrofrep cfiiceps eht ot sa niatrecnu si DDE ,yllaniF .retrauq a fo dne eht retfa 2151 noitceS rednu stnemeriuqer gnitroper 2151 noitceS rednu stnemeriuqer gnitroper ecnamrofrep cfiiceps eht ot sa niatrecnu eht morf ecnadiug gnitiawa yltnerruc si dna eht morf ecnadiug gnitiawa yltnerruc si dna 2151 noitceS rednu stnemeriuqer gnitroper ytiliba eht ,eroferehT .tnemnrevog laredef ytiliba eht ,eroferehT .tnemnrevog laredef eht morf ecnadiug gnitiawa yltnerruc si dna ylemit a no stnemeriuqer eseht no troper ot ylemit a no stnemeriuqer eseht no troper ot ytiliba eht ,eroferehT .tnemnrevog laredef eht ni reganam a hguohtlA .nwonknu si sisab eht ni reganam a hguohtlA .nwonknu si sisab ylemit a no stnemeriuqer eseht no troper ot taht detats puorg noitartsinimda dna tegdub taht detats puorg noitartsinimda dna tegdub eht ni reganam a hguohtlA .nwonknu si sisab rof tnemnrevog laredef eht detcatnoc sah DDE rof tnemnrevog laredef eht detcatnoc sah DDE taht detats puorg noitartsinimda dna tegdub edivorp ot elbanu saw DDE ,ecnadiug rehtruf edivorp ot elbanu saw DDE ,ecnadiug rehtruf rof tnemnrevog laredef eht detcatnoc sah DDE .siht mrfinoc ot noitatnemucod .siht mrfinoc ot noitatnemucod edivorp ot elbanu saw DDE ,ecnadiug rehtruf .siht mrfinoc ot noitatnemucod California State Auditor Report 2009-611.1 75 June 2009 SreKroW detacolSid—tca tnemtSevni ecroFKroW SecivreS htuoy—tca tnemtSevni ecroFKroW SecivreS KroW tluda—tca tnemtSevni ecroFKroW ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac ecnatSiSSa citSemod laredeF Fo Golatac 062.71 rebmun 952.71 rebmun 852.71 rebmun KSir marGorp Fo aera gniwohs noitatnemucod su dedivorp ffats DDE  gniwohs noitatnemucod su dedivorp ffats DDE  gniwohs noitatnemucod su dedivorp ffats DDE  srotinom ylraluger tnemtraped ehT fo sweiver etis-no eerht detcudnoc ti taht fo sweiver etis-no eerht detcudnoc ti taht fo sweiver etis-no eerht detcudnoc ti taht laredef htiw ecnailpmoc tneipicerbus ,revewoH .90–8002 raey lacsfi gnirud sOBC ,revewoH .90-8002 raey lacsfi gnirud sOBC ,revewoH .90–8002 raey lacsfi gnirud sOBC stnemeriuqer margorp ssenkaew lortnoc lanretni na defiitnedi ew ssenkaew lortnoc lanretni na defiitnedi ew ssenkaew lortnoc lanretni na defiitnedi ew ot detaler slortnoc lanretni( gnirevoc tiduA elgniS tnecer tsom ruo ni gnirevoc tiduA elgniS tnecer tsom ruo ni gnirevoc tiduA elgniS tnecer tsom ruo ni .)gnirotinom tneipicerbus tneipicerbus gnidrager 80–7002 raey lacsfi tneipicerbus gnidrager 80–7002 raey lacsfi tneipicerbus gnidrager 80–7002 raey lacsfi snoitazinagro desab-ytinummoc fo gnirotinom snoitazinagro desab-ytinummoc fo gnirotinom snoitazinagro desab-ytinummoc fo gnirotinom fo enon ,yllacfiicepS .AIW rednu dednuf )sOBC( fo enon ,yllacfiicepS .AIW rednu dednuf )sOBC( fo enon ,yllacfiicepS .AIW rednu dednuf )sOBC( ni gnidnuf AIW laredef deviecer taht sOBC eht ni gnidnuf AIW laredef deviecer taht sOBC eht ni gnidnuf AIW laredef deviecer taht sOBC eht yb sweiver etis-no deviecer 80–7002 raey lacsfi yb sweiver etis-no deviecer 80–7002 raey lacsfi yb sweiver etis-no deviecer 80–7002 raey lacsfi ni noillim 5.38$ deviecer sOBC 83 ,latot nI .DDE ni noillim 5.38$ deviecer sOBC 83 ,latot nI .DDE ni noillim 5.38$ deviecer sOBC 83 ,latot nI .DDE .80–7002 raey lacsfi gnirud sdnuf AIW laredef .80–7002 raey lacsfi gnirud sdnuf AIW laredef .80–7002 raey lacsfi gnirud sdnuf AIW laredef latroP yrevoceR etatS eht ecnis ,eromrehtruF latroP yrevoceR etatS eht ecnis ,eromrehtruF latroP yrevoceR etatS eht ecnis ,eromrehtruF detamitse na eviecer lliw DDE taht swohs detamitse na eviecer lliw DDE taht swohs detamitse na eviecer lliw DDE taht swohs eht rof sdnuf tcA yrevoceR ni noillim 3.514$ eht rof sdnuf tcA yrevoceR ni noillim 3.514$ eht rof sdnuf tcA yrevoceR ni noillim 3.514$ ti ,enola 90–8002 raey lacsfi ni margorp AIW ti ,enola 90–8002 raey lacsfi ni margorp AIW ti ,enola 90–8002 raey lacsfi ni margorp AIW erom neve eviecer lliw sOBC eht taht ylekil si erom neve eviecer lliw sOBC eht taht ylekil si erom neve eviecer lliw sOBC eht taht ylekil si neve eb lliw ti ,eroferehT .sraey erutuf ni yenom neve eb lliw ti ,eroferehT .sraey erutuf ni yenom neve eb lliw ti ,eroferehT .sraey erutuf ni yenom .sweiver etis-no mrofrep DDE taht lacitirc erom .sweiver etis-no mrofrep DDE taht lacitirc erom .sweiver etis-no mrofrep DDE taht lacitirc erom emit-lluf eno detcerider sah DDE ,yltnerruC emit-lluf eno detcerider sah DDE ,yltnerruC emit-lluf eno detcerider sah DDE ,yltnerruC gnirotinom ecnailpmoc eht ot noitisop rotidua gnirotinom ecnailpmoc eht ot noitisop rotidua gnirotinom ecnailpmoc eht ot noitisop rotidua lanoitidda eerht tcerider ot snalp dna noitces lanoitidda eerht tcerider ot snalp dna noitces lanoitidda eerht tcerider ot snalp dna noitces naht retal on noitces eht ot seeyolpme naht retal on noitces eht ot seeyolpme naht retal on noitces eht ot seeyolpme gnitcerider fo esoprup ehT .9002 ,1 yluJ gnitcerider fo esoprup ehT .9002 ,1 yluJ gnitcerider fo esoprup ehT .9002 ,1 yluJ fo gnirotinom eht ni tsissa ot si ffats eseht fo gnirotinom eht ni tsissa ot si ffats eseht fo gnirotinom eht ni tsissa ot si ffats eseht ytuped eht ,yllaniF .sdnuf AIW fo stneipicerbus ytuped eht ,yllaniF .sdnuf AIW fo stneipicerbus ytuped eht ,yllaniF .sdnuf AIW fo stneipicerbus detseuqer sah DDE taht detats rotcerid tegdub detseuqer sah DDE taht detats rotcerid tegdub detseuqer sah DDE taht detats rotcerid na erih ot ytirohtua noitisop dna tegdub lanoitidda na erih ot ytirohtua noitisop dna lanoitidda na erih ot ytirohtua noitisop dna dna ,sreganam owt ,stsylana nevele lanoitidda eno dna ,sreganam owt ,stsylana nevele eno dna ,sreganam owt ,stsylana nevele ecnailpmoc eht htiw tsissa ot ffats troppus eno ecnailpmoc eht htiw tsissa ot ffats troppus ecnailpmoc eht htiw tsissa ot ffats troppus .sweiver gnirotinom .sweiver gnirotinom .sweiver gnirotinom eht fo snoisivorp gnitnemelpmi rof gnipoleved eb lliw ro depoleved sah dna ,esu ni dah ydaerla DDE serudecorp dna sessecorp ot gniniatrep stnemucod tnaveler fo weiver ,lennosrep DDE yek fo sweivretnI :secruoS .tcA yrevoceR .74 dna 64 segap ot refer dnegel eht fo snoitpircsed deliated roF :etoN .elbacilppa toN = AN .deraperP =  .deraperp yltsoM = t  .deraperp yletaredoM = .deraperp toN =  76 California State Auditor Report 2009-611.1 June 2009 Table A.3.2 The Employment Development Department’s Preparedness to Administer the American Recovery and Reinvestment Act of 2009 Funds for Programs for Which It Expects to Receive or Be Awarded $50 Million or More for Fiscal Year 2008–09 Unemployment InsUrance – extensIon of emergency Increase In Unemployment compensatIon BenefIts Unemployment compensatIon federal fUndIng for extended Unemployment state Unemployment InsUrance & employment servIce operatIons catalog of federal domestIc assIstance catalog of federal domestIc assIstance catalog of federal domestIc assIstance catalog of federal domestIc assIstance area of program rIsk nUmBer 17.225 nUmBer 17.225 nUmBer Unknown* nUmBers 17.225 and 17.207† Overall Preparedness Overall preparedness to track, monitor, t Based on the most frequent occurrence of t Based on the most frequent occurrence of t Based on the most frequent occurrence of the color symbols t Based on the most frequent occurrence of the color symbols and report on American Recovery and the color symbols below, the Employment the color symbols below, EDD appears mostly below, EDD appears mostly prepared to implement the below, EDD appears moderately prepared to implement Reinvestment Act of 2009 (Recovery Act) Development Department (EDD) appears mostly prepared to implement the provisions of the provisions of the Recovery Act for Federal Funding for Extended the provisions of the Recovery Act for State Unemployment funds and to comply with the Recovery prepared to implement the provisions of the Recovery Act for the Unemployment Insurance— Unemployment. Insurance and Employment Service Operations. Act’s provisions. Recovery Act for the Increase in Unemployment Extension of Emergency Unemployment Compensation Benefits. Compensation (EUC). Human Capital A sufficient level of personnel exists to  According to the fund management  According to the fund management  According to the fund management administrator, similar to the t Although the chief of fiscal services indicated that EDD has a manage the programs included in the administrator, the Recovery Act simply increased administrator, the Recovery Act extends the Unemployment Insurance EUC program, this program extends sufficient level of personnel to properly administer funding Recovery Act. the amount of unemployment benefits to current EUC program end date from March the length of time a person can receive unemployment benefits. for this program, EDD informed us that it plans on using the recipients of unemployment checks by $25 per 31, 2009 to December 31, 2009. Therefore, he The fund management administrator does not believe that the funds to upgrade its information technology system for State week for this program. EDD does not believe does not believe that an increase in staff will be extension of benefits will result in the need for additional staff. Unemployment Insurance operations. Staff further stated that the increase in benefits will result in the need required. Based on our review of the Recovery Based on our review of the Recovery Act, we agree that the EDD plans to hire 4 to 6 new staff to manage these upgrade for additional staff. Additionally, according to Act, we agree that the need for additional staff need for additional staff is unlikely. Additionally, according to projects. Based on its acknowledgement that it plans to hire the deputy director of EDD’s program review is unlikely. Additionally, according to the deputy the deputy director of EDD’s program review branch, EDD had more staff, we conclude that EDD does not currently have branch, because of the significant increase director of EDD’s program review branch, EDD already hired additional staff in August 2008 to manage the sufficient staff for this program. in unemployment claims, EDD already hired already hired additional staff in August 2008 to increased workload. additional staff in August 2008 to manage the manage the increased workload. increased workload. Based on our review of the Recovery Act, we agree that the need for additional staff is unlikely. Staff is adequately trained to effectively The deputy director of EDD’s program review The deputy director of EDD’s program review t The deputy director of EDD’s program review branch stated NA The deputy director of EDD’s program review branch stated implement the Recovery Act’s provisons. t branch stated that no new training is required t branch stated that no new training is required that no new training is required because Recovery Act funds that if EDD hires contract managers to implement upgrades because Recovery Act funds for this program because Recovery Act funds for this program for this program are simply extensions of the existing program. of existing systems with these funds, there would be no need are simply extensions of the existing program. are simply extensions of the existing program. However, although this may be the case, there are other to train them. Although we believe that some level of training However, although this may be the case, there However, although this may be the case, there Recovery Act provisions that impose additional requirements will be required if new contract managers are eventually hired, are other Recovery Act provisions that impose are other Recovery Act provisions that impose on the program. Further, although we saw evidence that EDD’s because EDD has not yet entered into a contract to upgrade its additional requirements on the program. additional requirements on the program. staff is being trained and information is continuously being existing systems, additional training is not needed at this time. Further although we saw evidence that EDD’s Further, although we saw evidence that disseminated as it becomes available, we could not confirm that staff is being trained and information is EDD’s staff is being trained and information is such training will be adequate to effectively implement Recovery continuously being disseminated as it becomes continuously being disseminated as it becomes Act provisions. available, we could not confirm that such training available, we could not confirm that such training will be adequate to effectively implement will be adequate to effectively implement Recovery Act provisions. Recovery Act provisions. Financial and Operational Systems Recovery Act funds are clearly  We confirmed that EDD has prepared separate  Although we confirmed that EDD has prepared  We confirmed that EDD has prepared separate grant codes to  We have confirmed that EDD has prepared an accounting ID to distinguishable (for example, grant codes to account for Recovery Act funds. separate grant codes to account for Recovery account for Recovery Act funds. separately account for these funds. distinguished by using Act funds, according to the chief of the program separate accounts). analysis and evaluation section, additional system programming is still needed to ensure that Recovery Act and other federal funds are recorded in the correct grant code. This programming is expected to be complete by June 30, 2009. California State Auditor Report 2009-611.1 77 June 2009 Table A.3.2 The Employment Development Department’s Preparedness to Administer the American Recovery and Reinvestment Act of 2009 Funds for Programs for Which It Expects to Receive or Be Awarded $50 Million or More for Fiscal Year 2008–09 Unemployment InsUrance – extensIon of emergency Increase In Unemployment compensatIon BenefIts Unemployment compensatIon federal fUndIng for extended Unemployment state Unemployment InsUrance & employment servIce operatIons catalog of federal domestIc assIstance catalog of federal domestIc assIstance catalog of federal domestIc assIstance catalog of federal domestIc assIstance area of program rIsk nUmBer 17.225 nUmBer 17.225 nUmBer Unknown* nUmBers 17.225 and 17.207† Overall Preparedness Overall preparedness to track, monitor, t Based on the most frequent occurrence of t Based on the most frequent occurrence of t Based on the most frequent occurrence of the color symbols t Based on the most frequent occurrence of the color symbols and report on American Recovery and the color symbols below, the Employment the color symbols below, EDD appears mostly below, EDD appears mostly prepared to implement the below, EDD appears moderately prepared to implement Reinvestment Act of 2009 (Recovery Act) Development Department (EDD) appears mostly prepared to implement the provisions of the provisions of the Recovery Act for Federal Funding for Extended the provisions of the Recovery Act for State Unemployment funds and to comply with the Recovery prepared to implement the provisions of the Recovery Act for the Unemployment Insurance— Unemployment. Insurance and Employment Service Operations. Act’s provisions. Recovery Act for the Increase in Unemployment Extension of Emergency Unemployment Compensation Benefits. Compensation (EUC). Human