CSA
Summary
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Department of
Fish and Game:
Administrative
Processes Need
Improvement
Table of Contents
Summary
Introduction
Chapter 1
The Department’s Cost
Allocation
Plan Charges Its
Programs
and Funds Inequitably
Recommendation
s
1
Chapter 2
Charges to Restricted
Funds
Are Not Always
Appropriate
Recommendation
s
Chapter 3
The Department’s
Internal Audit Reports
Indicate Continuing
Purchasing
and Contracting
Weaknesses
Recommendation
s
Chapter 4
The Number of
Department
Headquarters
Positions Has Increased
Recommendation
Chapter 5
The Department Did Not
Always
Ensure That Costs Were
Reasonable in Its
Response to the
Dunsmuir Chemical Spill
Recommendation
2
Response to the Audit
Department of Fish and
Game
California State
Auditor’s
Comments
on the Response
by the
California
Department of
Fish and Game
Summary
Results in Brief
T
he Department of Fish and Game (department) is
responsible for maintaining native fish, wildlife, plant
Audit Highlights... species, and natural areas. This includes habitat
protection to ensure the survival of all species and natural areas.
The department: The department is also responsible for the diversified use of fish
and wildlife, including recreational, commercial, scientific, and
Improperly allocated educational. Our review focused on whether the department
indirect costs. manages its administrative costs in a reasonable manner, as well
as the department’s management of those funds that are restricted
Mismanaged the use
for specific purposes. We also determined what steps the
of restricted funds.
department has taken to address the purchasing and contracting
weaknesses that its auditors have identified at regional offices
Internal auditor
and at headquarters. Further, we developed a ten-year trend
found weaknesses
showing how the department has distributed its staff between
still exist in
headquarters activities and field activities. Finally, we reviewed
procurement and
purchasing. a sample of department expenditures related to the cleanup and
ongoing assessment of the 1991 chemical spill near Dunsmuir,
Headquarter staff California, and policies and procedures for responding to similar
grew faster than field spills. Specifically, we noted the following concerns:
staff over the past 10
years.
The department is allocating some of its costs as indirect
costs (also called administrative costs) even though these
3
costs are directly chargeable to a particular program. When
this occurs, the programs that are inappropriately sharing
these costs are being forced to pay, even though they have not
benefited in any way from the expenditures. Contributing to
this problem is the fact that the department has not had a
written cost allocation plan since fiscal year 1992-93.
Improperly allocating costs has contributed to the flaws in the
management of certain departmental funds that are restricted.
The department’s management of restricted funds is flawed
because it does not always capture the actual costs of program
activities funded by these restricted funds, has made
inappropriate loans from restricted funds, and does not
provide its managers with sufficient accounting information
to allow them to properly manage these funds. The
department has taken steps to address some of these
deficiencies. It has created a “Fund Manager” position to
assist managers in the administration of their funds, but more
improvement is needed.
In 1993, the discovery of numerous irregularities at one of the
regional offices led the department’s auditors to do similar
audits of headquarters and the other four regional offices.
These audits have confirmed that weaknesses in the
department’s purchasing of goods and services are not
restricted to only one regional office but are widespread.
These audits found that the department was often not
preparing purchase orders until after the purchased goods had
been received, that the department was not ensuring that it
had evidence of the receipt of goods or services before
making payments to the vendor, and that it was not always
taking advantage of vendor discounts.
In addition, the department’s award and management of
contracts for services is not always effective. Internal audits
of consultant contracts and the Adopt-A-Lake Program found
problems in the award and management of contracts. In our
review of 43 sole-source contracts, 13 did not provide
sufficient justification for the reasonableness of the contract
price paid by the department.
Our analysis of the department’s Salaries and Wages
Supplement data over a ten-year period indicates that the
department’s headquarters has grown at a faster pace than its
field activities. Although we acknowledge that the data used
for this analysis is less than perfect, it was the best
information the department had available. Also, we found
4
that the ratio of executive and administrative staff to total
department staff is higher than that of two other comparable
departments. However, the comparison of one department
with another must be viewed with caution.
We found that the department has not always used high-level
positions appropriately. It created and retained exempt
positions inappropriately and used a temporary help Career
Executive Assignment (CEA) position to compensate a
retired annuitant that did not meet Department of Personnel
Administration guidelines and criteria for CEA classification.
5
Although the department properly accounted for the charges
to the Dunsmuir chemical spill, the costs for goods and
services used in response to the spill were not always
justified. In one instance, the department made excessive
payments for computers.
Recommendations
The department needs to improve its administrative processes.
Specifically, it should:
Revise its cost allocation methodology to ensure that costs are
charged to the appropriate programs and paid by the proper
fund;
Improve its management over the expenditure of restricted
revenues to ensure these revenues are spent for targeted
purposes as expressed in state law;
Assign responsibilities related to its purchasing, payment, and
contracting practices to appropriately trained employees and
hold these employees accountable for adherence to these
practices to ensure that state purchasing and contracting laws
and regulations are followed;
Better distinguish field staff positions from headquarters staff
positions so it can properly evaluate the need for new
headquarters positions; and
Improve its controls over the procurement of goods and
services when competitive bidding is not used to ensure that
the costs for these goods and services are reasonable.
Agency Comments
The department generally agreed with our conclusions and
recommendations. However, it took exception to the approach
we used to conduct a 10-year study of the ratio of headquarters to
field positions.
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7
Introduction
Background
T
he mission of the Department of Fish and Game
(department) is to maintain native fish, wildlife, plants, and
natural areas for their intrinsic value and direct benefits to
people. This mission includes protecting and maintaining
habitat in an amount and quality sufficient to ensure the survival
of all native species and natural areas. At the same time, the
department is responsible for ensuring the legitimate use of fish
and wildlife, including recreational, commercial, scientific, and
educational. This dual mission requires the department to
provide for both the conservation and use of the same resources.
The department takes direction from the Fish and Game
Commission, which establishes policies regulating the taking of
fish and wildlife but has no power to manage the department.
The department also is responsible for enforcing California laws
related to sport and commercial fishing and hunting.
To carry out its mission, the department has been organized into
seven divisions with field staff in various locations around the
State (Figure 1). The specific titles and purposes of these
divisions are as follows:
The Inland Fisheries Division protects, maintains, restores,
and enhances populations and habitats of inland fish,
amphibians, reptiles, and aquatic invertebrates and provides
for the recreational, commercial, scientific, and educational
uses of these resources.
The Bay Delta Division develops recommendations for the
conservation and protection of the biological resources
affected by the State Water Project, Central Valley Project,
and other human activities.
The Wildlife Management Division protects, maintains, and
enhances the populations and habitats of birds and mammals
and regulates the recreational hunting of these resources.
8
Figure 1
Department of Fish and Game
Organization Chart
Executive Director
Fish and Game Commission
Director
Chief Deputy Director
Executive Director
Wildlife Conservation Board
Deputy Director Deputy Director Deputy Director Administrator
Policy Operations Administration Oil Spill Prevention & Response
Deputy Administrator
Executive Secretary Executive Secretary
Regional Manager Oil Spill Prevention & Response
Region 1
Northern CA—North Coast
Chief
Division Chief Regional Manager Assistant Deputy Director Planning/Enforcement
Bay-Delta Administration
Region 2
Sacto Valley—Central Sierra
Division Chief Branch Chief General Counsel
Regional Manager
Environmental Services Audits Legal Affairs Division
Region 3
Central Coast
Division Chief Branch Chief Staff Counsel III
Regional Manager
Inland Fisheries Personnel Programs Headquarters
Region 4 San Joaquin
Valley—Southern Sierra
Division Chief Branch Chief Staff Counsel III
Regional Manager
Marine Resources Technical Services Oil Spill Prevention & Response
Region 5
Southern CA—Eastern Sierra
Division Chief
Natural Heritage Senior Warden-Pilot Deputy Director
Air Services External Affairs
Division Chief
Wildlife Management Assistant Deputy Director
Conservation Education
Division Chief
Wildlife Protection Legislative Representative
Legislative Office
Aquaculture Coordinator
Chief
Office of Program Mgmt
9
The Natural Heritage Division identifies and conserves
California’s sensitive plants, animals, and natural areas.
The Wildlife Protection Division enforces the laws and
regulations enacted to protect California’s wildlife resources.
The Environmental Services Division protects, maintains,
restores, and improves fish and wildlife resources and
habitats.
The Marine Resources Division protects, maintains, and
enhances the populations and habitats of marine plants,
invertebrates, fish, birds, and mammals and provides for the
varied human uses of these resources.
In addition, the department operates an Office of Oil Spill
Prevention and Response, which prevents and responds to oil
spills affecting the marine waters of the State. Finally, the
department has divisions for administration, external affairs, and
legal affairs, which provide support to the department as a whole.
