Long Beach City

CITY OF LONG BEACH Audit Report ADMINISTRATIVE LICENSE SUSPENSION – PER SE PROGRAM Chapter 1460, Statutes of 1989; Chapter 431, Statutes of 1990; Chapter 1281, Statutes of 1992; Chapters 899 and 1244, Statutes of 1993; Chapter 938, Statutes of 1994; and Chapter 5, Statutes of 1997 July 1, 2013, through June 30, 2016 BETTY T. YEE California State Controller August 2018 BETTY T. YEE California State Controller August 13, 2018 The Honorable Robert Garcia, Mayor City of Long Beach 333 West Ocean Boulevard, 14th Floor Long Beach, CA 90802 Dear Mayor Garcia: The State Controller’s Office (SCO) audited the costs claimed by the City of Long Beach for the legislatively mandated Administrative License Suspension – Per Se Program for the period of July 1, 2013, through June 30, 2016. The city claimed and was paid $140,324 for the mandated program. Our audit found that $68,265 is allowable and $72,059 is unallowable. The costs are unallowable because the city claimed reimbursement for costs not incurred and for ineligible cases, and did not offset federal grant funds that were used to pay for the mandated activities. Following issuance of this report, the SCO’s Local Government Programs and Services Division will notify the city of the adjustments via a system-generated letter for each fiscal year in the audit period. If you have any questions, please contact Lisa Kurokawa, Chief, Compliance Audits Bureau, by telephone at (916) 327-3138. Sincerely, Original signed by JEFFREY V. BROWNFIELD, CPA Chief, Division of Audits JVB/rg The Honorable Robert Garcia, Mayor -2- August 13, 2018 cc: John Gross, Director of Financial Management City of Long Beach Geraldine Alejo, Revenue Management Officer Department of Financial Management City of Long Beach Robert G. Luna, Chief of Police Long Beach Police Department Maura Velasco-Ventura, Chief Financial Officer Long Beach Police Department Brandon Walker, Financial Services Officer Long Beach Police Department Chris Hill, Principal Program Budget Analyst Local Government Unit, California Department of Finance Steven Pavlov, Finance Budget Analyst Local Government Unit, California Department of Finance Anita Dagan, Manager Local Government Programs and Services Division California State Controller’s Office City of Long Beach Administrative License Suspension – Per Se Program Contents Audit Report Summary ............................................................................................................................ 1 Background ........................................................................................................................ 1 Objective, Scope, and Methodology ................................................................................. 2 Conclusion .......................................................................................................................... 3 Follow-up on Prior Audit Findings .................................................................................. 3 Views of Responsible Officials .......................................................................................... 3 Restricted Use .................................................................................................................... 4 Schedule—Summary of Program Costs .............................................................................. 5 Findings and Recommendations ........................................................................................... 7 Attachment—City’s Response to Draft Audit Report City of Long Beach Administrative License Suspension – Per Se Program Audit Report Summary The State Controller’s Office (SCO) audited the costs claimed by the City of Long Beach for the legislatively mandated Administrative License Suspension – Per Se Program for the period of July 1, 2013, through June 30, 2016. The city claimed and was paid $140,324 for the mandated program. Our audit found that $68,265 is allowable and $72,059 is unallowable. The costs are unallowable because the city claimed reimbursement for costs not incurred and for ineligible cases, and did not offset federal grant funds that were used to pay for the mandated activities. Background The Administrative License Suspension legislation became effective on July 1, 1990. The test claim legislation authorizes a peace officer, on behalf of the Department of Motor Vehicles (DMV), to immediately seize a valid California driver’s license in the possession of a person