Capital A sufficient level of personnel exists to  According to the fund management  According to the fund management  According to the fund management administrator, similar to the t Although the chief of fiscal services indicated that EDD has a manage the programs included in the administrator, the Recovery Act simply increased administrator, the Recovery Act extends the Unemployment Insurance EUC program, this program extends sufficient level of personnel to properly administer funding Recovery Act. the amount of unemployment benefits to current EUC program end date from March the length of time a person can receive unemployment benefits. for this program, EDD informed us that it plans on using the recipients of unemployment checks by $25 per 31, 2009 to December 31, 2009. Therefore, he The fund management administrator does not believe that the funds to upgrade its information technology system for State week for this program. EDD does not believe does not believe that an increase in staff will be extension of benefits will result in the need for additional staff. Unemployment Insurance operations. Staff further stated that the increase in benefits will result in the need required. Based on our review of the Recovery Based on our review of the Recovery Act, we agree that the EDD plans to hire 4 to 6 new staff to manage these upgrade for additional staff. Additionally, according to Act, we agree that the need for additional staff need for additional staff is unlikely. Additionally, according to projects. Based on its acknowledgement that it plans to hire the deputy director of EDD’s program review is unlikely. Additionally, according to the deputy the deputy director of EDD’s program review branch, EDD had more staff, we conclude that EDD does not currently have branch, because of the significant increase director of EDD’s program review branch, EDD already hired additional staff in August 2008 to manage the sufficient staff for this program. in unemployment claims, EDD already hired already hired additional staff in August 2008 to increased workload. additional staff in August 2008 to manage the manage the increased workload. increased workload. Based on our review of the Recovery Act, we agree that the need for additional staff is unlikely. Staff is adequately trained to effectively The deputy director of EDD’s program review The deputy director of EDD’s program review t The deputy director of EDD’s program review branch stated NA The deputy director of EDD’s program review branch stated implement the Recovery Act’s provisons. t branch stated that no new training is required t branch stated that no new training is required that no new training is required because Recovery Act funds that if EDD hires contract managers to implement upgrades because Recovery Act funds for this program because Recovery Act funds for this program for this program are simply extensions of the existing program. of existing systems with these funds, there would be no need are simply extensions of the existing program. are simply extensions of the existing program. However, although this may be the case, there are other to train them. Although we believe that some level of training However, although this may be the case, there However, although this may be the case, there Recovery Act provisions that impose additional requirements will be required if new contract managers are eventually hired, are other Recovery Act provisions that impose are other Recovery Act provisions that impose on the program. Further, although we saw evidence that EDD’s because EDD has not yet entered into a contract to upgrade its additional requirements on the program. additional requirements on the program. staff is being trained and information is continuously being existing systems, additional training is not needed at this time. Further although we saw evidence that EDD’s Further, although we saw evidence that disseminated as it becomes available, we could not confirm that staff is being trained and information is EDD’s staff is being trained and information is such training will be adequate to effectively implement Recovery continuously being disseminated as it becomes continuously being disseminated as it becomes Act provisions. available, we could not confirm that such training available, we could not confirm that such training will be adequate to effectively implement will be adequate to effectively implement Recovery Act provisions. Recovery Act provisions. Financial and Operational Systems Recovery Act funds are clearly  We confirmed that EDD has prepared separate  Although we confirmed that EDD has prepared  We confirmed that EDD has prepared separate grant codes to  We have confirmed that EDD has prepared an accounting ID to distinguishable (for example, grant codes to account for Recovery Act funds. separate grant codes to account for Recovery account for Recovery Act funds. separately account for these funds. distinguished by using Act funds, according to the chief of the program separate accounts). analysis and evaluation section, additional system programming is still needed to ensure that Recovery Act and other federal funds are recorded in the correct grant code. This programming is expected to be complete by June 30, 2009. continued on next page . . . 78 California State Auditor Report 2009-611.1 June 2009 Unemployment InsUrance – extensIon of emergency Increase In Unemployment compensatIon BenefIts Unemployment compensatIon federal fUndIng for extended Unemployment state Unemployment InsUrance & employment servIce operatIons catalog of federal domestIc assIstance catalog of federal domestIc assIstance catalog of federal domestIc assIstance catalog of federal domestIc assIstance area of program rIsk nUmBer 17.225 nUmBer 17.225 nUmBer Unknown* nUmBers 17.225 and 17.207† Financial and operational systems are  According to a manager for the analysis and  According to a fund management administrator  According to a manager for the analysis and support group, t According to the accounting chief of EDD, existing financial configured to manage and control support group, EDD completed the programming at EDD, accounting programming needed to the programming to file and pay Federal funding for extended and operational systems are configured to manage and control Recovery Act funds. needed to manage and control Recovery Act distinguish payments from the EUC account and unemployment (Fed-Ed) claims was completed in May 2009. Recovery Act funds. Although we requested documentation funds. This statement was supported by the fact federal treasury general fund is not in place at The accounting programming needed to make the distinction supporting this assertion, EDD was unable to provide such that EDD provided us with Recovery Act fiscal this time. As a result, it is not possible to isolate between Recovery Act and other federal funds has also been support. data for this program. Recovery Act Unemployment Insurance financial completed. EDD provided us with Recovery Act fiscal data for this activity from other federal financial activity. This program to confirm that the programming had been completed. programming is expected to be complete by June 30, 2009. Financial and operational systems support NA There are no contracts, grants, or loans allowed NA There are no contracts, grants, or loans allowed NA There are no contracts, grants, or loans allowed under this  According to the chief of accounting, EDD only plans to issue the increase in volume of contracts, under this program. under this program. program. one contract to upgrade its existing UI financial and operational grants, and loans. systems. Because there will be only one new contract, we conclude that EDD’s financial and operational systems can effectively support the increase in contract volume under the Recovery Act. Fraud, Waste, and Abuse Recovery Act funds are used for t According to the chief of the program analysis t According to the chief of the program analysis t According to the section chief of the program analysis and t According to the chief of accounting, EDD will use existing authorized purposes, and the potential and evaluation section, EDD will use existing and evaluation section, EDD will use existing evaluation section, EDD will use existing internal controls to internal controls to ensure fraud, waste, and abuse do not occur for fraud, waste, error, and abuse are internal controls to ensure appropriate use internal controls to ensure appropriate use ensure appropriate use of funds. However, we have not audited with these additional UI funds. However, we have not audited minimized and mitigated of funds. However, we have not audited this of funds. However, we have not audited this this program since the Single Audit covering fiscal year 2005–06. this program since fiscal year 2005–06. Therefore, we cannot (internal controls related to activities program since fiscal year 2005–06. Therefore, we program since fiscal year 2005–06. Therefore, we Therefore, we cannot confirm that EDD’s existing controls will be confirm that EDD’s existing controls will be effective as they allowed and allowable costs). cannot confirm that EDD’s existing controls will cannot confirm that EDD’s existing controls will effective as they relate to Recovery Act funds. relate to Recovery Act funds. be effective as they relate to Recovery Act funds. be effective as they relate to Recovery Act funds. Policies and Processes Specific Recovery Act requirements are t According to the chief of accounting, EDD is t According to the chief of accounting, EDD is t According to the chief of accounting, EDD is developing specific t According to the chief of accounting, EDD is developing specific incorporated into department policies. developing specific department policies to developing specific department policies to department policies to include Recovery Act provisions. department policies to include Recovery Act provisions. include Recovery Act provisions. include Recovery Act provisions. Written departmental policies provide the t According to the chief of accounting, EDD will use t According to the chief of accounting, EDD will use t According to the chief of accounting, EDD will use existing cash t According to the chief of accounting, EDD will use existing cash following procedures: (1) requesting cash existing cash management processes to ensure existing cash management processes to ensure management processes to ensure proper cash drawdown of management processes to ensure proper cash drawdown of advances as close as is administratively proper cash drawdown of Recovery Act funds. proper cash drawdown of Recovery Act funds. Recovery Act funds. We also obtained copies of EDD’s written Recovery Act funds. However, we have not audited this program possible to actual cash outlays; We also obtained copies of EDD’s written cash We also obtained copies of EDD’s written cash cash management procedures. However, we have not audited since fiscal year 2005–06. Therefore, we cannot attest to the (2 monitoring of cash management management procedures. However, we have not management procedures. However, we have not this program since fiscal year 2005–06. Therefore, we cannot effectiveness of these processes. activities; and (3) repayment of excess audited this program since fiscal year 2005-06. audited this program since fiscal year 2005-06. attest to the effectiveness of these processes. interest earnings when required (internal Therefore, we cannot attest to the effectiveness Therefore, we cannot attest to the effectiveness of controls related to cash management). of these processes. these processes. Written policies and procedures have  EDD has modified its unemployment insurance  EDD has modified its UI eligibility profile to  EDD has modified its UI eligibility profile to include extended NA These funds are to be used for UI administration only. As a result, been established to provide direction (UI) eligibility profile to include the extra include extended claim periods as allowed under claim parameters as allowed under the Recovery Act. there are no applicable eligibility procedures. for making and documenting eligibility payment allowed under the Recovery Act. the Recovery Act. determinations for Recovery Act fund grants (internal controls related to eligibility). Corrective action plan processes are in t EDD has existing corrective action processes t EDD has existing corrective action processes t EDD has existing corrective action processes in place. This t EDD has existing corrective action processes in place. This place to promptly resolve any audit in place. This program was not included in our in place. This program was not included in our program was not included in our Single Audit covering fiscal year program was not included in our Single Audit covering fiscal year findings identified that may impact Single Audit covering fiscal year 2007-08 but will Single Audit covering fiscal year 2007-08 but will 2007–08, but will be included in our Single Audit covering fiscal 2007–08 but will be included in our Single Audit covering fiscal the department’s ability to successfully be included in our Single Audit covering fiscal be included in our Single Audit covering fiscal year 2008–09. year 2008–09. implement the Recovery Act. year 2008–09. year 2008–09. New requirements, conditions, and NA According to the chief of the program analysis NA According to the chief of the program analysis NA According to the section chief of the program analysis and NA These funds are to be used for UI administration only. As a result, guidance have been provided to the and evaluation section, EDD makes payments and section, EDD makes payments directly to evaluation section, EDD makes payments directly to individuals, there is no applicable guidance to give to subrecipients. subrecipients regarding Recovery directly to individuals. Therefore, there are no individuals. Therefore, there are no subrecipients so there are no subrecipients for this program. Act funds. subrecipients for this program. for this program. California State Auditor Report 2009-611.1 79 June 2009 Unemployment InsUrance – extensIon of emergency Increase In Unemployment compensatIon BenefIts Unemployment compensatIon federal fUndIng for extended Unemployment state Unemployment InsUrance & employment servIce operatIons catalog of federal domestIc assIstance catalog of federal domestIc assIstance catalog of federal domestIc assIstance catalog of federal domestIc assIstance area of program rIsk nUmBer 17.225 nUmBer 17.225 nUmBer Unknown* nUmBers 17.225 and 17.207† Financial and operational systems are  According to a manager for the analysis and  According to a fund management administrator  According to a manager for the analysis and support group, t According to the accounting chief of EDD, existing financial configured to manage and control support group, EDD completed the programming at EDD, accounting programming needed to the programming to file and pay Federal funding for extended and operational systems are configured to manage and control Recovery Act funds. needed to