The department has offices in five regions of the State. The
purpose of these regional offices is to coordinate field operations
within a geographical area. However, the reporting structure
related to field staff is inconsistent among the department’s
divisions. In certain divisions, field staff report to one of the
five regional managers, but in other divisions, field staff report to
the division chief. Two deputy directors oversee department
policy and operations. The divisions were reorganized to report
to the deputy director for policy, whereas the regional offices
were reorganized to report to the other deputy director for
operations. According to the Fiscal and Administrative Services
Branch Chief, the department reorganized in 1994 to improve the
consistency between its policy and operations. Previously, both
regional managers and division chiefs made policy and
operations decisions. This dual direction to staff caused
inconsistent department policy and confused the reporting
relationship of field staff.
The department’s budgeted expenditures and projected revenues
amounted to approximately $168 million for fiscal year 1994-95.
Tables 1 and 2 present budgeted expenditures by program and the
related funding sources for those expenditures.
7
Table 1
Budgeted Use of Funds by Programs
for Fiscal Year 1994-95
Program Budget
Fisheries Management $ 58,463,000
Wildlife and Natural Heritage Management 31,837,000
Enforcement of Laws and Regulations 30,737,000
Environmental Services 27,338,000
Oil Spill Prevention and Response 19,420,000
Legal Services 513,000
Total $168,308,000
Table 2
Budgeted Funding Sources
for Fiscal Year 1994-95
Source Amount
Fish and Game Preservation Fund $ 74,057,000
Federal Trust Fund 28,668,000
Oil Spill Prevention and Administration Fund 17,257,000
Reimbursements 14,963,000
California Environmental License Plate Fund 10,648,000
Oil Spill Response Trust Fund 9,919,000
Public Resources Account, Cigarette and
Tobacco Products Surtax Fund 7,694,000
General Fund 3,143,000
Other Sources 1,959,000
Total $168,308,000
As shown in Table 2, almost half of the department’s funding is
provided by the Fish and Game Preservation Fund. This fund
has 20 subaccounts, called dedicated accounts, into which the
department deposits various revenues that have been targeted for
specific uses by law. Most of the revenue for these dedicated
accounts comes from fees the department charges hunters and
fishers for licenses and permits. Actual revenues for all 20
dedicated accounts totaled approximately $8,500,000 in fiscal
year 1994-95.
8
Scope and Methodology
The Bureau of State Audits was requested by the California
Legislature to conduct an audit covering various aspects
of the department’s operations. Specifically, we reviewed the
department’s allocation of administrative costs; revenues and
expenditures related to dedicated accounts and special funds;
internal audits related to its purchasing and contracting practices;
the department’s staffing levels; and its expenditures related to
the 1991 Dunsmuir spill and current procedures to respond to
similar spills.
Our review of the allocation of administrative costs focused on
whether the department allocates appropriate costs and whether
the allocation is equitable. To understand and evaluate its cost
allocation methodology, we reviewed the department’s
cost allocation plan and interviewed department staff. To
determine whether administrative costs are properly allocated and
properly classified as administrative overhead, we reviewed
selected allocations in fiscal years 1992-93 through 1994-95.
For our review of the department’s revenues and expenditures
related to the dedicated accounts and special funds, we examined
the controls established to ensure that revenues and expenditures
are recorded in the proper accounts. Specifically, we
interviewed department employees to determine what controls
are in place, we tested selected receipts to determine whether
revenues were deposited into the proper fund, and we reviewed
selected expenditures to determine whether funds were used for
the targeted purposes.
We reviewed audits conducted by the department’s internal
auditors to determine whether the department has taken
appropriate corrective action as a result of these audits.
Specifically, we reviewed selected internal audit reports that
identified weaknesses in the department’s purchasing and
contracting practices, ascertained whether the department still has
weaknesses in these areas, and assessed the steps taken to correct
the weaknesses.
We also reviewed department staffing levels for headquarters and
field activities. Specifically, we reviewed the department’s ratio
of headquarters staff to field staff, compared the department’s
executive and administrative staff with similar staff of other state
departments, and reviewed the department’s exempt and Career
Executive Assignment positions.
9
Our review of the department’s expenditures related to the
Dunsmuir spill focused on the reasonableness and
appropriateness of these expenditures. We looked at the total
costs charged to the project to date by categories to determine
significant categories of costs. We selected transactions for
these categories which included labor, legal, and travel costs and
traced them to the supporting documentation. We also tested
contracts for advertising, competitive bidding, justification of
sole source, justification of prices, and proper approval.
Finally, to determine whether the department has adequate
policies and procedures in place to respond to spills similar to the
Dunsmuir spill, we selected a sample of four spills that the
department has responded to since the Dunsmuir incident. We
reviewed the department’s policies and procedures pertaining to
spills and assessed whether the department followed the
appropriate procedures when responding to these four spills.
Chapter 1
The Department’s Cost Allocation
Plan Charges Its Programs
and Funds Inequitably
Chapter Summary
T
he Department of Fish and Game’s (department) cost
allocation process is flawed, and we found that certain
costs were charged as administrative costs that should not
have been. We also found that the department’s direct costs
could be allocated to benefiting programs in a more equitable
manner. In addition, we found that the amount accumulated in
and allocated through the administration program has increased
every
year from fiscal year 1991-92, when administrative costs
totaled $20 million, through fiscal year 1994-95, when these
costs totaled $26 million. Finally, we found that the department
has not had a written cost allocation plan since fiscal year
1992-93. As a result, some of the programs are being forced to
share administrative costs that they do not benefit from. In
10
addition, funds that are targeted for the support of specific
programs have in some cases been used to pay for other
programs. In other cases, programs have not borne all the costs
they should bear.
Although we reviewed the department’s cost allocation
procedures from fiscal year 1992-93 through fiscal year
1994-95, the results we discuss in this chapter pertain primarily
to fiscal year 1994-95. We do not include the detailed results of
our testing for fiscal years 1992-93 and 1993-94 because the
conditions we noted in those years continued to occur in fiscal
year 1994-95.
Basic Principles of Cost Allocation
The State Administrative Manual (SAM) requires state agencies
to use an equitable method to allocate indirect costs to the
Indirect costs must be
programs that benefit from the services. Indirect costs are costs
equitably allocated to the
programs that benefit from that cannot practically be identified as benefiting a specific
the services. program or activity and generally include administrative costs
such as the cost of the executive office, general administration,
budgeting, accounting, personnel, business services, management
analysis, and training.
The SAM requires documentation of a cost allocation
methodology by each state department. To meet this
requirement, state agencies prepare a cost allocation plan (CAP).
Each CAP should contain detailed information regarding the
costs being allocated and the allocation method. In addition, the
SAM requires that costs that can be identified directly to a
program (direct costs) be charged directly to that program and
emphasizes the importance of not charging costs that that
program did not incur.
The department
accumulates indirect costs We evaluated the way the department allocates its costs among
in an administrative cost its many programs. It generally accumulates costs not directly
pool. charged to specific programs in the administrative cost pool.
These costs are then allocated to the programs based on total
program expenditures. Some costs are charged directly to
specific programs.
A well-designed cost accounting system that charges direct and
indirect costs to the appropriate programs in an equitable manner
is especially important for the department because it accounts for
many restricted revenues that can only be spent on specific
programs. If the cost accounting system charges costs to those
11
programs that they should not bear, the restricted revenues will
be diverted from their targeted purposes. In addition, legislation
limits the amount that can be spent on administrative costs for a
number of the programs funded with restricted revenues. For
example, the Fish and Game Code, Section 7861.1, limits the
amount of administrative costs that can be charged to the
Commercial Salmon Stamp Account to 3 percent of annual
expenditures for the program. If costs allocated to this program
exceed the limit, the costs must be passed on to some other
allowable funding source.
The Department Does Not Have
a Current Cost Allocation Plan
The department does not have a written CAP that describes its
current cost allocation methodology, even though the SAM
requires that every state department periodically update such a
plan. The department did have a CAP in place for fiscal years
1991-92 and 1992-93, and the fiscal year 1991-92 CAP provided
a reasonable method to distribute its administrative costs among
its various programs. However, significant changes were made
to the 1992-93 CAP, and subsequently the department stopped
preparing a plan altogether.
12
The essential purpose of a CAP is to distribute administrative
costs to those programs that benefit from these costs. Beginning
with the 1992-93 CAP and continuing through 1994-95, the
department charged costs, such as salaries of certain division
staff, to the administrative cost pool that should have been
charged directly to programs. As a result, some of the programs
Programs share costs for were forced to share costs for which they received no benefit. In
which they receive no addition, various department funds were used to pay costs that
benefit.
did not relate to the targeted purposes for those restricted funds.
For example, the department charged approximately $32,000
more in administrative costs than it should have to the
Augmented Deer Tags Account. The overall impact is that the
hunters who paid the augmented deer tag fees overpaid by
$32,000.
The department told us that it made changes to the 1991-92 cost
allocation methodology because it conflicted with the Indirect
Cost Rate Proposal (ICRP) methodology. In 1991-92, the
department established special “program support” cost accounts
to accumulate costs of certain program units that provided
indirect support to programs but were not considered
administration. These costs were then allocated only to the
benefiting organizational units and not to all department units.