arrested or detained for driving under the influence (DUI), immediately serve an order of suspension or revocation, and issue a temporary driver’s license to the driver. The Commission on State Mandates (Commission) partially approved this test claim pursuant to Article XIII B, section 6, of the California Constitution, and Government Code (GC) section 17514, for the increased costs in performing the following activities: A. Minors (under the age of 21) that are detained but not ultimately arrested for violation of a DUI statute:  Admonishing those drivers that the failure to submit to, or the failure to complete, a preliminary alcohol screening test or other chemical test as requested will result in the suspension or revocation of the driver’s license.  Requesting and administering the alcohol screening test pursuant to Vehicle Code (VC) sections 23136 and 23137.  Taking possession of any driver’s license and serving the notice of order of suspension or revocation on the detained minor if the driver refuses or fails to complete the chemical test, or has been found to have a concentration of alcohol in the blood in violation of VC section 23136.  Completing a sworn report for those minors detained.  Submitting a copy of the completed notice of order of suspension, driver’s license, and sworn report to the DMV. B. All drivers (adults and minors) that are arrested for violation of a DUI statute:  Taking possession of any driver’s license and serving the notice of order of suspension or revocation on the driver if the driver refuses or fails to complete the chemical test, or has been found to have a concentration of alcohol in the blood in violation of VC sections 23140, 23152, and 23153. -1- City of Long Beach Administrative License Suspension – Per Se Program  Completing a sworn report for those drivers that are arrested with a blood alcohol concentration higher than the legal limit.  Submitting a copy of the completed notice of order of suspension, driver’s license, and sworn report to the DMV. The Commission also identified a uniform time allowance to account for employees’ time spent performing the mandated activities. In addition, the Commission identified sources of offsetting reimbursements, including fees collected pursuant to VC section 14905 and grant monies received by the state and passed through to local agencies. The program’s parameters and guidelines establish the state mandate and define the reimbursement criteria. The Commission adopted the parameters and guidelines on December 2, 2003. In compliance with GC section 17558, the SCO issues claiming instructions to assist local agencies in claiming mandated program reimbursable costs. Objective, Scope, The objective of our audit was to determine whether costs claimed represent increased costs resulting from the legislatively mandated and Methodology Administrative License Suspension – Per Se Program. Specifically, we conducted this audit to determine whether costs claimed were supported by appropriate source documents, were not funded by another source, and were not unreasonable and/or excessive. The audit period was from July 1, 2013, through June 30, 2016. To achieve our audit objective, we:  Reviewed the annual mandated costs claims filed by the city for the audit period to verify that the material cost component of each claim was salaries. Determined whether there were any errors or unusual or unexpected variances from year to year, and reviewed the activities claimed to determine whether they adhered to the SCO’s claiming instructions and the program’s parameters and guidelines;  Completed an internal control questionnaire by interviewing key city staff, and discussed the claim preparation process with city staff to determine what information was obtained, who obtained it, and how it was used;  Obtained system-generated lists of DUI cases from the city to verify the existence, completeness, and accuracy of the unduplicated case counts for each fiscal year in the audit period: o Reconciled the number of cases on the listing to the number of cases claimed for reimbursement. o Reviewed the case listing to determine eligibility and duplication (see Finding 1); and  Reviewed the Schedule of Expenditures of Federal Awards for each fiscal year in the audit period, and confirmed with city staff that the city received federal grant funds that were used to pay for mandated activities, but were not offset from claimed costs (see Finding 2). -2- City of Long Beach Administrative License Suspension – Per Se Program The legal authority to conduct this audit is provided by GC sections 12410, 17558.5, and 17561. We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objective. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objective. We limited our review of the city’s internal controls to gaining an understanding of the transaction flow and claim preparation process as necessary to develop appropriate auditing procedures. Our audit scope did not assess the efficiency or effectiveness of program operations. We did not audit the city’s financial statements. Conclusion Our audit found instances of noncompliance with the requirements outlined in the Objective, Scope, and Methodology section. These instances are quantified in the accompanying Schedule (Summary of Program Costs) and described in the Findings and Recommendations section of this report. For the audit period, the City of Long Beach claimed and was paid $140,324 for costs of the legislatively mandated Administrative License Suspension – Per Se Program. Our audit found that $68,265 is allowable and $72,059 is unallowable. Following issuance of this report, the SCO’s Local Government Programs and Services Division will notify the city of the adjustments via a system- generated letter for each fiscal year in the audit period. Follow-up on We have not previously conducted an audit of the city’s legislatively mandated Administrative License Suspension – Per Se Program. Prior Audit Findings Views of We issued a draft audit report on June 29, 2018. John Gross, Director of Responsible Financial Management, responded by letter dated July 2, 2018 (Attachment), agreeing with the audit results. This final audit report Officials includes the city’s response. -3- City of Long Beach Administrative License Suspension – Per Se Program Restricted Use This report is solely for the information and use of the City of Long Beach, the California Department of Finance, and the SCO; it is not intended to be and should not be used by anyone other than these specified parties. This restriction is not intended to limit distribution of this report, which is a matter of public record. Original signed by JEFFREY V. BROWNFIELD, CPA Chief, Division of Audits August 13, 2018 -4- City of Long Beach Administrative License Suspension – Per Se Program Schedule— Summary of Program Costs July 1, 2013, through June 30, 2016 Actual Costs Allowable Audit Cost Elements Claimed per Audit Adjustment Reference1 July 1, 2013, through June 30, 2014 Salaries $ 29,450 $ 1 5,017 $ (14,433) Benefits 12,469 6,358 (6,111) Total salaries and benefits 41,919 21,375 ( 20,544) Indirect costs 20,477 10,442 ( 10,035) Total direct and indirect costs 62,396 31,817 ( 30,579) Finding 1 Less offsetting revenues and reimbursements - (2,591) (2,591) Finding 2 Total program costs $ 62,396 29,226 $ (33,170) Less amount paid by the State2 (62,396) Amount paid in excess of allowable costs claimed $ (33,170) July 1, 2014, through June 30, 2015 Salaries $ 19,739 $ 1 0,715 $ ( 9,024) Benefits 11,524 6,255 (5,269) Total salaries and benefits 31,263 16,970 ( 14,293) Indirect costs 12,509 6,790 (5,719) Total direct and indirect costs 43,772 23,760 ( 20,012) Finding 1 Less offsetting revenues and reimbursements - (2,171) (2,171) Finding 2 Total program costs $ 43,772 21,589 $ (22,183) Less amount paid by the State2 (43,772) Amount paid in excess of allowable costs claimed $ (22,183) July 1, 2015, through June 30, 2016 Salaries $ 15,579 $ 8,375 $ ( 7,204) Benefits 9 ,369 5,037 (4,332) Total salaries and benefits 24,948 13,412 ( 11,536) Indirect costs 9 ,208 4,950 (4,258) Total direct and indirect costs 34,156 18,362 ( 15,794) Finding 1 Less offsetting revenues and reimbursements - (912) (912) Finding 2 Total program costs $ 34,156 17,450 $ (16,706) Less amount paid by the State2 (34,156) Amount paid in excess of allowable costs claimed $ (16,706) -5- City of Long Beach Administrative License Suspension – Per Se Program Schedule (continued) Actual Costs Allowable Audit Cost Elements Claimed per Audit Adjustment Reference1 Summary: July 1, 2013, through June 30, 2016 Salaries $ 64,768 $ 3 4,107 $ (30,661) Benefits 33,362 17,650 ( 15,712) Total salaries and benefits 98,130 51,757 ( 46,373) Indirect costs 42,194 22,182 ( 20,012) Total direct and indirect costs 140,324 73,939 ( 66,385) Finding 1 Less offsetting revenues and reimbursements - (5,674) (5,674) Finding 2 Total program costs $ 140,324 68,265 $ (72,059) Less amount paid by the State2 (140,324) Amount paid in excess of allowable costs claimed $ (72,059) _________________________ 1 See the Findings and Recommendations section. 