manage and control Recovery Act distinguish payments from the EUC account and unemployment (Fed-Ed) claims was completed in May 2009. Recovery Act funds. Although we requested documentation funds. This statement was supported by the fact federal treasury general fund is not in place at The accounting programming needed to make the distinction supporting this assertion, EDD was unable to provide such that EDD provided us with Recovery Act fiscal this time. As a result, it is not possible to isolate between Recovery Act and other federal funds has also been support. data for this program. Recovery Act Unemployment Insurance financial completed. EDD provided us with Recovery Act fiscal data for this activity from other federal financial activity. This program to confirm that the programming had been completed. programming is expected to be complete by June 30, 2009. Financial and operational systems support NA There are no contracts, grants, or loans allowed NA There are no contracts, grants, or loans allowed NA There are no contracts, grants, or loans allowed under this  According to the chief of accounting, EDD only plans to issue the increase in volume of contracts, under this program. under this program. program. one contract to upgrade its existing UI financial and operational grants, and loans. systems. Because there will be only one new contract, we conclude that EDD’s financial and operational systems can effectively support the increase in contract volume under the Recovery Act. Fraud, Waste, and Abuse Recovery Act funds are used for t According to the chief of the program analysis t According to the chief of the program analysis t According to the section chief of the program analysis and t According to the chief of accounting, EDD will use existing authorized purposes, and the potential and evaluation section, EDD will use existing and evaluation section, EDD will use existing evaluation section, EDD will use existing internal controls to internal controls to ensure fraud, waste, and abuse do not occur for fraud, waste, error, and abuse are internal controls to ensure appropriate use internal controls to ensure appropriate use ensure appropriate use of funds. However, we have not audited with these additional UI funds. However, we have not audited minimized and mitigated of funds. However, we have not audited this of funds. However, we have not audited this this program since the Single Audit covering fiscal year 2005–06. this program since fiscal year 2005–06. Therefore, we cannot (internal controls related to activities program since fiscal year 2005–06. Therefore, we program since fiscal year 2005–06. Therefore, we Therefore, we cannot confirm that EDD’s existing controls will be confirm that EDD’s existing controls will be effective as they allowed and allowable costs). cannot confirm that EDD’s existing controls will cannot confirm that EDD’s existing controls will effective as they relate to Recovery Act funds. relate to Recovery Act funds. be effective as they relate to Recovery Act funds. be effective as they relate to Recovery Act funds. Policies and Processes Specific Recovery Act requirements are t According to the chief of accounting, EDD is t According to the chief of accounting, EDD is t According to the chief of accounting, EDD is developing specific t According to the chief of accounting, EDD is developing specific incorporated into department policies. developing specific department policies to developing specific department policies to department policies to include Recovery Act provisions. department policies to include Recovery Act provisions. include Recovery Act provisions. include Recovery Act provisions. Written departmental policies provide the t According to the chief of accounting, EDD will use t According to the chief of accounting, EDD will use t According to the chief of accounting, EDD will use existing cash t According to the chief of accounting, EDD will use existing cash following procedures: (1) requesting cash existing cash management processes to ensure existing cash management processes to ensure management processes to ensure proper cash drawdown of management processes to ensure proper cash drawdown of advances as close as is administratively proper cash drawdown of Recovery Act funds. proper cash drawdown of Recovery Act funds. Recovery Act funds. We also obtained copies of EDD’s written Recovery Act funds. However, we have not audited this program possible to actual cash outlays; We also obtained copies of EDD’s written cash We also obtained copies of EDD’s written cash cash management procedures. However, we have not audited since fiscal year 2005–06. Therefore, we cannot attest to the (2 monitoring of cash management management procedures. However, we have not management procedures. However, we have not this program since fiscal year 2005–06. Therefore, we cannot effectiveness of these processes. activities; and (3) repayment of excess audited this program since fiscal year 2005-06. audited this program since fiscal year 2005-06. attest to the effectiveness of these processes. interest earnings when required (internal Therefore, we cannot attest to the effectiveness Therefore, we cannot attest to the effectiveness of controls related to cash management). of these processes. these processes. Written policies and procedures have  EDD has modified its unemployment insurance  EDD has modified its UI eligibility profile to  EDD has modified its UI eligibility profile to include extended NA These funds are to be used for UI administration only. As a result, been established to provide direction (UI) eligibility profile to include the extra include extended claim periods as allowed under claim parameters as allowed under the Recovery Act. there are no applicable eligibility procedures. for making and documenting eligibility payment allowed under the Recovery Act. the Recovery Act. determinations for Recovery Act fund grants (internal controls related to eligibility). Corrective action plan processes are in t EDD has existing corrective action processes t EDD has existing corrective action processes t EDD has existing corrective action processes in place. This t EDD has existing corrective action processes in place. This place to promptly resolve any audit in place. This program was not included in our in place. This program was not included in our program was not included in our Single Audit covering fiscal year program was not included in our Single Audit covering fiscal year findings identified that may impact Single Audit covering fiscal year 2007-08 but will Single Audit covering fiscal year 2007-08 but will 2007–08, but will be included in our Single Audit covering fiscal 2007–08 but will be included in our Single Audit covering fiscal the department’s ability to successfully be included in our Single Audit covering fiscal be included in our Single Audit covering fiscal year 2008–09. year 2008–09. implement the Recovery Act. year 2008–09. year 2008–09. New requirements, conditions, and NA According to the chief of the program analysis NA According to the chief of the program analysis NA According to the section chief of the program analysis and NA These funds are to be used for UI administration only. As a result, guidance have been provided to the and evaluation section, EDD makes payments and section, EDD makes payments directly to evaluation section, EDD makes payments directly to individuals, there is no applicable guidance to give to subrecipients. subrecipients regarding Recovery directly to individuals. Therefore, there are no individuals. Therefore, there are no subrecipients so there are no subrecipients for this program. Act funds. subrecipients for this program. for this program. continued on next page . . . 80 California State Auditor Report 2009-611.1 June 2009 Unemployment InsUrance – extensIon of emergency Increase In Unemployment compensatIon BenefIts Unemployment compensatIon federal fUndIng for extended Unemployment state Unemployment InsUrance & employment servIce operatIons catalog of federal domestIc assIstance catalog of federal domestIc assIstance catalog of federal domestIc assIstance catalog of federal domestIc assIstance area of program rIsk nUmBer 17.225 nUmBer 17.225 nUmBer Unknown* nUmBers 17.225 and 17.207† Acquisition/Contracts New requests for proposals issued NA According to the chief of the program NA According to the chief of the program analysis NA According to the chief of the program analysis and evaluation  Because EDD has not yet issued any requests for proposal for this under Recovery Act initiatives contain analysis and evaluation section, EDD makes and evaluation section, EDD makes UI benefit section, EDD makes UI benefit payments directly to individuals. program, it is unknown whether any Recovery Act language will the necessary language to satisfy the UI benefit payments directly to individuals. As payments directly to individuals. As a result, there Therefore, there are no requests for proposal for this program. be included. However, EDD has requested budget authority and provisions of the Recovery Act. a result, there are no requests for proposal for are no requests for proposal for this program. plans to issue requests for proposal to complete updates to its this program. unemployment insurance information technology systems. Contracts using Recovery Act funds NA According to the chief of the program analysis NA According to the chief of the program analysis NA According to the chief of the program analysis and evaluation  Although EDD plans to issue at least one contract for this are awarded in a prompt, fair, and and evaluation section, EDD makes payments and evaluation section, EDD makes payments section, EDD makes payments directly to individuals. Therefore, program, it has not yet done so. reasonable manner. directly to individuals. As a result, there are no directly to individuals. As a result, there are no there are no contracts for this program. contracts for this program. contracts for this program. New contracts awarded using Recovery NA According to the chief of the program analysis NA According to the chief of the program analysis NA According to the chief of the program analysis and evaluation  Although EDD plans to issue at least one contract for this Act funds have the specific terms and and evaluation section, EDD makes payments and evaluation section, EDD makes payments section, EDD makes payments directly to individuals. Therefore, program, it has not yet done so. clauses required. directly to individuals. As a result, there are no directly to individuals. As a result, there are no there are no contracts for this program. contracts for this program. contracts for this program. Projects funded under the Recovery NA According to the chief of the program analysis NA According to the chief of the program analysis NA According to the chief of the program analysis and evaluation  Although EDD plans to issue at least one contract for this Act avoid unnecessary delays and and evaluation section, EDD makes payments and evaluation section, EDD makes payments section, EDD makes payments directly to individuals. Therefore, program, it has not yet done so. cost overruns. directly to individuals. As a result, there are no directly to individuals. As a result, there are no there are no projects for this program. projects for this program. projects for this program. Contracts awarded using Recovery Act NA According to the chief of the program analysis NA According to the chief of the program analysis NA According to the chief of the program analysis and evaluation  Although EDD plans to issue at least one contract for this funds are transparent to the public. and evaluation section, EDD makes payments and evaluation section, EDD makes payments section, EDD makes payments directly to individuals. Therefore, program, it has not yet done so. directly to individuals. As a result, there are no directly to individuals. As a result, there are no there are no contracts for this program. contracts for this program. contracts for this program. The public benefits of Recovery Act funds NA According to the chief of the program analysis NA According to the chief of the program analysis NA According to the chief of the program analysis and evaluation  Although EDD plans to issue at least one contract for this used under contract are reported clearly, and evaluation section, EDD makes payments and evaluation section, EDD makes payments section, EDD makes payments directly to individuals. Therefore, program, it has not yet done so. accurately, and in a timely manner. directly to individuals. As a result, there are no directly to individuals. As a result, there are no there are no contracts for this program. contracts for this program. contracts for this program. Transparency and Accountability A governance body has been established t According to its accounting chief, EDD has t According to its accounting chief, EDD has t According to its accounting chief, EDD has created a managerial t According to its accounting chief, EDD has created a managerial to manage the overall implementation of created a managerial working group to oversee created a managerial working group to oversee working group to oversee implementation of the Recovery Act. working group to oversee implementation of the Recovery Act. the Recovery Act. implementation of the Recovery Act. EDD implementation of the Recovery Act. EDD EDD provided us with a list of department contacts and program EDD provided us with a list of department contacts and program provided us with a list of department contacts provided us with a list of department contacts experts who participate in its Recovery Act working group; experts who participate in its Recovery Act working group; and program experts who participate in its and program experts who participate in its however, EDD was unable to provide any formal documentation however, EDD was unable to provide any formal documentation Recovery Act working group; however, EDD was Recovery Act working group; however, EDD was of the group’s membership or oversight responsibilities. of the group’s membership or oversight responsibilities. unable to provide any formal documentation unable to provide any formal documentation of the group’s membership or oversight of the group’s membership or oversight responsibilities. responsibilities. The appropriate standard data elements  According to a manager of the analysis and  According to a manager of the analysis and  According to a manager of the analysis and support group,  Although the federal government issued a letter providing that must be captured, classified, and support group, EDD believes that the appropriate support group, EDD believes that the appropriate EDD believes that the appropriate standard data elements, as guidance for the use of these funds, it did not include Recovery aggregated for analysis and reporting to standard data elements, as identified in Federal standard data elements, as identified in Federal identified in Federal Register Vol. 74, No. 61, do not pertain to Act Section 1512 