However, this method conflicted with the department’s ICRP
method because the ICRP assumed allocated costs are spread
across the entire organization. To alleviate this conflict, the
types of costs being charged to these “program support” cost
accounts were reexamined and during subsequent years were
charged directly to programs or to administration. While this
would explain a general increase in costs charged to the
administration program, the department has no documentation or
support on file to show that the changes resulted in a more
equitable allocation of costs.
The Department Has Increased
the Costs It Allocates Through
the Administration Program
13
Administration program costs have increased by approximately
$5.8 million since fiscal year 1991-92, whereas total expenses
have increased by approximately $14.8 million over the same
Administration costs to
period. As Figure 2 illustrates, administration program costs
total costs ratio increased
20 percent from 1991 to increased from approximately 13 percent of the total department
1994. costs in fiscal year 1991-92 to approximately 16 percent in fiscal
year 1994-95, a 20 percent increase in the ratio. This increase
over the three years represents a $5.8 million addition to the costs
accumulated in the administration cost pool and allocated to the
programs. Further, costs related to the License and Revenue
Branch (branch) were included in the administration cost pool in
fiscal years 1991-92 through 1993-94 but were not included in
fiscal year 1994-95. Costs for the branch totaled approximately
$3.2 million in 1994-95. If these costs had been included in the
administration cost pool as in prior years, administration program
costs would represent 17 percent of total costs instead of
16 percent. This indicates that the removal of the branch’s costs
from the pool in 1994-95 did not entirely offset other additional
costs that were added to the pool in 1994-95.
Figure 2
Administrative Costs as a Percent
of Total Department Costs
18.00% 16.48% 15.58% 17.51%
16.00%
14.00% 13.27% 13.66%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
FY 91-92 FY 93-94 FY 94-95*
*Adjusted To Show License and Revenue Branch
Costs as Administrative Costs
14
Costs Are Not Allocated Equitably
$2,750,000 was charged We reviewed six of the largest categories of administrative costs
to administrative costs that in fiscal year 1994-95 and identified approximately $3.4 million
should have been charged that should have been charged directly to benefiting programs or
directly to specific allocated in a more equitable manner. Specifically, we found
programs. that the department improperly paid $104,000 for costs of the
Wildlife Conservation Board. We also found $2,750,000 in
costs that should have been charged directly to specific
department programs.
43
Finally, we identified $548,000 in costs that should be allocated
in a more equitable manner. As a result, programs were
inequitably charged costs for which they received no benefit. In
addition, certain restricted funds have incurred costs that they
should not have to absorb.
The Department Pays for Costs
Not Included In Its Budget
The department has been improperly paying for costs related to
the Wildlife Conservation Board (board) at least since fiscal year
1992-93. Specifically, the department has paid approximately
The department
$104,000 per year in rent for board office space. Although the
improperly pays $104,000
board is part of the department, the State’s Annual Budget
per year for Wildlife
provides separately for the support of the board. In addition, no
Conservation Board
provisions in the department’s annual support appropriations
office space.
authorize payment of the board’s rent. As a result, the
department’s dedicated and non-dedicated funds have been used
to support the board and diverted from their intended purpose.
Direct Charges Are Allocated
as Administrative Costs
The department has improperly included direct charges as
administrative costs. For fiscal year 1994-95, we identified
certain costs that should have been charged directly to specific
programs. For example, the salaries of some of the division
chiefs and divisional administrative staff members are charged to
administrative costs. However, because the efforts of these
employees benefit particular division programs, the time they
spend would be more appropriately charged directly to those
programs. The annual charge to administrative costs for these
salaries is approximately $2.2 million.
Similarly, we found that rent for a building used exclusively by
the Inland Fisheries Division is charged to administrative costs.
The annual rent for this building is $119,505. Charging
identifiable program costs as administrative costs violates SAM
Section 9201, which states that all direct costs must be charged to
the programs they benefit. By charging direct costs as
administrative costs, the responsibility and accountability for the
costs are not assigned to the program controlling those costs. In
addition, the costs directly benefiting a specific program are
borne by other programs that did not benefit from these costs.
44
Some Programs Are Charged for
Services They Do Not Use
Because the method used to allocate these costs is inequitable,
some programs pay costs for services they do not use.
Specifically, during our review of administrative costs in fiscal
year 1994-95, we identified a department activity that should be
charged in a more equitable manner. Costs totaling
approximately $548,000 for the Air Services Section, which
provides for the aviation needs of the department, were charged
as administrative costs and allocated to programs without regard
to which programs actually use the section’s services. However,
the department’s operations manual states that aircraft use will be
charged to the appropriate program or activity. In fact, in fiscal
year 1992-93, the department charged the costs for this
section directly to the programs using its services.
According to the Fiscal and Administrative Services Branch
Chief, the department began charging the costs for the Air
Services Section to the administrative cost pool because of the
difficulty in directly charging certain flight support activities,
such as repairs and maintenance. However, we believe costs for
flight support activities could be pooled and allocated to those
programs that use air services based on flight hours or some other
equitable base. In this way, all the costs related to the provision
of air services would be borne by those programs using the
service. With the current practice, the department ignores its
stated policy and unfairly charges other programs and funding
sources.
Restricted Funds Do Not Pay
Appropriate Share of Certain Costs
The costs of the License and Revenue Branch are not allocated in
an equitable manner. Because the branch provides licensure and
fee collection services for many departmental operations, its costs
should be allocated to all funds for which it collects revenues.
However, although 10 percent of the branch’s collections are
deposited into dedicated funds, these funds do not pay their share
of the branch’s costs. The branch is responsible for developing
and selling fishing and hunting tags and permits and collecting
the related revenues. During fiscal year 1994-95, the branch
collected more than $60 million in revenue, approximately
$6 million of which was restricted revenues. Restricted
revenues are deposited into special
45
(dedicated) accounts in the Fish and Game Preservation Fund,
while unrestricted revenues are deposited into the general,
unrestricted portion of the fund.
The department charges all the branch’s costs to the general
portion of the Fish and Game Preservation Fund, and restricted
funds pay nothing. As a result, even though the branch collects
and processes revenues in excess of $6 million for the dedicated
programs, none of its costs are being charged to these programs.
The department is evaluating alternatives to the current system
for allocating the branch’s costs. Specifically, the chief of the
branch recently prepared a draft proposal recommending changes
in the way the branch’s costs are allocated. According to the
proposal, the branch would charge some items, such as printing,
postage, and some staff work, directly. Other costs that are
generally administrative in nature, such as those for cashiering
and warehouse staff, would be charged as administrative costs.
The proposal concludes that further study of the branch’s
expenditures is required to determine which costs can be charged
directly and which should be distributed. We believe that the
recommendations expressed in the proposal are sound and should
be implemented.
Conclusion
Costs accumulated in and allocated through the administration
program are on the rise. In addition, the department’s cost
allocation methodology does not provide for an equitable
allocation of costs to its programs and funding sources. As a
result, the department cannot always be assured that it is
spending funds for their targeted purposes.
Recommendations
The department should carefully review its activities to better
differentiate its direct costs from its indirect costs. After all
costs have been categorized, the department should make
appropriate changes to its cost allocation plan to ensure that all
costs are allocated equitably. Finally, the department should
document its cost allocation methodology, including any changes
as they are made.
46
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47
Chapter 2
Charges to Restricted Funds
Are Not Always Appropriate
Chapter Summary
M
uch of the funding received by the Department of Fish
and Game (department) is restricted by law. For this
reason, the department has established a system of
dedicated accounts designed to ensure that the expenditures from
these accounts are dedicated to those activities specified in state
law. In spite of this, the department has made expenditures from
its dedicated accounts for purposes other than those specified in
state law.
Background
The department receives funding for its programs from various
sources. Approximately half of its funding is from the Fish and
Game Preservation Fund. This fund is supported by the sale of
hunting and fishing licenses, commercial fishing permit fees, and
environmental review fees paid by development project
applicants.
Most of these revenues are used for the general support of
hunting and fishing programs and other fish and wildlife
protection, management, and enforcement activities. However,
the revenues from the sale of special stamps and permits, such as
the salmon stamp, striped bass stamp, and deer permit tags, are
restricted by law for specific purposes, such as the preservation
of salmon and bass fisheries or the preservation of California’s
deer habitats. Many of these revenues are deposited into
dedicated accounts in the Fish and Game Preservation Fund. For
example, Fish and Game Code Sections 7860 through
7862 authorize the department to collect an $85 fee when it
issues a commercial fishing salmon stamp. After deducting the
administrative fee, the department must deposit the money into
the Commercial Salmon Stamp Account, which is a dedicated
account in the Fish and Game Preservation Fund. The law
48
requires the department to spend $30 for each stamp issued to
raise chinook salmon to a yearling size. The remaining revenue
must be spent on programs to restore, enhance, and protect
salmon streams. In fiscal year 1994-95, actual revenues
deposited into the Fish and Game Preservation Fund amounted to
nearly $75 million, approximately $8.5 million of which went
into 20 dedicated accounts.