reporting requirement guidance. EDD’s meet Recovery Act requirements under Register Vol. 74, No. 61, do not pertain to UI Register Vol. 74, No. 61, do not pertain to UI UI programs. The Task Force has asked for, but has yet to receive chief of accounting acknowledged that it has not received Section 1512 are identified. programs. The California Federal Economic programs. The Task Force has asked for, but federal guidance on whether the department must meet the any guidance specific to Recovery Act Section 1512 reporting Stimulus Task Force (Task Force) has asked for, but has yet to receive federal guidance on whether Recovery Act Section 1512 reporting requirements. requirements, nor has EDD asked for Recovery Act Section 1512 has yet to receive federal guidance on whether the department must meet the Recovery Act reporting requirements. the department must meet the Recovery Act Section 1512 reporting requirements. Section 1512 reporting requirements. Reporting mechanisms are in place NA According to the chief of the program analysis NA According to the chief of the program analysis NA According to the chief of the program analysis and evaluation NA According to the accounting chief at EDD, there are no to collect the required data from and evaluation section, EDD makes payments and evaluation section, EDD makes payments section, EDD makes payments directly to individuals. Therefore, subrecipients for this program because the funds are only subrecipients to meet the Recovery Act’s directly to individuals. Therefore, there are no directly to individuals. Therefore, there are no there are no subrecipients for this program. allowed for UI administrative costs. transparency provisions. subrecipients for this program. subrecipients for this program. California State Auditor Report 2009-611.1 81 June 2009 Unemployment InsUrance – extensIon of emergency Increase In Unemployment compensatIon BenefIts Unemployment compensatIon federal fUndIng for extended Unemployment state Unemployment InsUrance & employment servIce operatIons catalog of federal domestIc assIstance catalog of federal domestIc assIstance catalog of federal domestIc assIstance catalog of federal domestIc assIstance area of program rIsk nUmBer 17.225 nUmBer 17.225 nUmBer Unknown* nUmBers 17.225 and 17.207† Acquisition/Contracts New requests for proposals issued NA According to the chief of the program NA According to the chief of the program analysis NA According to the chief of the program analysis and evaluation  Because EDD has not yet issued any requests for proposal for this under Recovery Act initiatives contain analysis and evaluation section, EDD makes and evaluation section, EDD makes UI benefit section, EDD makes UI benefit payments directly to individuals. program, it is unknown whether any Recovery Act language will the necessary language to satisfy the UI benefit payments directly to individuals. As payments directly to individuals. As a result, there Therefore, there are no requests for proposal for this program. be included. However, EDD has requested budget authority and provisions of the Recovery Act. a result, there are no requests for proposal for are no requests for proposal for this program. plans to issue requests for proposal to complete updates to its this program. unemployment insurance information technology systems. Contracts using Recovery Act funds NA According to the chief of the program analysis NA According to the chief of the program analysis NA According to the chief of the program analysis and evaluation  Although EDD plans to issue at least one contract for this are awarded in a prompt, fair, and and evaluation section, EDD makes payments and evaluation section, EDD makes payments section, EDD makes payments directly to individuals. Therefore, program, it has not yet done so. reasonable manner. directly to individuals. As a result, there are no directly to individuals. As a result, there are no there are no contracts for this program. contracts for this program. contracts for this program. New contracts awarded using Recovery NA According to the chief of the program analysis NA According to the chief of the program analysis NA According to the chief of the program analysis and evaluation  Although EDD plans to issue at least one contract for this Act funds have the specific terms and and evaluation section, EDD makes payments and evaluation section, EDD makes payments section, EDD makes payments directly to individuals. Therefore, program, it has not yet done so. clauses required. directly to individuals. As a result, there are no directly to individuals. As a result, there are no there are no contracts for this program. contracts for this program. contracts for this program. Projects funded under the Recovery NA According to the chief of the program analysis NA According to the chief of the program analysis NA According to the chief of the program analysis and evaluation  Although EDD plans to issue at least one contract for this Act avoid unnecessary delays and and evaluation section, EDD makes payments and evaluation section, EDD makes payments section, EDD makes payments directly to individuals. Therefore, program, it has not yet done so. cost overruns. directly to individuals. As a result, there are no directly to individuals. As a result, there are no there are no projects for this program. projects for this program. projects for this program. Contracts awarded using Recovery Act NA According to the chief of the program analysis NA According to the chief of the program analysis NA According to the chief of the program analysis and evaluation  Although EDD plans to issue at least one contract for this funds are transparent to the public. and evaluation section, EDD makes payments and evaluation section, EDD makes payments section, EDD makes payments directly to individuals. Therefore, program, it has not yet done so. directly to individuals. As a result, there are no directly to individuals. As a result, there are no there are no contracts for this program. contracts for this program. contracts for this program. The public benefits of Recovery Act funds NA According to the chief of the program analysis NA According to the chief of the program analysis NA According to the chief of the program analysis and evaluation  Although EDD plans to issue at least one contract for this used under contract are reported clearly, and evaluation section, EDD makes payments and evaluation section, EDD makes payments section, EDD makes payments directly to individuals. Therefore, program, it has not yet done so. accurately, and in a timely manner. directly to individuals. As a result, there are no directly to individuals. As a result, there are no there are no contracts for this program. contracts for this program. contracts for this program. Transparency and Accountability A governance body has been established t According to its accounting chief, EDD has t According to its accounting chief, EDD has t According to its accounting chief, EDD has created a managerial t According to its accounting chief, EDD has created a managerial to manage the overall implementation of created a managerial working group to oversee created a managerial working group to oversee working group to oversee implementation of the Recovery Act. working group to oversee implementation of the Recovery Act. the Recovery Act. implementation of the Recovery Act. EDD implementation of the Recovery Act. EDD EDD provided us with a list of department contacts and program EDD provided us with a list of department contacts and program provided us with a list of department contacts provided us with a list of department contacts experts who participate in its Recovery Act working group; experts who participate in its Recovery Act working group; and program experts who participate in its and program experts who participate in its however, EDD was unable to provide any formal documentation however, EDD was unable to provide any formal documentation Recovery Act working group; however, EDD was Recovery Act working group; however, EDD was of the group’s membership or oversight responsibilities. of the group’s membership or oversight responsibilities. unable to provide any formal documentation unable to provide any formal documentation of the group’s membership or oversight of the group’s membership or oversight responsibilities. responsibilities. The appropriate standard data elements  According to a manager of the analysis and  According to a manager of the analysis and  According to a manager of the analysis and support group,  Although the federal government issued a letter providing that must be captured, classified, and support group, EDD believes that the appropriate support group, EDD believes that the appropriate EDD believes that the appropriate standard data elements, as guidance for the use of these funds, it did not include Recovery aggregated for analysis and reporting to standard data elements, as identified in Federal standard data elements, as identified in Federal identified in Federal Register Vol. 74, No. 61, do not pertain to Act Section 1512 reporting requirement guidance. EDD’s meet Recovery Act requirements under Register Vol. 74, No. 61, do not pertain to UI Register Vol. 74, No. 61, do not pertain to UI UI programs. The Task Force has asked for, but has yet to receive chief of accounting acknowledged that it has not received Section 1512 are identified. programs. The California Federal Economic programs. The Task Force has asked for, but federal guidance on whether the department must meet the any guidance specific to Recovery Act Section 1512 reporting Stimulus Task Force (Task Force) has asked for, but has yet to receive federal guidance on whether Recovery Act Section 1512 reporting requirements. requirements, nor has EDD asked for Recovery Act Section 1512 has yet to receive federal guidance on whether the department must meet the Recovery Act reporting requirements. the department must meet the Recovery Act Section 1512 reporting requirements. Section 1512 reporting requirements. Reporting mechanisms are in place NA According to the chief of the program analysis NA According to the chief of the program analysis NA According to the chief of the program analysis and evaluation NA According to the accounting chief at EDD, there are no to collect the required data from and evaluation section, EDD makes payments and evaluation section, EDD makes payments section, EDD makes payments directly to individuals. Therefore, subrecipients for this program because the funds are only subrecipients to meet the Recovery Act’s directly to individuals. Therefore, there are no directly to individuals. Therefore, there are no there are no subrecipients for this program. allowed for UI administrative costs. transparency provisions. subrecipients for this program. subrecipients for this program. continued on next page . . . 82 California State Auditor Report 2009-611.1 June 2009 Unemployment InsUrance – extensIon of emergency Increase In Unemployment compensatIon BenefIts Unemployment compensatIon federal fUndIng for extended Unemployment state Unemployment InsUrance & employment servIce operatIons catalog of federal domestIc assIstance catalog of federal domestIc assIstance catalog of federal domestIc assIstance catalog of federal domestIc assIstance area of program rIsk nUmBer 17.225 nUmBer 17.225 nUmBer Unknown* nUmBers 17.225 and 17.207† Reports published under the Recovery Act t According to a manager in the budget and t According to a manager in the budget and t According to a manager in the budget and administration t According to the accounting chief of EDD, the programs section are reviewed and approved for accuracy administration group, a staff services manager I administration group, a staff services manager I group, a staff services manager I or II currently reviews and the accounting section of fiscal programs division reviews and completeness (internal controls or II currently reviews and approves all required or II currently reviews and approves all required and approves all required reports. Although we reports. Although we requested documentation supporting this related to reporting). reports. Although we requested documentation reports. Although we requested documentation requested documentation supporting this assertion, EDD was assertion, EDD was unable to provide such support. However, we supporting this assertion, EDD was unable supporting this assertion, EDD was unable unable to provide such support. However, we have not audited have not audited this program since the Single Audit covering to provide such support. However, we have to provide such support. However, we have this program since the Single Audit covering fiscal year 2005–06. fiscal year 2005–06. Therefore, we cannot confirm whether such not audited this program this program since not audited this program this program since Therefore, we cannot confirm whether such controls are controls are adequate. the Single Audit covering fiscal year 2005–06. the Single Audit covering fiscal year 2005–06. adequate. Therefore, we cannot confirm whether such Therefore, we cannot confirm whether such controls are adequate. controls are adequate. Reports are prepared on a timely basis.  The deputy director of the program review  The deputy director of the program review  The deputy director of the program review branch at EDD states  The deputy director of the program review branch at EDD states branch at EDD states that it will be able to branch at EDD states that it will be able to that it will be able to meet the Recovery Act’s Section 1512 that it will be able to meet the Recovery Act’s Section 1512 meet the Recovery Act’s Section 1512 financial meet the Recovery Act’s Section 1512 financial financial reporting requirements within 10 days of the calendar financial reporting requirements within 10 days of the calendar reporting requirements within 10 days of the end reporting requirements within 10 days of the quarter using “soft” data. “Soft” financial data is estimated data. quarter using “soft” data. “Soft” financial data is estimated data. of the calendar quarter using “soft” data. “Soft” end of the calendar quarter using “soft” data. However, EDD is basing this assertion on guidance it received However, EDD is basing this assertion on guidance it received financial data is estimated data. However, EDD is “Soft” financial data is estimated data. However, from DOL in which DOL states that the focus of the guidance is from DOL in which DOL states that the focus of the guidance is basing this assertion on guidance it received from EDD is basing this assertion on guidance it DOL’s normal financial reports, not reporting under Section 1512 DOL’s normal financial reports, not reporting under Section 1512 the U.S. Department of Labor (DOL) in which received from DOL in which DOL states that the of the Recovery Act. Additionally, DOL makes it clear throughout of the Recovery Act. Additionally, DOL makes it clear throughout DOL states that the focus of the guidance is DOL’s focus of the guidance is DOL’s normal financial the document that the OMB is responsible for developing the document that the OMB is responsible for developing normal financial reports, not reporting under reports, not reporting under Section 1512 of Recovery Act reporting guidelines, and that DOL is currently Recovery Act reporting guidelines, and that DOL is currently Section 1512 of the Recovery Act. Additionally, the Recovery Act. Additionally, DOL makes it awaiting guidance from OMB. Furthermore, prior to receiving awaiting guidance from OMB. Furthermore, prior to receiving DOL makes it clear throughout the document clear throughout the document that the OMB this guidance, EDD stated that its cost accounting system could this guidance, EDD stated that its cost accounting system could that the U.S. Office of Management and Budget is responsible for developing Recovery Act not meet the deadlines for reporting under the Recovery Act not meet the deadlines for reporting under the Recovery Act (OMB) is responsible for developing Recovery Act reporting guidelines, and that DOL is currently because current state financial systems are configured to meet because current state financial systems are configured to meet reporting guidelines, and that DOL is currently awaiting guidance from OMB. Furthermore, prior federal reporting guidelines for reporting 45 days after prior federal reporting guidelines for reporting 45 days after awaiting guidance from OMB. Furthermore, prior to receiving this guidance, EDD stated the end of a quarter. Finally, EDD is uncertain as to the specific the end of a quarter. Finally, EDD is uncertain as to the specific prior to receiving this guidance, EDD stated that its cost accounting system could not meet performance reporting requirements under Section 1512 and performance reporting requirements under Section 1512 and that its cost accounting system could not meet the deadlines for reporting under the Recovery is currently awaiting guidance from the federal government. is currently awaiting guidance from the federal government. the deadlines for reporting under the Recovery Act because current state financial systems Therefore, the ability to report on these requirements on a Therefore, the ability to report on these requirements on a Act because current state financial systems are configured to meet prior federal reporting timely basis is unknown. Although a manager in the budget and timely basis is unknown. Although a manager in the budget and are configured to meet prior federal reporting guidelines for reporting 45 days after the end administration group stated that EDD has contacted the federal administration group stated that EDD has contacted the federal guidelines for reporting 45 days after the end of a of a quarter. Finally, EDD is uncertain as to the government for further guidance, EDD was unable to provide government for further guidance, EDD was unable to provide quarter. Finally, EDD is uncertain as to the specific specific performance reporting requirements documentation to confirm this. documentation to confirm this. performance reporting requirements under under Section 1512 and is currently awaiting Section 1512 and is currently awaiting guidance guidance from the federal government. Therefore, from the federal government. Therefore, the the ability to report on these requirements on ability to report on these requirements on a a timely basis is unknown. Although a manager timely basis is unknown. Although a manager in the budget and administration group stated in the budget and administration group stated that EDD has contacted the federal government that EDD has contacted the federal government for further guidance, EDD was unable to provide for further guidance, EDD was unable to provide documentation to confirm this. documentation to confirm this. The department regularly monitors NA According to the chief of the program analysis NA According to the chief of the program analysis NA According to the chief of the program analysis and evaluation NA These funds are only allowed for UI administrative costs. Also, subrecipient compliance with federal and evaluation section, EDD makes payments and evaluation section, EDD makes payments section, EDD makes payments directly to individuals. Therefore, according to the accounting chief at EDD, this requirement does program requirements (internal controls directly to individuals. Therefore, there are no directly to individuals. Therefore, there are no there are no subrecipients for this program. not apply because there are no subrecipients for this program. related to subrecipient monitoring). subrecipients for this program. subrecipients for this program. Sources: Interviews of key Employment Development Department (EDD) personnel and review of relevant documents pertaining to processes and procedures EDD already had in use, and has developed or will be developing for implementing provisions of the American Recovery and Reinvestment Act of 2009. Note: For detailed descriptions of the legend refer to pages 46 and 47. NA = Not applicable.  = Prepared. t = Mostly prepared.  = Moderately prepared.  = Not prepared. * EDD believes this program will be funded through Catalog of Federal Domestic Assistance Number 17.225, but notes that the federal government has not confirmed this number. † As noted in Table 6 on page 33, EDD plans to use the entire $59.9 million under this federal program to update its unemployment insurance information technology systems. California State Auditor Report 2009-611.1 83 June 2009 Unemployment InsUrance – extensIon of emergency Increase In Unemployment compensatIon BenefIts Unemployment compensatIon federal fUndIng for extended Unemployment state Unemployment InsUrance & employment servIce operatIons catalog of federal domestIc assIstance catalog of federal domestIc assIstance catalog of federal domestIc assIstance catalog of federal domestIc assIstance area of program rIsk nUmBer 17.225 nUmBer 17.225 nUmBer Unknown* nUmBers 17.225 and 17.207† Reports published under the Recovery Act t According to a manager in the budget and t According to a manager in the budget and t According to a manager in the budget and administration t According to the accounting chief of EDD, the programs section are reviewed and approved for accuracy administration group, a staff services manager I administration group, a staff services manager I group, a staff services manager I or II currently reviews and the accounting section of fiscal programs division reviews and completeness (internal controls or II currently reviews and approves all required or II currently reviews and approves all required and approves all required reports. Although we reports. Although we requested documentation supporting this related to reporting). reports. Although we requested documentation reports. Although we requested documentation requested documentation supporting this assertion, EDD was assertion, EDD was unable to provide such support. However, we supporting this assertion, EDD was unable supporting this assertion, EDD was unable unable to provide such support. However, we have not audited have not audited this program since the Single Audit covering to provide such support. However, we have to provide such support. However, we have this program since the Single Audit covering fiscal year 2005–06. fiscal year 2005–06. Therefore, we cannot confirm whether such not audited this program this program since not audited this program this program since Therefore, we cannot confirm whether such controls are controls are adequate. the Single Audit covering fiscal year 2005–06. the Single Audit covering fiscal year 2005–06. adequate. Therefore, we cannot confirm whether such Therefore, we cannot confirm whether such controls are adequate. controls are adequate. Reports are prepared on a timely basis.  The deputy director of the program review  The deputy director of the program review  The deputy director of the program review branch at EDD states  The deputy director of the program review branch at EDD states branch at EDD states that it will be able to branch at EDD states that it will be able to that it will be able to meet the Recovery Act’s Section 1512 that it will be able to meet the Recovery Act’s Section 1512 meet the Recovery Act’s Section 1512 financial meet the Recovery Act’s Section 1512 financial financial reporting requirements within 10 days of the calendar financial reporting requirements within 10 days of the calendar reporting requirements within 10 days of the end reporting requirements within 10 days of the quarter using “soft” data. “Soft” financial data is estimated data. quarter using “soft” data. “Soft” financial data is estimated data. of the calendar quarter using “soft” data. “Soft” end of the calendar quarter using “soft” data. However, EDD is basing this assertion on guidance it received However, EDD is basing this assertion on guidance it received financial data is estimated data. However, EDD is “Soft” financial data is estimated data. However, from DOL in which DOL states that the focus of the guidance is from DOL in which DOL states that the focus of the guidance is basing this assertion on guidance it received from EDD is basing this assertion on guidance it DOL’s normal financial reports, not reporting under Section 1512 DOL’s normal financial reports, not reporting under Section 1512 the U.S. Department of Labor (DOL) in which received from DOL in which DOL states that the of the Recovery Act. Additionally, DOL makes it clear throughout of the Recovery Act. Additionally, DOL makes it clear throughout DOL states that the focus of the guidance is DOL’s focus of the guidance is DOL’s normal financial the document that the OMB is responsible for developing the document that the OMB is responsible for developing normal financial reports, not reporting under reports, not reporting under Section 1512 of Recovery Act reporting guidelines, and that DOL is currently Recovery Act reporting guidelines, and that DOL is currently Section 1512 of the Recovery Act. Additionally, the Recovery Act. Additionally, DOL makes it awaiting guidance from OMB. Furthermore, prior to receiving awaiting guidance from OMB. Furthermore, prior to receiving DOL makes it clear throughout the document clear throughout the document that the OMB this guidance, EDD stated that its cost accounting system could this guidance, EDD stated that its cost accounting system could that the U.S. Office of Management and Budget is responsible for developing Recovery Act not meet the deadlines for reporting under the Recovery Act not meet the deadlines for reporting under the Recovery Act (OMB) is responsible for developing Recovery Act reporting guidelines, and that DOL is currently because current state financial systems are configured to meet because current state financial systems are configured to meet reporting guidelines, and that DOL is currently awaiting guidance from OMB. Furthermore, prior federal reporting guidelines for reporting 45 days after prior federal reporting guidelines for reporting 45 days after awaiting guidance from OMB. Furthermore, prior to receiving this guidance, EDD stated the end of a quarter. Finally, EDD is uncertain as to the specific the end of a quarter. Finally, EDD is uncertain as to the specific prior to receiving this guidance, EDD stated that its cost accounting system could not meet performance reporting requirements under Section 1512 and performance reporting requirements under Section 1512 and that its cost accounting system could not meet the deadlines for reporting under the Recovery is currently awaiting guidance from the federal government. is currently awaiting guidance from the federal government. the deadlines for reporting under the Recovery Act because current state financial systems Therefore, the ability to report on these requirements on a Therefore, the ability to report on these requirements on a Act because current state financial systems are configured to meet prior federal reporting timely basis is unknown. Although a manager in the budget and timely basis is unknown. Although a manager in the budget and are configured to meet prior federal reporting guidelines for reporting 45 days after the end administration group stated that EDD has contacted the federal administration group stated that EDD has contacted the federal guidelines for reporting 45 days after the end of a of a quarter. Finally, EDD is uncertain as to the government for further guidance, EDD was unable to provide government for further guidance, EDD was unable to provide quarter. Finally, EDD is uncertain as to the specific specific performance reporting requirements documentation to confirm this. documentation to confirm this. performance reporting requirements under under Section 1512 and is currently awaiting Section 1512 and is currently awaiting guidance guidance from the federal government. Therefore, from the federal government. Therefore, the the ability to report on these requirements on ability to report on these requirements on a a timely basis is unknown. Although a manager timely basis is unknown. Although a manager in the budget and administration group stated in the budget and administration group stated that EDD has contacted the federal government that EDD has contacted the federal government for further guidance, EDD was unable to provide for further guidance, EDD was unable to provide documentation to confirm this. documentation to confirm this. The department regularly monitors NA According to the chief of the program analysis NA According to the chief of the program analysis NA According to the chief of the program analysis and evaluation NA These funds are only allowed for UI administrative costs. Also, subrecipient compliance with federal and evaluation section, EDD makes payments and evaluation section, EDD makes payments section, EDD makes payments directly to individuals. Therefore, according to the accounting chief at EDD, this requirement does program requirements (internal controls directly to individuals. Therefore, there are no directly to individuals. Therefore, there are no there are no subrecipients for this program. not apply because there are no subrecipients for this program. related to subrecipient monitoring). subrecipients for this program. subrecipients for this program. Sources: Interviews of key Employment Development Department (EDD) personnel and review of relevant documents pertaining to processes and procedures EDD already had in use, and has developed or will be developing for implementing provisions of the American Recovery and Reinvestment Act of 2009. Note: For detailed descriptions of the legend refer to pages 46 and 47. NA = Not applicable.  = Prepared. t = Mostly prepared.  = Moderately prepared.  = Not prepared. * EDD believes this program will be funded through Catalog of Federal Domestic Assistance Number 17.225, but notes that the federal government has not confirmed this number. † As noted in Table 6 on page 33, EDD plans to use the entire $59.9 million under this federal program to update its unemployment insurance information technology systems. 