In addition to the funding it receives from the Fish and Game
Preservation Fund, the department is supported by other special
funding sources, such as the Oil Spill Prevention and
Administration Fund, which consists of fees assessed on barrels
of crude oil received at or piped from marine terminals. The use
of revenues from these special funds is also restricted to specific
purposes.
Because the use of Because the use of these dedicated accounts and special funds is
dedicated accounts is
restricted by law for specific purposes, matching of the actual
restricted, matching actual
costs with the revenues associated with each program is
costs with related
important. Management needs accurate information regarding
revenues
actual costs to evaluate whether the funds were spent as required
is important.
and to determine whether the revenues generated are sufficient to
cover the costs of the related programs.
We tested the revenues and expenditures of the following
dedicated accounts and special funds for fiscal year 1994-95 to
determine whether funds were used in conformance with state
law:
Striped Bass Stamp Account;
Salmon Stamp Account;
Augmented Salmon Stamp Account;
Augmented Deer Tags Account;
Streambed Alteration Permits Account;
Endangered and Rare Fish, Wildlife, and Plant Species
Conservation and Enhancement Account;
Oil Spill Prevention and Administration Fund; and
Oil Spill Response Trust Fund.
49
50
In the discussion that follows, we do not make reference to each
of the accounts listed above but provide selected examples
illustrating the flaws in the department’s management of its
dedicated accounts. To some extent, however, each one of these
accounts has incurred costs that are unrelated to the activities to
which its funds are intended to be dedicated.
Charges to Restricted Funds
Not Based on Actual Costs
Charges to dedicated accounts do not always reflect the actual
costs of department activities. For example, the department
deposits the actual amount of permit fees collected into the
Streambed Alteration Permits Account. However, labor costs
Full-time salaries for 20
charged to this account are based on estimates from a 1991
wardens are charged to
department task force report. That report concluded that the
the Lake and Streambed
level of effort needed to carry out the Lake and Streambed
Alteration Agreement
Program even though Alteration Agreement Program activities was equivalent to
these wardens do not approximately 20 full-time wardens. The department has
devote full charged 100 percent of the labor costs it incurs for 20 specified
time to the program. wardens to this account instead of the actual time each warden
devotes to the program. Labor costs charged to the Streambed
Alteration Permits Account represent approximately 79 percent
of reported account expenditures. However, these labor charges
are not based on the actual effort required to administer program
activities. In addition, the vehicle fuel costs charged to this
account are for specific vehicles that, in some cases, are assigned
to wardens other than those whose labor costs are charged to the
account.
Because the charges to the Streambed Alteration Permits Account
do not reflect the actual costs of the activities associated with
issuing streambed permits, the department cannot accurately
assess whether the fees collected are sufficient to cover the costs
associated with this activity. When the department cannot link
its costs to the fees that it charges for particular activities, it runs
the risk that those paying the fees may challenge the
reasonableness of the fees. Recently, for example, the California
Superior Court ruled that a fee imposed by the department related
to California Environmental Quality Act projects was
unconstitutional because the department could not prove that the
fee charged bore a reasonable relation to its costs.
51
Dedicated Funds Improperly
Loaned to Another Fund
In fiscal year 1988-89, the department made a loan of
$1.5 million to the Native Species Conservation and
Enhancement Account using funds from 11 of the 20 dedicated
accounts in the Fish and Game Preservation Fund as shown in
Table 3. We believe this loan should not have been made from
dedicated accounts because their use is restricted by law to
purposes specifically related to the source of the revenues
collected, and the legislation authorizing the loan did not
specifically allow the use of dedicated funds. The loan was
apparently made from the dedicated portion of the Fish and Game
Preservation Fund because the non-dedicated portion had limited
funds. Over the ensuing three fiscal years, the department has
paid the dedicated accounts back $1.4 million of the $1.5 million
loaned to the Native Species Conservation and Enhancement
Account according to information in the governor’s budget.
However, the loan was not paid back from the Native Species
Conservation and Enhancement Account. Instead, the
department paid back the dedicated accounts by simply
transferring funds from the non-dedicated portion of the Fish and
Game Preservation Fund. Therefore, the loan to the Native
Species Conservation and Enhancement Account is still
outstanding.
Table 3
Loan to the Native Species Conservation
and Enhancement Account
(In Thousands of Dollars)
Original
Loan Loan
Dedicated Account Amount Repayments Difference
Augmented Salmon Stamp $ 569 $ 369 $(200)
Striped Bass Stamp 416 515 99
Salmon Stamp 341 341
Sea Urchin 37 37
State Duck Stamp Account 29 29
Penalty Assessments Training 20 25 5
Herring Tax 17 21 4
Aquaculture Program 12 15 3
Big Horn Sheep Permit 12 15 3
Life-Time Licenses Trust 9 11 2
Ocean Fishery Research
and Hatchery 3 4 1
Total $1,465 $1,382 $ (83)
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We have been unable to determine exactly when the loans were
repaid or the exact amounts because, according to the
department’s internal auditors, the accounting records have been
destroyed. However, the governor’s budget indicates that the
repayments occurred during fiscal years 1990-91 and 1991-92.
In addition, as shown in Table 3, repayment information reflected
in the governor’s budget did not always agree with the amount
that each account loaned. For example, the Striped Bass Stamp
Account was overpaid by approximately $99,000, whereas the
Augmented Salmon Stamp Account is still owed approximately
$200,000.
The amount owed to the non-dedicated portion of the Fish and
Game Preservation Fund was approximately $1.35 million as of
Because anticipated
June 30, 1995. Because the revenues from the program that
revenues have not
received the loan have not materialized as projected, it is unclear
materialized, it is unclear
how the loan will be repaid. According to the chief of the Fiscal
how the loan will be
and Administrative Services Branch, the department will ask the
repaid.
Legislature for relief of the debt to the non-dedicated portion of
the Fish and Game Preservation Fund since it believes that
program revenue will not be sufficient to repay the loan.
Lack of Information Precludes
Managers From Monitoring Charges
to Dedicated Funds
Because the department has not developed meaningful and
accurate accounting information, managers responsible for
programs funded with dedicated accounts and special funds do
not always have sufficient information to manage their funds
properly. Depending on the nature of the program, a specific
department activity may be supported by one or more funds,
including dedicated accounts within the Fish and Game
Preservation Fund. To determine whether restricted funds have
been spent in accordance with state law, managers need to know
what funds support each of their activities. However, based on
interviews with selected division chiefs, we found that these
managers monitor charges to each of the programs in their
divisions but they do not always monitor the use of funds that pay
for those programs. The reason indicated by most of the
managers was that the expenditure information they receive from
the department’s accounting office is either inaccurate or does
not indicate which fund pays for each program. Accounting
staff explained that the information provided to managers can be
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used to determine the funds used for their programs, but the
managers do not use the accounting information to the fullest
extent possible. When managers responsible for spending
dedicated account and special funds cannot monitor accounting
charges to their funds, the department cannot ensure that it is
spending funds for their targeted purposes.
Corrective Action
The department has taken steps to improve its management of
dedicated account funds. It has created a “fund manager”
position within the Administration Division to help the division
chiefs better manage the dedicated accounts under their
responsibility. This fund manager has been assigned various
duties related to dedicated accounts. These duties include the
following:
Establishing an improved system for accounting and tracking
dedicated account revenues and expenditures;
Monitoring dedicated account revenues and expenditures and
assisting in revenue forecasting;
Serving as a liaison between accounting and program
personnel;
Monitoring reporting requirements to ensure that reports to
the Legislature are made on a timely basis; and
Preparing a section on the management of dedicated funds for
the policy and procedure manual.
Although the department has taken some steps to ensure that it
spends restricted funds for their targeted purposes, more action is
needed.
Conclusion
By using dedicated funds improperly, the department violates the
intent of various laws that authorize the collection of fees for
specific purposes. In addition, the department does not meet its
responsibility to properly control and manage the funds it has
been authorized to spend.
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55
Recommendations
To better manage its dedicated accounts, we recommend that the
department do the following:
Ensure that the new system for tracking dedicated account
revenues and expenditures clearly shows that restricted funds
are spent in accordance with laws regarding the intended use
of those funds;
Implement a time reporting system so that it can properly
charge personnel costs to its restricted funds based on the level
of effort required to carry out the related program activities;
Ensure that the accounting information it provides to program
staff meets their needs; and
Verify that it has the proper legal authority when it makes
loans using restricted revenues.
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57
Chapter 3
The Department’s Internal Audit Reports
Indicate Continuing Purchasing
and Contracting Weaknesses
Chapter Summary
T
he Department of Fish and Game’s (department) internal
auditors have identified purchasing and contracting
problems. The continuation of these problems indicates
that underlying weaknesses have not been addressed sufficiently
by the department.
In October 1993, the department’s internal auditors reported
several purchasing and contracting problems in the Region 5
office, located in Long Beach. These problems included
improper procurement of goods and services, improper use of the
revolving fund, and failure to document the receipt and
acceptance of goods or services.
Internal auditors conducted subsequent audits of the purchasing
practices at headquarters and the other four regional offices.
They also conducted audits of the department’s consultant
services contracts and the Adopt-A-Lake Program. Each of
these audits identified procurement problems, indicating that
purchasing and contracting problems are not restricted to the
Region 5 office.
Our audit of the department’s expenditures related to the
Dunsmuir spill and the dedicated accounts and special funds
identified problems similar to those found by the internal
auditors. In our view, these procurement problems continue
because the department did not always implement the internal
auditors’ recommendations or the internal audit recommendations
did not always adequately address the problems.
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The Department Has Acted To Address
the Irregularities Identified
at the Region 5 Office
One of the purposes of our audit was to determine if the
department took corrective action to address irregularities
identified in the Region 5 office. The internal auditors issued a
report in October 1993 that identified a host of problems with the
management of the region. These problems included improperly
procuring personal services, circumventing the State’s purchasing
and contracting procedures, not having purchases approved
before goods or services were obtained, not documenting the
receipt and acceptance of goods or services, and improperly using
the revolving fund to circumvent the State’s purchasing process.
The department has taken several actions to address the
irregularities identified in the Region 5 office. These actions
include the following:
Taking disciplinary action against five Region 5 employees
involved in improper procurement practices;
Establishing a task force to improve the department’s
procurement practices; and
Issuing memoranda to clarify procedures for procuring goods
and services.
In addition, the department’s internal auditors conducted a
follow-up audit of Region 5 to determine the extent of the
corrective action taken. In a September 1994 draft of the
A follow-up audit at
follow-up report, the internal auditors criticized many of the same
Region 5 found that many
procurement practices that had been criticized in the October
of the same procurement
1993 report. The region was still not obtaining contracts as it
problems still exist.
should, was not preapproving purchases, and was still splitting
purchases to circumvent procurement rules. However, the
follow-up report also noted the region’s improvement in areas
such as procurement of personal services and use of the revolving
fund.
Procurement Problems Exist
Throughout the Department
The identification of irregularities at the department’s Region 5
office raised concerns about whether headquarters and the other
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four regional offices were properly managing the procurement of
goods and services. After examining the Region 5 office, the
internal auditors conducted audits of purchasing and contracting
practices at headquarters and the other four regional offices.
Audits were also conducted of the department’s consultant
services contracts and the Adopt-A-Lake Program. Although
final audit reports have not been issued on the other four regional
offices, the consultant services contracts, and the Adopt-A-Lake
Program, internal audits
consistently identified problems with the procurement of
goods and services similar to those found in Region 5. These
purchasing-and-payment-related problems appear to be
widespread, as illustrated in Table 4.
Table 4
Department of Fish and Game
Summary of Purchasing Audits
by Internal Auditors
Follow-up
Internal Audits: Region 5 Headquarters of Region 5 Region 1* Region 2* Region 3* Region 4*
Deficiencies Noted in the:
Initiation of the procurement NR NR NR x x x
Procurement of goods x x x x x x x
Procurement of services x x x x x x
Receipt of goods and services x x x x x x
Payment of invoices x x x x
Notes:
“x” denotes that that the weakness was identified by the audit work.
“NR” denotes that this process was not reviewed.
* Internal audit reports not yet prepared. Information based on review of internal audit workpaper summaries.
A blank space denotes that the weakness was not identified in the audit work.
Specifically, the internal auditors noted purchasing weaknesses
related to the preparation and approval of purchase orders before
the goods have been received and the preparation of reports to
document the receipt of goods and services.
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Preparation and approval of purchase orders before goods or
services are obtained is important for several reasons. When
purchase orders are not prepared before goods or services are
procured, opportunities for realizing economic savings and
efficiencies from combining two or more purchases are missed.
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Also, when purchase orders are prepared and approved after the
fact, the department cannot ensure that the most competitive price
available was obtained for the goods and services purchased.
Similarly, employees should prepare and distribute documented
evidence that goods or services have been received and accepted.
The State Administrative Manual (SAM),
Section 8422.20, requires that employees receiving goods or
services prepare “stock received” reports to acknowledge and
document that the goods or services ordered have been received
and accepted. When employees do not prepare and distribute
these reports, purchasing staff members do not know the status of
open purchase orders, and accounting staff do not know whether
vendor invoices should be paid. In fact, in the May 1994
headquarters purchasing audit report, the internal auditors
reported several instances when accounting staff paid vendor
invoices without evidence that goods or services were actually
received.
The internal auditors also noted several problems related to the
department’s payment process, including:
Not always taking advantage of vendor discounts;
Incurring excessive late payment penalties; and
Making duplicate payments to vendors.
Under the department’s current procedures, field employees and
the regional offices receive the original copy of vendor invoices.
These invoices are processed by the offices’ “payment desk”
function before being sent to the department’s accounting office
The current process for
in Sacramento for payment. The “payment desk” function
handling vendor invoices
delays payment and limits matches the vendor invoices with purchase orders and any “stock
ability to take vendor received” reports. The matched documents are then assembled
discounts for prompt into a payment package and sent to the accounting office for
payment. payment. Handling vendor invoices in this manner creates a
delay in the processing of vendor payments that has prevented the
department from taking advantage of vendor discounts, led to late
vendor payment penalties, and, on occasion, resulted in duplicate
payments to vendors.
Finally, the internal auditors found problems with the
department’s contracting practices, including obtaining services
before a contract is approved and inappropriately using the
sole-source justification. They also identified contracting
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problems in the Adopt-A-Lake Program. This program allows
the department to facilitate volunteer efforts toward rehabilitating
and improving fisheries, fish habitats, and resources. In its
efforts to accomplish these goals, the department assisted a
contractor in preparing proposals for contracts that it
subsequently awarded to the contractor, inadequately monitored
the contractor’s performance, and paid invoices that were not
justified by the contractor’s records.
We believe that many of the department’s current purchasing and
contracting problems continue because the department has not
always implemented the audit recommendations or the
recommendations did not always adequately address the
problems.
Internal Audit Recommendations Did
Not Always Adequately Address
the Department’s Purchasing
and Payment Problems
While the internal audits identified and reported many purchasing
and payment problems at the Region 5 office and at headquarters,
Internal auditor the audit recommendations did not always adequately address the
recommendations should issues. For example, the Region 5 audit report emphasized the
have: need for employees to obtain prior approval before making
purchases and recommended that regional administrators be
limited purchase order
responsible for approving regional office purchase orders and that
authority; and
field supervisors be responsible for approving field office
purchase orders. Although the recommendation was consistent
made headquarters
with established policies and procedures, the follow-up audit at
accounting office
Region 5 indicated that these problems still exist and, therefore,
responsible for
more action is needed. A better solution would be to provide
payments.
training to employees responsible for approving purchases or to
consider limiting the authority and responsibility for preparing
and approving purchase orders to fewer employees.
Regarding the department not taking advantage of vendor
discounts, incurring excessive late payment penalties, and
making duplicate payments, the headquarters purchasing audit
recommended that the regions’ administrative staff ensure the
prompt processing of vendor invoices, and the Region 5 audit
recommended that only original vendor invoices be submitted to
the headquarters accounting office to prevent duplicate payments.
However, we believe that the responsibility for the proper
processing of payments is more appropriately placed with the
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headquarters accounting office. A better arrangement would be
to require vendors to send original invoices directly to the
accounting office in Sacramento rather than to field or regional
offices. This change would eliminate the need for the “payment
desk” function in outlying offices to handle invoices. Because
invoices would be processed and paid more promptly, the
accounting office could take advantage of vendor discounts and
avoid late vendor payment penalties. Also, the chances for
making duplicate payments to vendors would be reduced because
extra copies of the vendor invoice would not exist within the
department.
The Department’s “One-Time Services”
Authorizations Are Misused
and Not Monitored
A problem that was repeatedly identified in the department’s
audits was the misuse of the “one-time services” authorization.
This authorization is used to procure services in place of
obtaining a formal contract and does not require Department of
General Services approval. This method of authorization is
intended where the need for services is not anticipated, cannot be
postponed, and is needed immediately for health and safety
reasons, to prevent loss of state assets, or to avoid significantly
higher costs.
In the past, the department did not always enter into written
contracts with vendors. Rather, it simply paid the vendor
invoices by indicating approval and “one-time services, no
contract issued” on the invoice. The department still allows the
use of “one-time services” authorizations but now requires the
use of a “one-time services” authorization form. The use of the
“one-time services” authorization was formalized by the
department’s recently developed policy and procedure on the
proper use of the new authorization form. However, this form is
still not a contract because terms of the services to be provided
are not disclosed, the vendor is not required to sign the form
agreeing to provide the services, and no control number is
required to identify and track the use of the form.