84 California State Auditor Report 2009-611.1 June 2009 4.A elbaT evieceR ot stcepxE tI hcihW rof smargorP rof sdnuF 9002 fo tcA tnemtsevnieR dna yrevoceR naciremA eht retsinimdA ot ssenderaperP ’secivreS laicoS fo tnemtrapeD ehT 90–8002 raeY lacsiF ni eroM ro noilliM 05$ dedrawA eB ro rof ecnatsIssa yraropmet rof dnuf ycnegreme—slaudIvIdnI elBarenluv rof ecnatsIssa doof( stIfeneB )pans( margorp ecnatsIssa noItIrtun latnemelppus eht nI esaercnI )dnuf ycnegnItnoc fnat( margorp )fnat( seIlImaf ydeen )margorp spmats 417.39 reBmun ecnatsIssa cItsemod laredef fo golatac 155.01 reBmun ecnatsIssa cItsemod laredef fo golatac ksIr margorp fo aera ssenderaperP llarevO laicoS ,woleb slobmys roloc eht fo ecnerrucco tneuqerf tsom eht no desaB  eht ,woleb slobmys roloc eht fo ecnerrucco tneuqerf tsom eht no desaB t ,rotinom ,kcart ot ssenderaperp llarevO eht fo snoisivorp eht tnemelpmi ot deraperp yletaredom sraeppa secivreS deraperp yltsom sraeppa )secivreS laicoS( secivreS laicoS fo tnemtrapeD dna yrevoceR naciremA no troper dna ydeeN rof ecnatsissA yraropmeT rof dnuF ycnegremE eht rof tcA yrevoceR latnemelppuS eht rof tcA yrevoceR eht fo snoisivorp eht tnemelpmi ot )tcA yrevoceR( 9002 fo tcA tnemtsevnieR .)dnuF ycnegnitnoC FNAT( margorp )FNAT( seilimaF .stfieneb )PANS( margorP ecnatsissA noitirtuN yrevoceR eht htiw ylpmoc ot dna sdnuf .snoisivorp s’tcA latipaC namuH rehtehw gnidrager noitamrofni gnitciflnoc htiw su dedivorp secivreS laicoS t eganam ot lennosrep fo level tneicffius a sah ti taht seveileb secivreS laicoS t eganam ot stsixe lennosrep fo level tneicffius A FNAT tcA yrevoceR eht eganam ot lennosrep fo level tneicffius a dah ti ,uaerub ycilop pmats doof eht fo feihc eht ot gnidroccA .margorp siht .tcA yrevoceR eht ni dedulcni smargorp eht .dnuF ycnegnitnoC tnerruc fi enimreted ot sisylana boj lamrof a tcudnoc ton did secivreS laicoS tfieneb PANS tcA yrevoceR eht eganam ot tneicffius erew slevel gnffiats ot ffats fo level tneicffius a dah ti taht detats secivreS laicoS ,yllacfiicepS taht detats uaerub ycilop pmats doof eht fo feihc eht ,daetsnI .esaercni ,revewoH .tcA yrevoceR eht rednu dnuF ycnegnitnoC FNAT eht eganam a ,)SNF( ecivreS noitirtuN dna dooF eht morf noitcerid nettirw no desab ,hcnarb ytilibigile dna tnemyolpme ’secivreS laicoS fo feihc eht ot gnidrocca denimreted secivreS laicoS ,erutlucirgA fo tnemtrapeD .S.U eht fo trap eno erih ot margorp FNAT eht dezirohtua yllabrev rotcerid ytuped feihc eht launna eht sa rennam emas eht ni esaercni eht tnemelpmi dluow ti taht ,9002 yaM ni ,revewoH .ffats FNAT htiw krow ot rebmem ffats lanoitidda .sekam ylenituor ti taht stnemtsujda gnivil‑fo‑tsoc .ezeerf gnirih ediw‑tnemtraped a detutitsni secivreS laicoS sti gnitroppus noitatnemucod edivorp ot elbanu saw secivreS laicoS fo feihc ehT .slevel gnffiats sti fo ycauqeda eht gnidrager noitressa did secivreS laicoS taht su dlot hcnarb ytilibigile dna tnemyolpme eht dluow slevel gnffiats tnerruc fi enimreted ot sisylana na mrofrep ton .tneicffius eb California State Auditor Report 2009-611.1 85 June 2009 rof ecnatsIssa yraropmet rof dnuf ycnegreme—slaudIvIdnI elBarenluv rof ecnatsIssa doof( stIfeneB )pans( margorp ecnatsIssa noItIrtun latnemelppus eht nI esaercnI )dnuf ycnegnItnoc fnat( margorp )fnat( seIlImaf ydeen )margorp spmats 417.39 reBmun ecnatsIssa cItsemod laredef fo golatac 155.01 reBmun ecnatsIssa cItsemod laredef fo golatac ksIr margorp fo aera seveileb hcnarb ytilibigile dna tnemyolpme ’secivreS laicoS fo feihc ehT t ylevitceffe ot deniart yletauqeda si ffats taht seveileb secivreS laicoS  ylevitceffe ot deniart yletauqeda si ffatS eht tnemelpmi ylevitceffe ot deniart yletauqeda si ffats ’secivreS laicoS taht .snoisivorp tcA yrevoceR tnemelpmi .snoisivorp s’tcA yrevoceR eht tnemelpmi .snoisivorp s’tcA yrevoceR ,uaerub ycilop pmats doof ’secivreS laicoS fo feihc eht ot gnidroccA ,hcnarb ytilibigile dna tnemyolpme ’secivreS laicoS fo feihc eht ot gnidroccA na ot sesaercni era tcA yrevoceR eht rednu sesaercni tfieneb PANS eht snoitcurtsni margorp eht dna tcA yrevoceR eht fo weiver a no desab taht detats osla eH .tneicffius si gniniart ffats gnitsixe dna ,metsys gnitsixe fo trap a ,)FCA( seilimaF dna nerdlihC rof noitartsinimdA eht morf deviecer ot seicilop dna ,serudecorp ,smetsys gnitsixe esu lliw ffats ’secivreS laicoS secivreS laicoS ,)SHH( secivreS namuH dna htlaeH fo tnemtrapeD .S.U eht gniniart rof deen eht eziminim taht snoisivorp s’tcA yrevoceR eht tnemelpmi eht htiw edicnioc snoisivorp dnuF ycnegnitnoC FNAT eht taht denimreted snoisivorp s’tcA yrevoceR eht taht su dlot rehtruf eH .ffats lanoitidda yna ro .deniart neeb ydaerla evah ffats hcihw ni snoisivorp FNAT gnitsixe evah ffats hcihw ni smargorp eht rof snoisivorp gnitsixe htiw edicnioc .deniart neeb ydaerla on si ereht ,hcnarb ytilibigile dna tnemyolpme eht fo feihc eht ot gnidroccA .FCA htiw snoissucsid eseht fo noitatnemucod nettirw nettirw no desab taht detats uaerub ycilop pmats doof eht fo feihc ehT denimreted secivreS laicoS ,)SNF( ecivreS noitirtuN dna dooF morf ecnadiug ‑tsoc launna sa rennam emas eht ni esaercni eht tnemelpmi dluow ti taht eht fo seipoc deniatbo eW .sekam ylenituor ti taht stnemtsujda gnivil‑fo .ecnadiug nettirw smetsyS lanoitarepO dna laicnaniF ot stnuocca etarapes gnitnemelpmi fo ssecorp eht ni si secivreS laicoS t laicoS fo reganam eht ot rebmem ffats SNF na morf liam‑e na ot gnidroccA  elbahsiugnitsid ylraelc era sdnuf tcA yrevoceR .sdnuf tcA yrevoceR hsiugnitsid setats no nedrub eht ecalp naht rehtar ,noitces gnitroper laredef ’secivreS gnisu yb dehsiugnitsid ,elpmaxe rof( a enimreted ot dediced SNF ,sdrocer gnitnuocca fo stes erom ro owt evah ot .)stnuocca etarapes cisab eht rof sedoc etarapes pu tes sah ti taht dednopser secivreS laicoS etagerges ot sdnuf margorp fo snwodward yliad ot ylppa ot etar egatnecrep yrevoceR eht rednu dnuF ycnegnitnoC FNAT eht fo noitrop ecnatsissa dluow secivreS laicoS ,sdrow rehto nI .stfieneb tcA yrevoceR dna raluger etatS eht ot dettimbus ti mrof eht htiw su dedivorp tnemtraped ehT .tcA eht etaluclac ot stfieneb PANS latot eht ot egatnecrep a ylppa ylpmis dnuf tsurt laredef wen a tseuqer ot )rellortnoC etatS( ecffiO s’rellortnoC .tcA yrevoceR eht rednu stfieneb PANS fo tnuoma ycnegnitnoC FNAT eht rof rellortnoC etatS eht htiw stpiecer kcart ot tnuocca .dnuF eht rof serutidnepxe kcart ot stnuocca etarapes detaerc osla secivreS laicoS gnirrucernon dna ydisbus krow eht rof ,revewoH .dnuF ycnegnitnoC FNAT llits si ti taht su dlot secivreS laicoS ,dnuF ycnegnitnoC FNAT eht fo snoitrop .sedoc tnuocca etarapes eht pu gnittes fo ssecorp eht ni . . . egap txen no deunitnoc 86 California State Auditor Report 2009-611.1 June 2009 rof ecnatsIssa yraropmet rof dnuf ycnegreme—slaudIvIdnI elBarenluv rof ecnatsIssa doof( stIfeneB )pans( margorp ecnatsIssa noItIrtun latnemelppus eht nI esaercnI )dnuf ycnegnItnoc fnat( margorp )fnat( seIlImaf ydeen )margorp spmats 417.39 reBmun ecnatsIssa cItsemod laredef fo golatac 155.01 reBmun ecnatsIssa cItsemod laredef fo golatac ksIr margorp fo aera nac smetsys lanoitarepo dna laicnanfi sti taht seveileb secivreS laicoS  ot rebmem ffats SNF na morf liam‑e na ot gnidrocca ,deton ylsuoiverp sA t era smetsys lanoitarepo dna laicnaniF .sdnuf tcA yrevoceR lortnoc dna eganam ecalp naht rehtar ,noitces gnitroper laredef ’secivreS laicoS fo reganam eht yrevoceR lortnoc dna eganam ot derugfinoc SNF ,sdrocer gnitnuocca fo stes erom ro owt evah ot setats no nedrub eht .sdnuf tcA eganam ot smetsys gnitsixe yfidom ot snalp ti taht detats secivreS laicoS fo snwodward yliad ot ylppa ot etar egatnecrep a enimreted ot dediced dednopser secivreS laicoS ,yllacfiicepS .sdnuf tcA yrevoceR lortnoc dna .stfieneb tcA yrevoceR dna raluger etagerges ot sdnuf margorp dna htlaeH fo tnemtrapeD .S.U eht morf ecnadiug labrev deviecer ti taht FNAT eht taht dna ,gnitroper laicnanfi enilno gnidrager secivreS namuH hcnarb pmats doof eht fo feihc eht ,smetsys lanoitarepo gnidrager ,rehtruF gnitroper FNAT dradnats eht ni nmuloc nwo sti evah lliw dnuF ycnegnitnoC laredef eht taht stfieneb eussi dna ytilibigile enimreted seitnuoc taht su dlot ylisae dna etarapes niamer ot sdnuf tcA yrevoceR wolla ot stnemucod .seiraicfieneb ot yltcerid syap tnemnrevog wonk ton did secivreS laicoS ,9002 ,1 enuJ fo sa ,revewoH .elbahsiugnitsid .mrof enilno eht rof etad noitavitca eht doof ,srotcerid eraflew ytnuoc ot ,9002 ,72 yraurbeF detad rettel a nI noitatnemelpmi dedivorp secivreS laicoS ,srehto dna ,srotanidrooc pmats eht fo feihc eht ot gnidrocca ,smetsys lanoitarepo gnidrager ,rehtruF yraropmet s’tcA yrevoceR eht fo snoisivorp eht gnidrager snoitcurtsni gnitsixe sti esu lliw secivreS laicoS ,hcnarb ytilibigile dna tnemyolpme .stfieneb PANS ni esaercni secivreS laicoS .sdnuf tcA yrevoceR retsinimda ot smetsys lanoitarepo sti no desab ,tneicffius era smetsys lanoitarepo gnitsixe taht denimreted ,)ISO( noitargetnI smetsyS fo ecffiO eht fo regnam eht ot gnidrocca ,oslA .FCA eht yb deussi snoitcurtsni margorp dna tcA yrevoceR eht fo gnidaer ISO ,tinu tnemeganam aitrosnoc metsyS erafleW detamotuA ediwetatS laicoS ,hcnarb ytilibigile dna tnemyolpme eht fo feihc eht ot gnidroccA stca dna PANS rof smetsys noitamotua aitrosnoc eht rof thgisrevo sedivorp yrevoceR gnidrager FCA eht morf ecnadiug rehtruf detseuqer sah secivreS smetsys muitrosnoc ytnuoc eht dna secivreS laicoS neewteb nosiail eht sa sllac ecnerefnoc hguorht neeb evah snoitasrevnoc esoht tub ,sdnuf tcA noitamrfinoc labrev deviecer ISO taht detats reganam ehT .stfieneb PANS rof eseht fo noitatnemucod nettirw on si ereht detats secivreS laicoS .FCA htiw detnemelpmi eb dluow esaercni sulumits eht taht aitrosnoc ytnuoc eht morf .FCA htiw snoissucsid ffats ’secivreS laicoS a ot gnidrocca ,noitidda nI .9002 ,1 lirpA evitceffe siht ta gnidnatsrednu reh si ti ,margorp pmats doof eht ni reganam secivres s’tcA yrevoceR eht deviecer evah seiraicfieneb PANS s’ainrofilaC taht tniop .esaercni tfieneb laicoS ,hcnarb ytilibigile dna tnemyolpme sti fo feihc eht ot gnidroccA AN on era ereht ,hcnarb pmats doof ’secivreS laicoS fo feihc eht ot gnidroccA AN troppus smetsys lanoitarepo dna laicnaniF htiw snaol dna ,stnarg ,stcartnoc gnidrawa etapicitna ton seod secivreS ehS .margorp tfieneb PANS eht htiw detaicossa snaol ro ,stnarg ,stcartnoc ,stnarg ,stcartnoc fo emulov ni esaercni eht eht fo snoitrop gnirrucernon dna ecnatsissa cisab eht rof sdnuf tcA yrevoceR dna ytilibigile enimreted stnemtraped eraflew ytnuoc eht taht detats osla .snaol dna .dnuF ycnegnitnoC FNAT ot yltcerid stnemyap sekam tnemnrevog laredef eht taht dna stfieneb eussi .seiraicfieneb PANS eht fo ypoc a dedivorp secivreS laicoS ,noitrop ydisbus krow eht gnidrageR sihT .dnuF ycnegnitnoC FNAT eht rof ecalp ni sah ti stressa ti tcartnoc eno segelloC ytinummoC ainrofilaC eht fo ecffiO s’rollecnahC eht htiw si tcartnoc ni stnapicitrap ot dedivorp secivres noitacude fo stsoc rof ti esrubmier ot )SKROWlaC( sdiK ot ytilibisnopseR dna ytinutroppO kroW ainrofilaC eht krow eht rof stnemeriuqer eht ecno ,secivreS laicoS ot gnidroccA .margorp laicoS ,dezilanfi neeb evah dnuF ycnegnitnoC FNAT eht fo noitrop ydisbus .tcA yrevoceR eht fo snoisivorp edulcni ot tcartnoc eht dnema lliw secivreS California State Auditor Report 2009-611.1 87 June 2009 rof ecnatsIssa yraropmet rof dnuf ycnegreme—slaudIvIdnI elBarenluv rof ecnatsIssa doof( stIfeneB )pans( margorp ecnatsIssa noItIrtun latnemelppus eht nI esaercnI )dnuf ycnegnItnoc fnat( margorp )fnat( seIlImaf ydeen )margorp spmats 417.39 reBmun ecnatsIssa cItsemod laredef fo golatac 155.01 reBmun ecnatsIssa cItsemod laredef fo golatac ksIr margorp fo aera esubA dna ,etsaW ,duarF laicoS taht detats hcnarb ytilibigile dna tnemyolpme sti fo feihc ehT  secivreS laicoS ,uaerub ycilop pmats doof eht fo feihc eht ot gnidroccA t dezirohtua rof desu era sdnuf tcA yrevoceR ,seitivitca elbawolla gnidulcni ,slortnoc lanretni gnitsixe sti esu lliw secivreS lliw sihT .sdnuf tcA yrevoceR eesrevo ot slortnoc lanretni gnitsixe esu lliw ,etsaw ,duarf rof laitnetop eht dna ,sesoprup FNAT eht retsinimda ot ,gnirotinom tneipicerbus dna ,stsoc elbawolla dna ,stsoc elbawolla ,seitivitca elbawolla rof slortnoc gnitsixe gnisu edulcni detagitim dna deziminim era esuba dna ,rorre nettirw dna tcA yrevoceR eht fo weiver sti no desab dnuF ycnegnitnoC detats uaerub ycilop pmats doof eht fo feihc ehT .gnirotinom tneipicerbus dewolla seitivitca ot detaler slortnoc lanretni( .FCA eht morf snoitcurtsni margorp taht denimreted secivreS laicoS ,SNF morf ecnadiug nettirw no desab taht .)stsoc elbawolla dna eht sa rennam emas eht ni esaercni tfieneb PANS eht tnemelpmi dluow ti tiduA elgniS eht rof margorp FNAT eht fo weiver ruo gnirud ,revewoH .sekam ylenituor ti stnemtsujda gnivil‑fo‑tsoc launna ssenkaew lortnoc lanretni na detroper ew ,80–7002 raey lacsfi gnirevoc secivreS laicoS taht detats ew ,troper taht nI .dewolla seitivitca gnidrager nihtiw reganam secivres ffats a morf ,9002 ,02 lirpA detad liame na ,rehtruF yllacinortcele sdnuf margorp FNAT rof smialc elfi ot seitnuoc detcerid secivreS laicoS taht swohs SNF ot margorp pmats doof ’secivreS laicoS did ti taht dna ,noitatnemucod gnitroppus deliated gnidivorp tuohtiw gnidrager noitacfiiralc niatbo ot tnemnrevog laredef eht detcatnoc sah gnitroppus eht weiver ot seitnuoc eht fo stisiv etis‑no yna tcudnoc ton laicoS ,9002 ,02 yaM nO .smialc ecnaussi‑revo eganam dluohs ti woh taht edulcnoc ton dluoc ew ,yltneuqesnoC .smialc rieht rof noitatnemucod doof eht fo feihc eht ot gnidroccA .SNF morf esnopser a deviecer secivreS taht snoisivorp margorp FNAT eht htiw ecnailpmoc ni si secivreS laicoS ot rettel gniyfiralc a gniussi no snalp tnemtraped eht ,uaerub ycilop pmats ot sdnuf ecart ot tneicffius serudecorp gnitnuocca dna lortnoc lacsfi edulcni .seitnuoc neeb ton evah sdnuf hcus taht hsilbatse ot etauqeda serutidnepxe fo level a .setutats elbacilppa fo snoitibihorp dna snoitcirtser eht fo noitaloiv ni desu lacsfi gnirevoc tiduA elgniS eht ecnis margorp siht detidua ton evah eW eht nehw noisulcnoc ruo htiw rucnoc ton did ti taht detats secivreS laicoS era slortnoc hcus rehtehw mrfinoc tonnac ew erofereht ,60–5002 raey noitanimreted ruo ,secivreS laicoS ot gnidroccA .dehsilbup saw tiduA elgniS lacsfi gnirevoc tiduA elgniS ruo ot tcejbus si margorp PANS ehT .etauqeda ruo dna ,desu ti ssecorp eht fo weiver etelpmocni na no desab saw .90–8002 raey secivreS laicoS yb desu elanoitar eht tneserper yltcerroc ton seod noissucsid noitatnemucod gnitroppus gnittimbus morf seitnuoc eht gnippots ni dna tnemyolpme sti fo feihc eht ot gnidroccA .smialc ecnatsissa rieht htiw lortnoc a si siht taht rucnoc ton seod llits secivreS laicoS ,hcnarb ytilibigile taht niaga deliated ew ,weiv ’secivreS laicoS no stnemmoc ruo nI .ssenkaew dna seitivitca dewolla htiw ecnailpmoc sti gnirusne rof sessecorp lortnoc sti ,tneicffiusni era gnirotinom drawa-eht-gnirud rof snoisivorp stsoc elbawolla noitatnemucod fo seipoc htiw su edivorp ton did secivreS laicoS taht dna .tcerrocni saw noisulcnoc ruo taht noitressa sti gnitroppus . . . egap txen no deunitnoc 88 California State Auditor Report 2009-611.1 June 2009 rof ecnatsIssa yraropmet rof dnuf ycnegreme—slaudIvIdnI elBarenluv rof ecnatsIssa doof( stIfeneB )pans( margorp ecnatsIssa noItIrtun latnemelppus eht nI esaercnI )dnuf ycnegnItnoc fnat( margorp )fnat( seIlImaf ydeen )margorp spmats 417.39 reBmun ecnatsIssa cItsemod laredef fo golatac 155.01 reBmun ecnatsIssa cItsemod laredef fo golatac ksIr margorp fo aera sessecorP dna seiciloP dna seicilop tnemtraped gnitsixe gnisu setapicitna secivreS laicoS  otni snoisivorp tcA yrevoceR emos detaroprocni secivreS laicoS t era stnemeriuqer tcA yrevoceR cfiicepS ycnega laredef sti morf noitacfiiralc rehtruf gnikees si tub serudecorp noitatnemelpmi na deviecer ti ,9002 ,32 yraurbeF nO .seicilop tnemtraped .seicilop tnemtraped otni detaroprocni sti fo feihc ehT .snoisivorp tcA yrevoceR lanoitidda yna gnidrager yrevoceR eht fo snoisivorp PANS esoht gnibircsed SNF morf mudnaromem sti esu lliw secivreS laicoS taht detats hcnarb ytilibigile dna tnemyolpme ot snoisivorp rehto dna ,9002 ,1 lirpA no detnemelpmi eb tsum taht tcA ,stsoc elbawolla ,seitivitca elbawolla gnidulcni ,slortnoc lanretni gnitsixe a deussi secivreS laicoS ,esnopser nI .9002 ,1 lirpA retfa detnemelpmi eb dnuF ycnegnitnoC FNAT eht retsinimda ot ,gnirotinom tneipicerbus dna pmats doof ,srotcerid eraflew ytnuoc ot ,9002 ,72 yraurbeF detad rettel morf snoitcurtsni margorp nettirw dna tcA yrevoceR eht fo weiver no desab gnidrager snoitcurtsni noitatnemelpmi edivorp ot srehto dna ,srotanidrooc su dlot hcnarb ytilibigile dna tnemyolpme eht fo feihc eht ,rehtruF .FCA eht .margorp tfieneb PANS eht detceffa taht tcA yrevoceR eht fo snoisivorp eht gnidrager FCA morf noitamrofni rehtruf detseuqer dah secivreS laicoS taht detaroprocni eb ot deen lliw taht snoisivorp tcA yrevoceR lanoitidda yna gnidrager SNF morf noitacfiiralc deviecer secivreS laicoS ,9002 ,02 yaM nO deviecer ton dah tnemtraped eht ,9002 ,91 yaM fo sA .erutuf eht ni pmats doof eht fo feihc eht ot gnidroccA .smialc ecnaussi‑revo tfieneb PANS .ecnadiug rehtruf ytnuoc ot rettel rehtona gniussi setapicitna secivreS laicoS ,uaerub ycilop reporp eht gnidrager srehto dna ,srotanidrooc pmats doof ,srotcerid eraflew .sdohtem noitaluclac ecalp ni ssecorp detnemucod‑llew a sah ti taht detats secivreS laicoS  desab ,uaerub ycilop pmats doof ’secivreS laicoS fo feihc eht ot gnidroccA t eht edivorp seicilop latnemtraped nettirW laicoS .tcA tnemevorpmI tnemeganaM hsaC laredef eht ot smrofnoc taht hcus( SNF morf ecnadiug nettirw ,egaugnal s’tcA yrevoceR eht fo weiver no hsac gnitseuqer )1( :serudecorp gniwollof eht rednu sdnuf rof ssecorp emas siht esu lliw ti taht detats osla secivreS noitacfiiralc eht dna ,9002 ,32 yraurbeF detad omem noitatnemelpmi eht sa ylevitartsinimda si sa esolc sa secnavda .tcA yrevoceR doof eht ,ffats SNF htiw snoitasrevnoc dna ,)9002 ,5 hcraM detad omem gnirotinom )2( ;syaltuo hsac lautca ot elbissop .serudecorp tnemeganam hsac tnerruc sti esu ot eunitnoc lliw hcnarb pmats dna ;seitivitca tnemeganam hsac fo yfitnedi ton did ew ,80‑7002 raey lacsfi gnirevoc troper tiduA elgniS ruo nI sgninrae tseretni ssecxe fo tnemyaper )3( .margorp FNAT eht rof sessenkaew lortnoc lanretni tnemeganam hsac yna lacsfi gnirevoc tiduA elgniS ruo ecnis margorp siht detidua ton evah eW ot detaler slortnoc lanretni( deriuqer nehw era slortnoc hcus rehtehw mrfinoc tonnac ew erofereht ,60–5002 raey .)tnemeganam hsac lacsfi gnirevoc tiduA elgniS ruo ot tcejbus si margorp PANS ehT .etauqeda .90–8002 raey ytilibigile dna tnemyolpme ’secivreS laicoS fo feihc eht ot gnidroccA  ytilibigile gnitnemucod dna gnikam rof snoitcerid dedivorp secivreS laicoS t neeb evah serudecorp dna seicilop nettirW rof serudecorp emas eht gniniatniam yltnerruc si secivreS laicoS ,hcnarb noitcerid nettirw deviecer tI .sdnuf tcA yrevoceR rof snoitanimreted gnikam rof noitcerid edivorp ot dehsilbatse hcnarb ytilibigile dna tnemyolpme eht fo feihc ehT .ytilibigile gninimreted eht htiw detaicossa segnahc ytilibigile elbacilppa gnidrager SNF morf snoitanimreted ytilibigile gnitnemucod dna tnerruc eht taht noitanimreted eht dehcaer secivreS laicoS taht detats osla morf noitacfiiralc tneuqesbus deviecer osla secivreS laicoS .tcA yrevoceR slortnoc lanretni( stnarg dnuf tcA yrevoceR rof yrevoceR eht fo gnidaer sti no desab tneicffius erew serudecorp ytilibigile ,9002 ,72 yraurbeF detad rettel a nI .sdradnats ytilibigile gnidrager SNF .)ytilibigile ot detaler eht fo feihc eht ,yllaniF .FCA morf deviecer snoitcurtsni margorp eht dna tcA laicoS ,srehto dna ,srotanidrooc pmats doof ,srotcerid eraflew ytnuoc ot detseuqer sah secivreS laicoS taht detats hcnarb ytilibigile dna tnemyolpme fo snoisivorp eht gnidrager snoitcurtsni noitatnemelpmi dedivorp secivreS ot segnahc desoporp yna no sllac enohp aiv FCA morf noitamrofni rehtruf noitacfiiton ehT .stfieneb PANS ni esaercni yraropmet s’tcA yrevoceR eht .noitatnemucod ro snoisivorp ytilibigile .tcA yrevoceR eht htiw detaicossa segnahc ytilibigile dedulcni gnirrucernon dna ydisbus krow eht rof slasoporp taht su dlot secivreS laicoS lacsfi gnirevoc tiduA elgniS ruo ecnis margorp siht detidua ton evah eW laicoS .dezilanfi neeb ton evah dnuF ycnegnitnoC FNAT eht fo snoitrop era slortnoc hcus rehtehw mrfinoc tonnac ew erofereht ,60–5002 raey laredef dna dedrawa neeb evah snoitrop esoht nehw taht detats secivreS lacsfi gnirevoc tiduA elgniS ruo ot tcejbus si margorp PANS ehT .etauqeda .stneipicerbus sti ot ecnadiug detadpu esaeler lliw ti ,desaeler si ecnadiug .90–8002 raey California State Auditor Report 2009-611.1 89 June 2009 rof ecnatsIssa yraropmet rof dnuf ycnegreme—slaudIvIdnI elBarenluv rof ecnatsIssa doof( stIfeneB )pans( margorp ecnatsIssa noItIrtun latnemelppus eht nI esaercnI )dnuf ycnegnItnoc fnat( margorp )fnat( seIlImaf ydeen )margorp spmats 417.39 reBmun ecnatsIssa cItsemod laredef fo golatac 155.01 reBmun ecnatsIssa cItsemod laredef fo golatac ksIr margorp fo aera laicoS ,hcnarb ytilibigile dna tnemyolpme eht fo feihc eht ot gnidroccA  serudecorp nalp noitca evitcerroc wen taht eveileb ton seod secivreS laicoS t ot ecalp ni era sessecorp nalp noitca evitcerroC FNAT eht rof sessecorp nalp noitca evitcerroc gnitsixe sti esu lliw secivreS eht rednu sdnuf rof etairporppa si ssecorp gnitsixe eht taht dna dedeen era defiitnedi sgnidnfi tidua yna evloser yltpmorp fo weiver a no noitanimreted sti desab secivreS laicoS .dnuF ycnegnitnoC detats uaerub ycilop pmats doof eht fo feihc eht ,yllacfiicepS .tcA yrevoceR ot ytiliba s’tnemtraped eht tcapmi yam taht gnidroccA .FCA yb dedivorp snoitcurtsni margorp eht dna tcA yrevoceR eht noitcurtsni dna lanoitamrofni dna tcA yrevoceR eht fo weiver no desab taht .tcA yrevoceR eht tnemelpmi yllufsseccus lamrof on si ereht ,hcnarb ytilibigile dna tnemyolpme eht fo feihc eht ot eunitnoc lliw secivreS laicoS ,tnemnrevog laredef eht morf smudnaromem .noitanimreted ’secivreS laicoS gnitroppus sisylana nettirw .serudecorp nalp noitca evitcerroc gnitsixe esu ot ew ,80‑7002 raey lacsfi gnirevoc tiduA elgniS eht gnirud ,sselehtreveN lacsfi gnirevoc tiduA elgniS ruo ecnis margorp siht detidua ton evah eW on nekat sah secivreS laicoS .sessenkaew lortnoc lanretni eerht defiitnedi era slortnoc hcus rehtehw mrfinoc tonnac ew erofereht ,60–5002 raey .driht eht gnitcerroc fo ssecorp eht ni si dna owt rof noitca evitcerroc lacsfi gnirevoc tiduA elgniS ruo ot tcejbus si margorp PANS ehT .etauqeda .90–8002 raey deviecer sah ti taht eriannoitseuq ruo ot dednopser secivreS laicoS  detad rettel a nI .seitnuoc ot ecnadiug nettirw emos dedivorp secivreS laicoS t ecnadiug dna ,snoitidnoc ,stnemeriuqer weN eht rof noitrop ”ecnatsissA cisaB“ eht rof FCA eht morf ecnadiug yranimilerp ,srotanidrooc pmats doof ,srotcerid eraflew ytnuoc ot ,9002 ,72 yraurbeF stneipicerbus eht ot dedivorp neeb evah deviecer ton evah stneipicerbus taht detats osla tI .dnuF ycnegnitnoC FNAT gnidrager snoitcurtsni noitatnemelpmi dedivorp secivreS laicoS ,srehto dna .sdnuf tcA yrevoceR gnidrager sloot noitcelloc atad dna ,serudecorp ,seicilop gnitsixe sti esuaceb ecnadiug .stfieneb PANS ni esaercni yraropmet s’tcA yrevoceR eht fo snoisivorp eht .tneicffius era eciton noitamrofni na htiw slaudividni eseht dedivorp osla secivreS laicoS doof desaercni fo ssenerawa gnisiar ni meht tsissa ot ,9002 ,03 lirpA detad dna ydisbus krow eht rof slasoporp eht taht detats osla secivreS laicoS .seiraicfieneb gnoma stfieneb pmats neeb ton evah dnuF ycnegnitnoC FNAT eht fo snoitrop gnirrucernon evah snoitrop esoht nehw ,secivreS laicoS ot gnidrocca ,rehtruF .dezilanfi gnidrager SNF morf noitacfiiralc deviecer secivreS laicoS ,9002 ,02 yaM nO detadpu eussi lliw ti ,desaeler si ecnadiug laredef dna dedrawa neeb doof eht fo feihc eht ot gnidroccA .smialc ecnaussi revo stfieneb PANS .stneipicerbus sti ot ecnadiug ot rettel rehtona gniussi setapicitna secivreS laicoS ,uaerub ycilop pmats eht gnidrager srehto dna ,srotanidrooc pmats doof ,srotcerid eraflew ytnuoc .sdohtem noitaluclac reporp stcartnoC/noitisiuqcA ,hcnarb ytilibigile dna tnemyolpme ’secivreS laicoS fo feihc eht ot gnidroccA AN pmats doof eht fo feihc eht ot gnidrocca ,margorp tfieneb PANS eht roF AN rednu deussi slasoporp rof stseuqer weN htiw slasoporp rof stseuqer gniussi etapicitna ton seod secivreS laicoS slasoporp rof stseuqer gniussi etapicitna ton seod secivreS laicoS ,hcnarb yrassecen eht niatnoc sevitaitini tcA yrevoceR .dnuF ycnegnitnoC FNAT eht rof sdnuf tcA yrevoceR ytilibigile enimreted stnemtraped eraflew ytnuoC .tcA yrevoceR eht rednu eht fo snoisivorp eht yfsitas ot egaugnal syap tnemnrevog laredef eht taht stfieneb dednuf yllaredef eussi dna .tcA yrevoceR .yltcerid ,stcartnoc gnidrawa etapicitna ton seod ti ,secivreS laicoS ot gnidroccA AN pmats doof eht fo feihc eht ot gnidrocca ,margorp tfieneb PANS eht roF AN sdnuf tcA yrevoceR gnisu stcartnoC .dnuF ycnegnitnoC FNAT eht rof sdnuf tcA yrevoceR htiw snaol ro ,stnarg eht rednu stcartnoc gniussi etapicitna ton seod secivreS laicoS ,hcnarb dna ,riaf ,tpmorp a ni dedrawa era eussi dna ytilibigile enimreted stnemtraped eraflew ytnuoC .tcA yrevoceR .rennam elbanosaer .yltcerid syap tnemnrevog laredef eht taht stfieneb dednuf yllaredef . . . egap txen no deunitnoc 90 California State Auditor Report 2009-611.1 June 2009 rof ecnatsIssa yraropmet rof dnuf ycnegreme—slaudIvIdnI elBarenluv rof ecnatsIssa doof( stIfeneB )pans( margorp ecnatsIssa noItIrtun latnemelppus eht nI esaercnI )dnuf ycnegnItnoc fnat( margorp )fnat( seIlImaf ydeen )margorp spmats 417.39 reBmun ecnatsIssa cItsemod laredef fo golatac 155.01 reBmun ecnatsIssa cItsemod laredef fo golatac ksIr margorp fo aera ,stcartnoc gnidrawa etapicitna ton seod ti ,secivreS laicoS ot gnidroccA  pmats doof eht fo feihc eht ot gnidrocca ,margorp tfieneb PANS eht roF AN yrevoceR gnisu dedrawa stcartnoc weN dna ecnatsissa cisab eht rof sdnuf tcA yrevoceR htiw snaol ro ,stnarg eht rednu stcartnoc gniussi etapicitna ton seod secivreS laicoS ,hcnarb dna smret cfiiceps eht evah sdnuf tcA .dnuF ycnegnitnoC FNAT eht fo snoitrop gnirrucernon eussi dna ytilibigile enimreted stnemtraped eraflew ytnuoC .tcA yrevoceR .deriuqer sesualc .yltcerid syap tnemnrevog laredef eht taht stfieneb dednuf yllaredef eht fo ypoc a dedivorp secivreS laicoS ,noitrop ydisbus krow eht gnidrageR tcartnoc sihT .dnuF ycnegnitnoC FNAT eht rof ecalp ni sah ti tcartnoc eno ot segelloC ytinummoC ainrofilaC eht fo ecffiO s’rollecnahC eht htiw si ni stnapicitrap ot dedivorp secivres lanoitacude fo stsoc rof ti esrubmier rof lasoporp eht ecno ,secivreS laicoS ot gnidroccA .margorp SKROWlaC eht ,dezilanfi neeb sah dnuF ycnegnitnoC FNAT eht fo noitrop ydisbus krow eht .snoisivorp tcA yrevoceR edulcni ot tcartnoc eht dnema lliw secivreS laicoS htiw stcejorp gnidnuf etapicitna ton seod ti ,secivreS laicoS ot gnidroccA AN pmats doof eht fo feihc eht ot gnidrocca ,margorp tfieneb PANS eht roF AN diova tcA yrevoceR eht rednu dednuf stcejorP .dnuF ycnegnitnoC FNAT eht rof sdnuf tcA yrevoceR eht rednu stcejorp gnidnuf etapicitna ton seod secivreS laicoS ,hcnarb .snurrevo tsoc dna syaled yrassecennu eussi dna ytilibigile enimreted stnemtraped eraflew ytnuoC .tcA yrevoceR .yltcerid syap tnemnrevog laredef eht taht stfieneb dednuf yllaredef ,stcartnoc gnidrawa etapicitna ton seod ti ,secivreS laicoS ot gnidroccA AN pmats doof eht fo feihc eht ot gnidrocca ,margorp tfieneb PANS eht roF AN sdnuf tcA yrevoceR gnisu dedrawa stcartnoC .dnuF ycnegnitnoC FNAT eht rof sdnuf tcA yrevoceR htiw snaol ro ,stnarg eht rednu stcartnoc gniussi etapicitna ton seod secivreS laicoS ,hcnarb .cilbup eht ot tnerapsnart era eussi dna ytilibigile enimreted stnemtraped eraflew ytnuoC .tcA yrevoceR .yltcerid syap tnemnrevog laredef eht taht stfieneb dednuf yllaredef ,stcartnoc gnidrawa etapicitna ton seod ti ,secivreS laicoS ot gnidroccA AN pmats doof eht fo feihc eht ot gnidrocca ,margorp tfieneb PANS eht roF AN sdnuf tcA yrevoceR fo stfieneb cilbup ehT .dnuF ycnegnitnoC FNAT eht rof sdnuf tcA yrevoceR htiw snaol ro ,stnarg eht rednu stcartnoc gniussi etapicitna ton seod secivreS laicoS ,hcnarb ,ylraelc detroper era tcartnoc rednu desu eussi dna ytilibigile enimreted stnemtraped eraflew ytnuoC .tcA yrevoceR .rennam ylemit a ni dna ,yletarucca .yltcerid syap tnemnrevog laredef eht taht stfieneb dednuf yllaredef California State Auditor Report 2009-611.1 91 June 2009 rof ecnatsIssa yraropmet rof dnuf ycnegreme—slaudIvIdnI elBarenluv rof ecnatsIssa doof( stIfeneB )pans( margorp ecnatsIssa noItIrtun latnemelppus eht nI esaercnI )dnuf ycnegnItnoc fnat( margorp )fnat( seIlImaf ydeen )margorp spmats 417.39 reBmun ecnatsIssa cItsemod laredef fo golatac 155.01 reBmun ecnatsIssa cItsemod laredef fo golatac ksIr margorp fo aera ytilibatnuoccA dna ycnerapsnarT eganam ot ydob ecnanrevog a dehsilbatse sah ti taht setats secivreS laicoS t eganam ot ydob ecnanrevog a dehsilbatse sah ti taht setats secivreS laicoS t ot dehsilbatse neeb sah ydob ecnanrevog A stidua dael sti ot gnidroccA .tcA yrevoceR eht fo noitatnemelpmi llarevo eht dael sti ot gnidroccA .tcA yrevoceR eht fo noitatnemelpmi llarevo eht eht fo noitatnemelpmi llarevo eht eganam seussi eht eganam ot puorg krow a pu tes secivreS laicoS ,rotanidrooc eht eganam ot puorg krow a pu tes secivreS laicoS ,rotanidrooc stidua .tcA yrevoceR puorg krow sihT .tcA yrevoceR eht ni dedulcni smargorp eht htiw detaicossa sihT .tcA yrevoceR eht rednu dedulcni smargorp eht htiw detaicossa seussi esehT .secivreS laicoS ta snoisivid suoirav tneserper taht seeyolpme sedulcni laicoS ta snoisivid suoirav tneserper ohw seeyolpme sedulcni puorg krow noisivid ro hcnarb evitcepser rieht rof tcatnoc fo tniop eht era slaudividni evitcepser rieht rof tcatnoc fo tniop eht era slaudividni esehT .secivreS teem ton seod dna lamrof ton si puorg sihT .sdnuf tcA yrevoceR gnidrager lamrof ton si puorg sihT .sdnuf tcA yrevoceR gnidrager noisivid ro hcnarb eht fo srebmem ,esira seussi tcA yrevoceR revenehw ,rehtaR .ylraluger ,esira seussi tcA yrevoceR revenehw ,rehtaR .ylraluger teem ton seod dna stcepsa eht sserdda srebmem eht dna ,seussi eht fo demrofni era puorgkrow srebmem eht dna ,seussi eht fo demrofni era puorg krow eht fo srebmem hguohtlA .rof elbisnopser si noisivid ro hcnarb evitcepser rieht seussi eht fo si noisivid ro hcnarb evitcepser rieht seussi eht fo stcepsa eht sserdda dael eht ,puorg krow siht ot detaler seton gniteem ro sadnega detseuqer ew