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Based on the widespread use of this method of authorization
throughout the department, it obviously is not being restricted to
its intended purposes. The internal auditors reported many
Widespread use of
misuses of the “one-time services” authorization, first in
”one-time services”
Region 5 and later in the headquarters purchasing audit. That
indicates they are not
later report recommended periodic review of these authorizations
being restricted to their
to determine the propriety of their use and whether services
intended
should be consolidated into contracts. However, the department
purpose.
did not implement the recommendation and, in fact, recent audits
of two of the other four regional offices and our audit have
identified continuing misuse of these authorizations.
Despite Internal Audit Recommendations,
Problems Still Exist
Our testing of the department’s expenditures found problems
similar to those identified by the internal auditors. We found
misuse of the “one-time services” authorizations and problems
with contracting practices.
Our testing of the Dunsmuir spill and various restricted-fund
Six of 22 “one-time expenditures identified the widespread use of “one-time
services” authorizations services” authorizations. Twenty-two of the 60 transactions we
were not appropriate.
tested were “one-time services” authorizations. Six of these 22
occurred in the 1994-95 fiscal year and were not appropriate.
For example, one of the divisions misused the authorization when
hiring temporary support staff services. Specifically, the Oil
Spill Prevention and Response Division, responsible for
preventing and responding to marine oil spills, was in need of
additional clerical help because of the workload created by a
large number of spills. To satisfy this need, the office hired
temporary clerical services from two temporary help agencies.
The services were for the same divisional unit and covered a
seven-month period. The division spent $19,000 for services
from one temporary help agency and $32,000 for services from
the other agency. These services were obtained by processing
123 “one-time services” authorization forms rather than a
contract, as required by SAM Section 1215.
In our view, the division should have anticipated the need to enter
into a contract with the temporary help agencies, especially since
the services spanned a seven-month period. Because the
“one-time services” authorizations require minimal effort to
procure services, the division used the authorizations to
circumvent the normal contracting process. In fact, the same
staff member was able to request the services, authorize
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procurement, and approve payment. As a result, a written
contract was not in place as required, and the department did not
ensure that the State was legally protected from unsatisfactory
services.
Further, the department’s award and management of contracts is
not always effective. Specifically, the reasonableness of
contract prices or rates is not always justified. As part of the
contracting process, the SAM requires departments to justify the
reasonableness of the price of contracted services. This
requirement applies even if the contract is exempt from bidding
or if fewer than three competitive bids or proposals have been
received. SAM Section 1220.1.a(2) requires an explanation
sufficient to afford a basis for approval as to the reasonableness
of the cost or price of the services. In addition, SAM
Section 1236.2.a requires the justification of the appropriateness
or reasonableness of the costs for sole-source contracts, exempt
contracts, or contracts prepared when fewer than three
competitive bids or proposals are received.
In our review of 43 sole-source contracts, 13 did not provide
sufficient justification of the reasonableness of the contract price
or rates. Ten contracts, totaling $2,785,478 for damage
assessment and scientific services, were executed without any
The department did not
cost justification. Two contracts, totaling $385,000 for attorney
provide sufficient
services in relation to the Dunsmuir spill, offered no justification
justification for the costs of
of the reasonableness of the hourly rates. Finally, one
13 out of 43 sole-source
sole-source contract for striped bass rearing services totaling
contracts reviewed.
$230,998 simply stated that the costs were very much in accord
with the costs of an earlier contract; however, no analysis was
documented to justify the costs of the current contract. When
the department does not sufficiently justify the reasonableness of
the cost of its contracts, the State cannot be assured that services
are being obtained in the most economical manner possible.
The Department Has Taken
Some Corrective Action
The department has taken steps to resolve its problems regarding
the procurement of goods and services. Specifically, it has
revamped its administrative team. This new team has
developed, implemented, and issued new written purchasing
guidelines and procedures for procuring goods and services. In
addition, management bulletins have been issued and a new
contract processing and management manual will soon be issued
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to clarify acceptable contract processing and management
practices.
These written procedures will help to clarify the requirements
and appropriate procedures to be followed when goods or
services are procured through purchase orders or contracts. The
new purchasing guide was issued in June 1995 and describes the
various methods for procuring goods and services and the
required forms and procedures for employees to use and follow.
Various departmental bulletins have been issued clarifying the
requirements and responsibilities of contract managers. Finally,
the contract processing and management manual, which is in the
final stages of being issued, will provide department employees
with written standards for acceptable contract processing and
contract management practices.
Conclusion
Several audits of the department’s purchasing and contracting
practices have identified widespread problems in its procurement
of goods and services. The department has taken some steps to
resolve these problems, including issuing written guidelines and
procedures, but we believe that more improvement is needed.
Recommendations
The department should review its purchasing, payment, and
contracting processes and identify responsibilities that should be
assigned to appropriately trained employees. The department
should keep in mind the primary functions of the employees and
the most effective and efficient process to accomplish these
responsibilities.
The department should also develop and implement processes
that ensure purchasing and contracting laws and regulations are
followed. Department supervisors should be made responsible
and held accountable for obtaining goods and services through
these administrative processes.
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Chapter 4
The Number of Department Headquarters
Positions Has Increased
Chapter Summary
O
ur review of the Department of Fish and Game’s
(department) staffing indicates a pattern of an increasing
number of staff members at department headquarters.
Our analysis shows that growth in headquarters positions has
outpaced growth in field positions by 2.5 to one over the last
ten years. However, we acknowledge that the department’s data
used in our analysis is less than perfect. Also, the ratio of
executive and administrative staff relative to total department
staff is twice as high as that of the Department of Forestry and
Fire Protection (DFFP) and one and one-quarter times that of the
Department of Parks and Recreation (DPR). However, the
comparison of one department with another must be viewed with
caution because of various differences between departments.
Finally, although the department’s creation of exempt positions is
not always proper, the placement of Career Executive
Assignments (CEA) within the department is appropriate, with
one exception.
Ten-Year Trend Indicates the
Number of Headquarters Staff
Has Grown Faster Than Field Staff
Our analysis of the position counts in the Salaries and Wages
Supplement (SWS) to the governor’s budget shows that the
department’s headquarters staff increased faster than the field
staff from fiscal year 1983-84 to fiscal year 1993-94. For
purposes of our analysis, we defined headquarters staff as staff of
the Fish and Game Commission, the department’s executive
office, and the various administration branches in Sacramento,
such as audits, personnel programs, and technical services. We
also included all staff reporting to a Sacramento division office
plus region administrative staff reporting to a regional office.
We found that the total staff, excluding temporary help, increased
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by 363 positions (from 1,251 to 1,614), representing a 29 percent
net increase in total positions. Headquarters accounted for
259 (71 percent) of the positions and field staff accounted for the
remaining 104 (29 percent) positions. In other words,
headquarters staff increased faster than field staff by a ratio of 2.5
to one. The 1983-84 fiscal year headquarters staff
(423 positions) represented 34 percent of the 1,251 total
staff positions, whereas the 1993-94 fiscal year headquarters staff
(682 positions) represented 42 percent of the 1,614 total
staff positions.
The increases in headquarters staff positions can be attributed to
many of the department’s divisions. Table 5 shows a breakdown
of the net increases in headquarters staff by division.
Table 5
Net Increase in the Number
of Headquarters Positions
Fiscal Fiscal
Year Year Net Percent
Organizational Unit 1983-84 1993-94 Increase Increase
Executive and Administration 146 229 83 57%
Oil Spill Prevention and
Response 0 52 52 100
Inland Fisheries 65 101 36 55
Environmental Services 43 74 31 72
Wildlife Protection 13 31 18 138
Natural Heritage 15 27 12 80
Marine Resources 30 41 11 37
Other divisions and regions 111 127 16 14
Total 423 682 259 61%
We discussed this information with the deputy directors and
several division chiefs to obtain their perspective on our analysis
and explanations for any major changes in the staffing levels
during the ten-year period. Several division chiefs offered
explanations for the increases in headquarters staff in their
particular divisions.
70
The Deputy Director of Administration explained that increases
in the executive and administration division have closely
paralleled increases in total department staff for the ten-year
period. One would expect an increase in the department’s
executive and administration staff as the field staff increases
because the growth in field staff would create a larger workload
for accounting, budgeting, business services, and personnel staff
that comprise the executive and administration staff. However,
the 146 executive and administration positions represented
approximately 12 percent of the 1,251 total department
The increase in executive employees in fiscal year 1983-84, whereas the 229 executive and
and administration administration positions represented approximately 14 percent of
positions represents a the 1,614 total department employees in fiscal year 1993-94.
sizable portion of total The 83-position increase in the executive office and
department net administration staff represents a sizable portion (23 percent) of
increase.
the total department net increase of 363 positions over the
ten-year period. Further analysis of the data identified the
following significant position count changes between fiscal year
1983-84 and 1993-94 within the executive office and
administration branches:
The Executive Office increased by approximately
4 positions.
The License and Revenue Branch increased by
approximately 19 positions.
The Fiscal, Budgets, and Contracts Branches increased by
approximately 15 positions.
The Personnel Programs Branch increased by
approximately 9 positions.
The Legal and Legislative units increased by
approximately 8 positions.
The establishment of the Oil Spill Prevention and Response
(OSPR) Division, as enacted by Chapter 1248, Statutes of 1990,
created 52 headquarters positions between fiscal years 1991-92
and 1993-94. The OSPR is a new division intended to prevent
and respond to oil spills affecting the marine waters of the State.
Our review of the Inland Fisheries Division revealed a net
increase of 36 headquarters positions between fiscal years
1983-84 and 1993-94. According to its division chief, a major
71
contributing factor to the increase in headquarters staff was the
addition of the Fisheries Restoration and Enhancement unit,
created under Chapter 1545, Statutes of 1988.
The Environmental Services Division contributed a net increase
of 31 headquarters staff positions between fiscal year 1983-84
and 1993-94. The division chief informed us that the increase in
headquarters positions was partly attributable to four laboratories
that report to the division and the new Natural Communities
Conservation Plan (NCCP) pilot project. According to the
division chief, staff from the pilot project currently report directly
to the division, but will be reassigned to the region if the program
is approved as a permanent activity.
We acknowledge that the Salaries and Wages Supplement (SWS)
data used for our analysis of the department is not entirely
accurate because, according to department officials, some of
the positions reflected as headquarters positions are actually
field positions. The positions are counted this way because these
field staff report to a headquarters division rather than to a
regional office. For example, during our interviews with the
Headquarter positions
division chiefs, all stated that some positions are displayed as
may be overstated
headquarters positions in the SWS but actually are field staff
because some are field
positions. One division chief stated that for the 1994-95 fiscal
staff reporting to
year, 34 of the 82 positions displayed in the SWS as headquarters
headquarters rather than
actually operate as Inland Fisheries Division field positions.
to
Also, the Division Chief of the Environmental Services Division
a region.
stated that the laboratory and NCCP project positions are
displayed in the SWS as headquarters positions but actually
operate as field positions. The headquarters divisions feel that
they maintain better control over the activities of these field staff
by having them report directly to them. However, if this is the
case, the department should correctly categorize these positions
in the SWS.
In spite of such flaws, the department’s SWS data was the best
available to us to perform a trend analysis of the department’s
headquarters to field staff ratio over the ten-year period. We
relied on the SWS data to distinguish headquarters from field
positions, but it was not feasible to undertake a
position-by-position analysis over the ten-year period.
Therefore, our analysis should be viewed simply as an overall
indicator of the trend in the department’s headquarters to field
staffing ratios.
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The Department’s Executive and Administration
Staff Is Proportionately Higher Than
That of Two Comparable Departments
We also compared the executive and administration staffing
levels of the department to that of comparable departments. In
considering which other departments were comparable, we asked
department staff for their opinion and looked at the
organizational structure and the missions of other departments.
The Assistant Deputy Director of Administration directed us to
Resource Agency departments that had headquarters and field
operations responsible for preserving the environment and its
natural resources. Therefore, we used the DFFP and the DPR
for comparison.
To conduct our analysis, we used the data in the SWS and
classified these positions as executive and administrative based
on the branches and divisions reported in the SWS.
The positions we classified were the “authorized”
permanent positions for the 1994-95 fiscal year. Some branches
were not listed consistently under the same executive or
administrative category in all three departments. Therefore,
branches with similar functions were grouped together to make
consistent comparisons. In addition, we did not include
temporary help positions in our analysis.
Our analysis determined that the department’s executive and
administrative positions represented 14.5 percent of total staff,
whereas the DFFP and the DPR were approximately 7.5 percent
and 11.7 percent, respectively. This indicates that the
department has an almost double and one and
one-quarter higher percentage of executive and administrative
positions to total department positions when compared to the
DFFP and the DPR, respectively.
Figure 3
Percentage of Executive and Administrative
Positions to Total Staff
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16.00%
14.5%
14.00%
11.7%
12.00%
10.00%
7.5%
8.00%
6.00%
4.00%
2.00%
0.00%
Department DFFP DPR
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However, a comparison of one department with another must be
viewed with caution. Other factors could cause significant
differences in the size and proportion of each department’s
executive and administrative ranks. For example, legislative
mandates, the level of decentralization, the amount of equipment
used and maintained, and the number of professional staff could
cause significant differences between how departments operate
and are organized. We did not attempt to assess the impact of
these other factors.
The Department Has
Mishandled Two Exempt Positions
Our review of the department’s exempt from civil service
(exempt) positions revealed that it has mishandled the creation of
two exempt positions. Exempt positions are exempt from civil
service requirements, and are administered by the Department of
Personnel Administration (DPA). The department has 11
exempt positions authorized by statute. Four of the exempt
positions are authorized by Fish and Game Code Sections 700
and 701.3, 2 are authorized by Government Code Sections 8670.4
and 8670.6, and 5 are former civil service positions that were
designated as exempt by the governor as allowed by Government
Code Section 12010.6.
Of these 11 exempt positions, one was inappropriately converted
from civil service to exempt, and another is used even though the
position was deleted in the budget process for fiscal year
1992-93. Government Code Section 12010.6 increases the
governor’s managerial flexibility without increasing costs or
One exempt position was hiring additional staff by authorizing the governor to designate
inappropriately converted certain civil service positions as exempts. Only vacant civil
from civil service and
service positions designated as “managerial” can be designated
another is used even
exempt. The department inappropriately converted a Fish and
though it has been
Wildlife Manager (presently a Supervising Biologist) civil
eliminated from
service position that was designated “supervisory” by the DPA.
the budget.
Memoranda requesting the conversion indicate that the
department misrepresented the civil service position as a
“management” position to the DPA and the Governor’s Office.
In our discussions with the DPA regarding the conversion of
this position, it agreed that the conversion of this civil service
position was inappropriate.
Another exempt position was deleted in the 1992-93 budget act
but still exists within the department. The Final Change Book
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documents the final changes to the governor’s proposed budget.
The 1992-93 Final Change Book showed that the position and
budget authority for the Assistant Director of External Affairs
position had been deleted from the budget act. However, in
October 1991, the department deleted the exempt position from
the State’s payroll roster and reestablished it as a civil service
“supervisory” position. Effective July 1992, the DPA approved
the department’s request to change the title of the exempt
Assistant Director of External Affairs to General Counsel. In
February 1993, the department deleted the civil service
“supervisory” position from the state payroll roster and
reestablished the exempt position under the new General Counsel
title.
According to the DPA, the department should have obtained
approval from the DPA and the Governor’s Office when it
converted the exempt position back to civil service. However,
because the DPA is not typically made aware of positions deleted
in the budget process, the department was able to convert this
position without the DPA’s knowledge or approval. The DPA
stated that the current impact of the actions taken by the
department could not be determined; however, the DPA is
proposing to put into writing its currently unwritten policy
regarding returning an exempt position back to civil service.
In our view, the actions of the department to retain an exempt
position that had been deleted in the 1992-93 fiscal year budget
circumvented the intent of the Legislature. Also, the department
inappropriately reclassified the position from exempt to civil
service, then later inappropriately reclassified it back to exempt
without the DPA’s knowledge.
The Department Misused a
Temporary Help CEA Position
To assess the reasonableness of the department’s CEAs, we used
the DPA Guidelines and Criteria to evaluate the appropriate use
of the CEA classification. CEAs are defined by the DPA as civil
service employees in “a high administrative and
policy-influencing position whose primary responsibility is the
managing of a major function or the rendering of advice to top
level management. Such responsibility is found in the top
administrative levels of State service.” When deciding on
whether a position should be designated as a CEA, the DPA uses
76
guidelines and specific criteria to evaluate the high administrative
and top managerial nature of the position in question.
In our discussions regarding the appropriateness of some of the
department’s CEA positions, the DPA stated that it considers the
“high administrative and policy influencing” role of the position
as the most critical factor in approving a CEA position. The
DPA reviewed all of the department’s CEA positions and
considers them appropriately classified.
However, we found that the department has hired a former
division chief as a retired annuitant and is inappropriately
compensating the annuitant at the CEA level. Government
Duties and responsibilities Code Section 21153 limits the compensation of retired annuitants
of the position do not meet to that paid other employees performing comparable duties. The
DPA guidelines for CEA
department’s organization chart shows this retired annuitant
level.
reports to a supervising biologist, and the duty statement
describes duties and responsibilities that do not meet the DPA
guidelines and criteria for CEA classification. Therefore, we
believe the retired annuitant is inappropriately compensated at the
CEA level.
Discussions revealed that the DPA was unaware of this position
because it is a temporary help position and because DPA
guidelines do not require the review and approval of temporary
help CEA positions. The DPA stated that the department is
responsible for ensuring its compliance with Government Code
Section 21153 when hiring and compensating retired annuitants.