detaler seton gniteem ro sadnega detseuqer ew hguohtlA .rof elbisnopser seton ro sgniteem lamrof on neeb evah ereht taht su dlot rotanidrooc stidua neeb evah ereht taht su dlot rotanidrooc stidua dael eht ,puorg krow siht ot .erahs ot .erahs ot seton ro sgniteem lamrof on eh ,noitartsinimda rof rotcerid ytuped ’secivreS laicoS ot gnidroccA eh ,noitartsinimda rof rotcerid ytuped ’secivreS laicoS ot gnidroccA evitatneserper ASHHC eht htiw sgniteem lamrofni ylkeew ni setapicitrap dna htlaeH ainrofilaC eht htiw sgniteem lamrofni ylkeew ni setapicitrap etadpu ylkeew eseht taht detats osla rotcerid ytuped ehT .ecroF ksaT eht no laredeF ainrofilaC eht no evitatneserper )ASHHC( ycnegA secivreS namuH na edivorp dna ASHHC ot troper taht seicnega etats rehto edulcni sgniteem detats osla rotcerid ytuped ehT .)ecroF ksaT( ecroF ksaT sulumitS cimonocE noitamrofni detaler‑tcA yrevoceR ssucsid dna etanimessid ot ytinutroppo taht seicnega etats rehto edulcni sgniteem etadpu ylkeew eseht taht lareneg fo era ro stnemtraped ASHHC tceffa yam rehtie taht scipot dna ssucsid dna etanimessid ot ytinutroppo na edivorp dna ASHHC ot troper .puorg eht ot tseretni ASHHC tceffa yam rehtie taht scipot dna noitamrofni detaler‑tcA yrevoceR .puorg eht ot tseretni lareneg fo era ro stnemtraped . . . egap txen no deunitnoc 92 California State Auditor Report 2009-611.1 June 2009 rof ecnatsIssa yraropmet rof dnuf ycnegreme—slaudIvIdnI elBarenluv rof ecnatsIssa doof( stIfeneB )pans( margorp ecnatsIssa noItIrtun latnemelppus eht nI esaercnI )dnuf ycnegnItnoc fnat( margorp )fnat( seIlImaf ydeen )margorp spmats 417.39 reBmun ecnatsIssa cItsemod laredef fo golatac 155.01 reBmun ecnatsIssa cItsemod laredef fo golatac ksIr margorp fo aera 2151 noitceS ,secivreS laicoS ta lesnuoc feihc tnatsissa roines a ot gnidroccA AN noitces gnitroper laredef ’secivreS laicoS fo reganam eht ,9002 ,91 yaM nO  taht stnemele atad dradnats etairporppa ehT rof troper a etaerc ot secivreS laicoS eriuqer ton seod tcA yrevoceR eht fo tnerruc rehtehw tuoba noitacfiiralc gnitseuqer SNF ot liam‑e na tnes detagergga dna ,defiissalc ,derutpac eb tsum .dnuF ycnegnitnoC FNAT eht ot dedivorp gnidnuf tcA yrevoceR eht tcA yrevoceR teem ot detadpu eb ot deen lliw smsinahcem gnitroper yrevoceR teem ot gnitroper dna sisylana rof morf noitamrfinoc deviecer secivreS laicoS ,9002 ,21 enuJ nO .stnemeriuqer 2151 noitceS rednu stnemeriuqer tcA ’secivreS laicoS rof reganam hcnarb tnatsissa eht ot gnidrocca ,rehtruF defiidom timbus ot deriuqer ton era setats taht tnemnrevog laredef eht .defiitnedi era yllabrev )BMO( tegduB dna tnemeganaM fo ecffiO .S.U eht ,uaerub setamitse eb lliw sdnuf tcA yrevoceR ,rehtruF .tcA yrevoceR eht rof stroper 64‑SNF ycnegnitnoC FNAT eht taht noitaterpretni ’secivreS laicoS htiw deerga a enimreted lliw tnemnrevog laredef eht hcihw ni ssecorp a hguorht dekcart .tcA yrevoceR eht fo 2151 noitceS rednu gnitroper ot tcejbus ton si dnuF etagerges ot sdnuf margorp fo snwodward yliad ot ylppa ot etar egatnecrep taht demrfinoc FCA eht fo evitatneserper a ,9002 ,9 enuJ no ,yllanoitiddA .stfieneb tcA yrevoceR dna raluger gnitroper 2151 noitceS eht ot tcejbus ton si dnuF ycnegnitnoC FNAT eht ton od stnemeriuqer gnitroper 2151 noitceS eht hguohtlA .stnemeriuqer taht dedda evitatneserper FCA eht ,dnuF ycnegnitnoC FNAT eht ot ylppa taht su dlot secivreS laicoS .stnemeriuqer lanoitidda evah thgim BMO eht evitatirohtua deviecer sah ti seveileb ti ,FCA morf esnopser eht fo thgil ni yrevoceR ot tcejbus ton si dnuF ycnegnitnoC FNAT eht taht ecnadiug laredef .stnemeriuqer gnitroper 2151 noitceS tcA 2151 noitceS ,secivreS laicoS ta lesnuoc feihc tnatsissa roines a ot gnidroccA AN noitces gnitroper laredef ’secivreS laicoS fo reganam eht ,9002 ,91 yaM nO  tcelloc ot ecalp ni era smsinahcem gnitropeR rof troper a etaerc ot secivreS laicoS eriuqer ton seod tcA yrevoceR eht fo tnerruc rehtehw tuoba noitacfiiralc gnitseuqer SNF ot liam‑e na tnes teem ot stneipicerbus morf atad deriuqer eht .dnuF ycnegnitnoC FNAT eht ot dedivorp gnidnuf tcA yrevoceR eht tcA yrevoceR teem ot detadpu eb ot deen lliw smsinahcem gnitroper .snoisivorp ycnerapsnart s’tcA yrevoceR eht morf noitamrfinoc deviecer secivreS laicoS ,9002 ,21 enuJ nO .stnemeriuqer ’secivreS laicoS rof reganam hcnarb tnatsissa eht ot gnidrocca ,rehtruF defiidom timbus ot deriuqer ton era setats taht tnemnrevog laredef eht ’secivreS laicoS htiw deerga yllabrev BMO eht ,uaerub setamitse eb lliw sdnuf tcA yrevoceR ,rehtruF .tcA yrevoceR eht rof stroper 64‑SNF gnitroper ot tcejbus ton si dnuF ycnegnitnoC FNAT eht taht noitaterpretni a enimreted lliw tnemnrevog laredef eht hcihw ni ssecorp a hguorht dekcart a ,9002 ,9 enuJ no ,yllanoitiddA .tcA yrevoceR eht fo 2151 noitceS rednu etagerges ot sdnuf margorp fo snwodward yliad ot ylppa ot etar egatnecrep si dnuF ycnegnitnoC FNAT eht taht demrfinoc FCA eht fo evitatneserper .stfieneb tcA yrevoceR dna raluger eht hguohtlA .stnemeriuqer gnitroper 2151 noitceS eht ot tcejbus ton ycnegnitnoC FNAT eht ot ylppa ton od stnemeriuqer gnitroper 2151 noitceS lanoitidda evah thgim BMO eht taht dedda evitatneserper FCA eht ,dnuF morf esnopser eht fo thgil ni taht su dlot secivreS laicoS .stnemeriuqer eht taht ecnadiug laredef evitatirohtua deviecer sah ti seveileb ti ,FCA 2151 noitceS tcA yrevoceR ot tcejbus ton si dnuF ycnegnitnoC FNAT .stnemeriuqer gnitroper California State Auditor Report 2009-611.1 93 June 2009 rof ecnatsIssa yraropmet rof dnuf ycnegreme—slaudIvIdnI elBarenluv rof ecnatsIssa doof( stIfeneB )pans( margorp ecnatsIssa noItIrtun latnemelppus eht nI esaercnI )dnuf ycnegnItnoc fnat( margorp )fnat( seIlImaf ydeen )margorp spmats 417.39 reBmun ecnatsIssa cItsemod laredef fo golatac 155.01 reBmun ecnatsIssa cItsemod laredef fo golatac ksIr margorp fo aera 2151 noitceS ,secivreS laicoS ta lesnuoc feihc tnatsissa roines a ot gnidroccA AN secivreS laicoS ,hcnarb gnitnuocca dna lacsfi sti fo feihc eht ot gnidroccA t tcA yrevoceR eht rednu dehsilbup stropeR rof troper a etaerc ot secivreS laicoS eriuqer ton seod tcA yrevoceR eht fo rof serudecorp gnitsixe dna ,etad ot stroper tcA yrevoceR yna deussi ton sah ycarucca rof devorppa dna deweiver era .dnuF ycnegnitnoC FNAT eht ot dedivorp gnidnuf tcA yrevoceR eht .gnitroper tcA yrevoceR rof desu eb lliw lavorppa dna weiver detaler slortnoc lanretni( ssenetelpmoc dna .)gnitroper ot ’secivreS laicoS rof reganam hcnarb tnatsissa eht ot gnidrocca ,rehtruF laredef eht morf noitamrfinoc deviecer secivreS laicoS ,9002 ,21 enuJ nO secivreS laicoS htiw deerga yllabrev BMO eht ,uaerub setamitse stroper 64‑SNF defiidom timbus ot deriuqer ton era setats taht tnemnrevog ot tcejbus ton si margorp ycnegnitnoC FNAT eht taht noitaterpretni a hguorht dekcart eb lliw sdnuf tcA yrevoceR ,rehtruF .tcA yrevoceR eht rof no ,yllanoitiddA .tcA yrevoceR eht fo 2151 noitceS rednu gnitroper etar egatnecrep a enimreted lliw tnemnrevog laredef eht hcihw ni ssecorp FNAT eht taht demrfinoc FCA eht fo evitatneserper a ,9002 ,9 enuJ dna raluger etagerges ot sdnuf margorp fo snwodward yliad ot ylppa ot gnitroper 2151 noitceS eht ot tcejbus ton si margorp dnuF ycnegnitnoC stfieneb tcA yrevoceR ton od stnemeriuqer gnitroper 2151 noitceS eht hguohtlA .stnemeriuqer taht dedda evitatneserper FCA eht ,dnuF ycnegnitnoC FNAT eht ot ylppa lacsfi gnirevoc tiduA elgniS ruo ecnis margorp siht detidua ton evah eW taht su dlot secivreS laicoS .stnemeriuqer lanoitidda evah thgim BMO eht era slortnoc hcus rehtehw mrfinoc tonnac ew erofereht ,60–5002 raey evitatirohtua deviecer sah ti seveileb ti ,FCA morf esnopser eht fo thgil ni lacsfi gnirevoc tiduA elgniS ruo ot tcejbus si margorp PANS ehT .etauqeda yrevoceR ot tcejbus ton si dnuF ycnegnitnoC FNAT eht taht ecnadiug laredef .90‑8002 raey .stnemeriuqer gnitroper 2151 noitceS tcA yfitnedi ton did ew ,80‑7002 raey lacsfi gnirevoc troper tiduA elgniS ruo nI .margorp FNAT eht rof gnitroper fo aera eht ni sessenkaew lortnoc yna 2151 noitceS ,secivreS laicoS ta lesnuoc feihc tnatsissa roines a ot gnidroccA AN secivreS laicoS ,hcnarb gnitnuocca dna lacsfi eht fo feihc eht ot gnidroccA  .sisab ylemit a no deraperp era stropeR rof troper a etaerc ot secivreS laicoS eriuqer ton seod tcA yrevoceR eht fo .etad ot stroper yna deraperp ton sah .dnuF ycnegnitnoC FNAT eht ot dedivorp gnidnuf tcA yrevoceR eht laredef eht morf noitamrfinoc deviecer secivreS laicoS ,9002 ,21 enuJ nO ’secivreS laicoS rof reganam hcnarb tnatsissa eht ot gnidrocca ,rehtruF stroper 64‑SNF defiidom timbus ot deriuqer ton era setats taht tnemnrevog secivreS laicoS htiw deerga yllabrev BMO eht ,uaerub setamitse a hguorht dekcart eb lliw sdnuf tcA yrevoceR ,rehtruF .tcA yrevoceR eht rof gnitroper ot tcejbus ton si dnuF ycnegnitnoC FNAT eht taht noitaterpretni etar egatnecrep a enimreted lliw tnemnrevog laredef eht hcihw ni ssecorp ,9002 ,9 enuJ no ,yllanoitiddA .tcA yrevoceR eht fo 2151 noitceS rednu dna raluger etagerges ot sdnuf margorp fo snwodward yliad ot ylppa ot dnuF ycnegnitnoC FNAT eht taht demrfinoc FCA eht fo evitatneserper a stfieneb tcA yrevoceR eht hguohtlA .stnemeriuqer gnitroper 2151 noitceS eht ot tcejbus ton si ycnegnitnoC FNAT ot ylppa ton od stnemeriuqer gnitroper 2151 noitceS lanoitidda evah thgim BMO eht taht dedda evitatneserper FCA eht ,sdnuF morf esnopser eht fo thgil ni taht su dlot secivreS laicoS .stnemeriuqer FNAT eht taht ecnadiug laredef evitatirohtua deviecer sah ti seveileb ti ,FCA gnitroper 2151 noitceS tcA yrevoceR ot tcejbus ton si dnuF ycnegnitnoC .stnemeriuqer . . . egap txen no deunitnoc 94 California State Auditor Report 2009-611.1 June 2009 rof ecnatsIssa yraropmet rof dnuf ycnegreme—slaudIvIdnI elBarenluv rof ecnatsIssa doof( stIfeneB )pans( margorp ecnatsIssa noItIrtun latnemelppus eht nI esaercnI )dnuf ycnegnItnoc fnat( margorp )fnat( seIlImaf ydeen )margorp spmats 417.39 reBmun ecnatsIssa cItsemod laredef fo golatac 155.01 reBmun ecnatsIssa cItsemod laredef fo golatac ksIr margorp fo aera laicoS ,hcnarb ytilibigile dna tnemyolpme eht fo feihc eht ot gnidroccA  lliw secivreS laicoS ,uaerub ycilop pmats doof eht fo feihc eht ot gnidroccA t srotinom ylraluger tnemtraped ehT .tneicffius era stneipicerbus gnirotinom rof slortnoc lanretni tnerruc ’secivreS esuaceb serudecorp gnirotinom tneipicerbus tnerruc sti esu ot eunitnoc laredef htiw ecnailpmoc tneipicerbus lanoitidda rehtar tub margorp wen a ton si stfieneb PANS tcA yrevoceR slortnoc lanretni( stnemeriuqer margorp tneipicerbus revo sessenkaew lortnoc owt detroper ew ,revewoH weiver no desab taht detats osla eH .margorp PANS tnerruc a fo gnidnuf .)gnirotinom tneipicerbus ot detaler laicoS .80–7002 raey lacsfi gnirevoc troper tiduA elgniS ruo ni gnirotinom eht sa hcus( SNF morf ecnadiug nettirw ,egaugnal s’tcA yrevoceR eht fo .ssenkaew rehtie detcerroc ylluf tey ton sah secivreS omem noitacfiiralc eht dna ,9002 ,32 yraurbeF detad omem noitatnemelpmi pmats doof eht ,ffats SNF htiw snoitasrevnoc dna )9002 ,5 hcraM detad yfitnedi ton did secivreS laicoS taht dnuof ew ,gnidnfi tsrfi ruo gnidrageR .serudecorp gnirotinom tneipicerbus tnerruc sti esu ot eunitnoc lliw hcnarb citsemoD laredeF fo golataC eht sa hcus ,noitamrofni drawa laredef eht ot sdrawabus gniussi nehw ,rebmun dna eltit )ADFC( ecnatsissA ,60–5002 raey lacsfi gnirevoc tiduA elgniS ruo ecnis detidua ton evah eW laredef eht htiw krow ot deen lliw ti taht detats secivreS laicoS .seitnuoc PANS ehT .etauqeda era slortnoc hcus rehtehw mrfinoc tonnac ew erofereht eht fo stneipicerbus yfiton ot stnemeriuqer eht gnidrager ycnega gnitnarg .90–8002 raey lacsfi gnirevoc tiduA elgniS ruo ot tcejbus si margorp taht snoitaluger dna swal laredef tnaveler dna noitamrofni drawa laredef gnidnfi siht devloser yllaitrap sah secivreS laicoS .drawa tnarg eht nrevog .rebmun dna eltit ADFC eht gniyfitnedi seitnuoc eht ot rettel a gniussi yb sdnetni secivreS laicoS ,rotanidrooc stidua dael eht ot gnidrocca ,revewoH fo dne eht yb gnidnfi siht rof detelpmoc nalp noitca evitcerroc eht evah ot .9002 rebmeceD etauqeda skcal secivreS laicoS taht deton ew ,gnidnfi dnoces eht gnidrageR snoisiced tnemeganam seussi ti taht erusne ot serudecorp dna seicilop .331‑A ralucriC BMO yb deriuqer semarf emit eht nihtiw sgnidnfi tidua no ot snalp osla secivreS laicoS taht su dlot rotanidrooc stidua dael ehT fo dne eht yb detelpmoc gnidnfi siht rof nalp noitca evitcerroc eht evah .9002 rebmeceD lliw ro depoleved sah dna esu ni sah ydaerla secivreS laicoS serudecorp dna sessecorp ot gniniatrep stnemucod tnaveler fo weiver dna lennosrep )secivreS laicoS( ’secivreS laicoS fo tnemtrapeD yek fo sweivretnI :secruoS .tcA yrevoceR eht fo snoisivorp gnitnemelpmi rof gnipoleved eb .74 dna 64 segap ot refer dnegel eht fo snoitpircsed deliated roF :etoN .elbacilppa toN = AN .deraperP =  .deraperp yltsoM = t  .deraperp yletaredoM = .deraperp toN =  California State Auditor Report 2009-611.1 95 June 2009 Appendix B StAtuS of ACtionS StAte DepARtmentS hAve tAken to CoRReCt inteRnAl ContRol weAkneSSeS RepoRteD in the Single AuDit CoveRing fiSCAl yeAR 2007–08 Table B provides a summary of the status of selected internal control weaknesses reported in our Single Audit report covering fiscal year 2007–08 for the four departments we assessed. Based on our limited analysis of corrective action taken by the departments for 30 internal control weaknesses we identified, it appears they corrected four of the previously reported weaknesses. For the other 26, we determined that the departments are still in the process of correcting 22 and have taken minimal or no action for the remaining four. Table B Status of Action State Departments Have Taken to Correct Selected Internal Control Weaknesses Reported In the Single Audit Covering Fiscal Year 2007–08 status of correctIng control Weaknesses state department/u.s. offIce of management total numBer correctIve correctIve mInImal or no and Budget cIrcular a-133 of control actIon actIon In correctIve complIance requIrements Weaknesses taken process actIon taken Department of Education Cash management 5 2 1 2* Reporting 1 0 1 0 Subrecipient monitoring 6 1 5 0 Subtotals 12 3 7 2 Department of Health Care Services Activities allowed and allowable costs 4 0 4 0 Eligibility 4† 0 4† 0 Reporting 1 0 1 0 Subrecipient monitoring 2 0 2 0 Subtotals 11 0 11 0 Employment Development Department Reporting 1 1 0 0 Subrecipient monitoring 3 0 3 0 Subtotals 4 1 3 0 Department of Social Services Activities allowed and allowable costs 1 0 0 1* Subrecipient montoring 2 0 1 1 Subtotals 3 0 1 2 Totals 30 4 22 4 Source: Bureau of State Audits’ State of California: Internal Control and State and Federal Compliance Audit Report for the Fiscal Year Ended June 30, 2008 (May 2009, Report 2008‑002); and the Bureau of State Audits’ analysis of departments’ corrective action. * The department disagrees with the our conclusion regarding this control weakness. † Although two of these weaknesses were identified during procedures performed over special tests and provisions for our Single Audit covering fiscal year 2007–08, we categorize them here under eligibility control weaknesses because they relate to provider eligibility. 96 California State Auditor Report 2009-611.1 June 2009 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