Conclusion
The department’s staffing information indicates an increasing
headquarters staff. Ten-year SWS information shows a trend
toward increasing headquarters staff positions when compared to
field staff positions. The comparison of the department’s
executive and administrative positions to those in two other
Resource Agency departments indicates that it has a
higher percentage of executive and administrative positions
relative to total department positions than the other two
departments. Finally, because the department has mishandled
the creation of two exempt positions and misused a temporary
help CEA position, these high administrative positions do not
appear to be properly justified.
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The department claims that increases in the executive and
administration divisions headquarters staff over the last ten years
are in line with the overall increase in total staff. Also, some of
the increase in headquarters staff is attributed to new programs
and divisions and the SWS display of headquarters staff members
who are actually field staff. However, the 2.5 to one rate of
growth in headquarters to field positions during the past ten years
and the fact that the department appears to have comparatively
more executive and administrative positions than two similar
state departments raise a concern about the size of its executive
and administrative staff. Finally, although the DPA agrees with
the department’s placement of CEA positions, we found that the
department has mishandled the creation of 2 of its 11 exempt
positions and one temporary help CEA position.
Recommendation
The department should closely monitor its creation of new
headquarters positions. To facilitate the monitoring of such
new positions, the department should ensure that, in the future,
the position information displayed in the Salaries and Wages
Supplement to the Governor’s Budget accurately represents the
placement of the department’s headquarters and field employees.
In addition, the department should review and ensure that its
exempt and CEA positions are appropriate and properly justified.
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Chapter 5
The Department Did Not Always
Ensure That Costs Were Reasonable in Its
Response to the Dunsmuir Chemical Spill
Chapter Summary
T
he Department of Fish and Game (department) properly
accounted for the Dunsmuir chemical spill expenditures. It
also has adequate policies and procedures for responding
to similar spills to ensure that pollutants are adequately removed
from the environment and that the loss of fish, wildlife, and their
habitat is identified and minimized. However, procedures
related to the procurement of goods and services in an emergency
situation are not adequate. As a result, the costs for goods and
services used in responding to the spill were not always justified.
In particular, the department made questionable payments for the
rental and subsequent acquisition of computers. In addition, the
department did not always justify the reasonableness of costs
when obtaining services through contracts exempt from
advertising and bidding.
Background
In July 1991, a Southern Pacific Railroad train derailed at the
Cantara Loop on the upper Sacramento River near the town of
Dunsmuir. The derailment caused a tank car to spill metam
sodium into the river, killing fish and vegetation downstream.
The department was designated as the lead agency in assessing
the effects of the spill, restocking the river with fish, and taking
legal action against Southern Pacific Railroad and other
defendants. Through June 1995, the department spent
approximately $11 million for various purposes related to the
incident, including natural resource damage assessment, legal
costs, and employee wages and benefits. To pay for the costs
related to this incident, the department used money from a variety
of funding sources, including the General Fund, the California
Environmental License Plate Fund, the Fish and Game
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Preservation Fund, the Fish and Wildlife Pollution Cleanup and
Abatement Fund, and the Oil Spill Response Trust Fund.
Legal action against Southern Pacific Railroad and other
defendants resulted in two consent decrees totaling $38 million in
the department’s favor. According to the terms of a settlement
agreement between the parties, the defendants will make an
initial payment of $19 million and will pay the remaining
$19 million in five yearly installments. These payments are to
be disbursed as follows:
$13 million to the state and federal government for the costs
incurred during the emergency response;
$14 million to enhance the river’s natural resources and
acquire new habitat;
$5 million for restoration and monitoring;
$3 million for the Fish and Wildlife Pollution Cleanup and
Abatement Fund to provide a funding base for future
incidents;
$2 million for the Fish and Game Preservation Fund; and
$1 million in penalties divided evenly between the federal
government and the Central Valley Regional Water Quality
Control Board.
According to the department’s legal counsel, payment under the
Southern Pacific Railroad consent decree will occur within
90 days of when the court issues its order or when the various
appeals filed by environmental groups have been exhausted. As
a result, the department has received only $2 million of the
$38 million settlement as of June 1995.
Charges to the Dunsmuir Chemical
Spill Are Not Always Reasonable
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We reviewed the charges to the Dunsmuir project and found that
they were properly classified as Dunsmuir expenditures;
however, the department could not always justify the
reasonableness of these charges. Based on our review of
Charges were properly
contracts, invoices, exception time sheets, travel expense claims,
classified as Dusmuir
and other documents supporting the Dunsmuir expenditures, we
expenditures.
found that the expenditures charged to the project did relate to
natural resource damage assessment and cleanup efforts.
However, we identified weaknesses in the controls designed to
ensure that the department receives the best price for the goods
and services that it procures. Specifically, we found problems in
the department’s rental of computers and in its justification of the
reasonableness of contract prices and rates. These problems are
similar to those discussed in Chapter 4 of this report.
During our review of the expenditures for the Dunsmuir spill, we
identified the payment of unreasonable rental fees for computers.
Because of the emergency nature of the spill, the department’s
Region 1 office used the exemptions from advertising and
competitive bidding for many of its procurements related to the
spill. For example, in August 1991, regional staff members were
in need of laptop computers to assess and document the damages
caused by the spill. The regional office rented six laptop
computers from a local vendor for an initial period of two weeks
The department paid over
at a cost of $9,009. After the initial two-week period, the office
$53,500 to rent computers
still needed the computers, so it rented them for another two
it could have bought for
weeks at the same rate. By the time the office was done with the
$21,500.
six computers, it had paid more than $53,500 in rental fees to the
vendor. Because it had already paid so much for the rentals, the
vendor allowed the office to keep the six computers. If it had
purchased six computers at the onset, the costs would have been
approximately $21,500, or $32,000 less than the total rental fees
paid.
Additionally, our review of 24 sole-source contracts charged to
the Dunsmuir spill identified 7 contracts involving total costs of
$1,030,289, where the department did not provide justification
for the reasonableness of the contract price or rates. For
example, in one contract for attorney services, no justification
was provided. The total cost for this contract was $300,000, and
the contract rates for the attorney services ranged from $165 per
hour for in-court services to $49 per hour for travel time. The
State Administrative Manual (SAM), Section 1220.1.a(2),
requires departments to justify the reasonableness of the contract
price or rates. Also, SAM Section 1236.2.a requires departments
to justify the reasonableness of sole-source contracts, exempt
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contracts, and contracts prepared when fewer than three
competitive bids or proposals were received.
Because of the emergency nature of the spill, the department was
not required to use the normal procurement process to obtain the
The department did not needed goods and services. Specifically, the department used
always take the necessary the SAM provisions exempting it from advertising and
steps to ensure competitive bidding when procuring emergency, expert witness,
reasonable
and legal services. However, the department did not always take
prices.
the necessary steps to ensure the reasonableness of the prices and
rates for the goods and services.
When the department does not take steps to ensure that
reasonable prices or rates are paid for the procurement of goods
and services that are not advertised or competitively bid, the State
cannot be assured that a reasonable price is paid for the goods
and services received.
The Department Has Adequate Policies
and Procedures To Respond to Spills
Similar to the Dunsmuir Spill
The department has a comprehensive pollution response manual
that describes in detail the procedures to follow in responding to
emergency spills in the State. We believe these procedures are
sufficient to ensure that pollutants are adequately removed from
the environment and that the loss of fish, wildlife, and their
habitat is identified and minimized. In addition, these
procedures properly incorporate the use of the Office of
Emergency Services’ Incident Command System, which is a
statewide process that departments must follow in responding to
large spills that threaten the State’s land or resources. We
reviewed the department’s response to two large and two small
spills that occurred after the Dunsmuir incident and found that the
department appropriately followed the procedures outlined in its
emergency response manual, including the use of the Incident
Command System for the large spills.
Conclusion
The department’s charges to the Dunsmuir spill project are
properly classified as project expenditures. However, the
reasonableness of costs charged to the project was not always
justified. Based on our review of the department’s policies and
83
procedures to respond to spills and our testing of a sample of spill
projects, the department’s policy and procedures to respond to
spills similar to the Dunsmuir spill are adequate.
Recommendation
The department should ensure the reasonableness of costs for
goods and services procured in response to spills. When the
department does not use the normal competitive bidding process,
it should ensure that steps are taken to justify and document the
reasonableness of prices and rates for goods and services.
For recommendations related to the use of contracts, please refer
to the recommendations found at the end of Chapter 3 of this
report.
We conducted this review under the authority vested in the state auditor by Section 8543 et seq. of
the California Government Code and according to generally accepted governmental auditing
standards. We limited our review to those areas specified in the audit scope of this report.
Respectfully submitted,
KURT R. SJOBERG
State Auditor
Date: October 11, 1995
Staff: Steven M. Hendrickson, Audit Principal
John F. Collins II, CPA
Robert Cabral, CIA
Christopher Harris
Brian K. Lewis, CPA
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