2 Payment amount current as of May 21, 2018. -6- City of Long Beach Administrative License Suspension – Per Se Program Findings and Recommendations FINDING 1— The city claimed $140,324 for the Arrested Drivers for Violation of DUI Statute cost component for the audit period. We found that $73,939 is Overstated salaries allowable and $66,385 is unallowable because the city overstated salaries. and related benefits and related indirect Salary costs are determined by multiplying the number of drivers arrested costs for violation of the DUI statute by the uniform time allowance and the arresting officer’s hourly rate. The city overstated the salary costs by $30,661 because it misinterpreted the program’s parameters and guidelines requirement that it claim only actual costs incurred, which resulted in the city claiming reimbursement for costs not incurred and for ineligible cases. In addition, unallowable related benefit costs total $15,712 and unallowable related indirect costs total $20,012. The following table summarizes the case adjustment by fiscal year: Salary Adjustment Number of Drivers Arrested for Uniform Related Related Total Fiscal Violation of DUI Statute Time Salary Salary Benefit Indirect Cost Audit Year Claimed Allowable Difference Allowance 1 Rate Adjustment Adjustment 2 Adjustment Adjustment 3 2013-14 2 ,167 1,105 (1,062) 0.25 $ 5 4.36 $ (14,433) $ (6,111) $ ( 10,035) $ (30,579) 3 2014-15 1 ,553 843 (710) 0.25 $ 5 0.84 (9,024) (5,269) ( 5,719) (20,012) 4 2015-16 1 ,423 765 (658) 0.25 $ 4 3.79 (7,204) (4,332) ( 4,258) (15,794) Total 5 ,143 2,713 (2,430) $ (30,661) $ (15,712) $ ( 20,012) $ (66,385) 1 The uniform time allowance of 0.25 is equivalent to 15 minutes. 2 The benefit rate is 42.34% for FY 2013-14, 58.38% for FY 2014-15, and 60.14% for FY 2015-16 3 The indirect cost rate is 69.53% for FY 2013-14 and 63.37% for FY 2014-15. Both rates are applied to salaries only. 4 The indirect cost rate is 36.91% for FY 2015-16 and is applied to both salaries and benefits. Costs Not Incurred We reviewed the case listing provided by the city and found that the city claimed reimbursement for arrests conducted by the California Highway Patrol (CHP), the Signal Hill Police Department (SHPD), Long Beach State University (LBSU), and miscellaneous arrests coded as AOTH. These agencies do not have their own booking facilities, and therefore use the City of Long Beach’s facilities; however, the arresting departments’ field offices complete all of the paperwork, including the sworn reports and other necessary documents, and the City of Long Beach does not incur a cost. In total, we determined that the city claimed 1,903 ineligible cases for the audit period (815 for FY 2013-14, 568 for FY 2014-15, and 520 for FY 2015-16). Section IV. (Reimbursable Activities) of the parameters and guidelines states, in part, “The claimant is only allowed to claim and be reimbursed for increased costs for reimbursable activities identified below.” -7- City of Long Beach Administrative License Suspension – Per Se Program Ineligible Cases Our review of the case listing also showed that the city claimed cases with the same booking number multiple times. After reading the officer’s statement, we noted several cases where the individual detained was arrested with two incidents (e.g., DUI-alcohol and possession of drugs). In this example, reimbursement is limited to the DUI-alcohol violation (and not for the drug possession violation). In total, we determined that the city claimed 527 ineligible cases for the audit period (247 for FY 2013-14, 142 for FY 2014-15, and 138 for FY 2015-16). Section IV. (Reimbursable Activities) of the parameters and guidelines states, in part, “To be eligible for mandated cost reimbursement for any fiscal year, only actual costs may be claimed. Actual costs are those costs actually incurred to implement the mandated activities.” Recommendation We recommend that the city:  Follow the mandated program’s claiming instructions and the parameters and guidelines when filing its reimbursement claims; and  Ensure that claimed costs include only eligible costs and are based on actual costs incurred as a result of implementing the mandated activities. City’s Response For Finding #1, the City concurs with the SCO’s finding that the City unintentionally overstated the number of cases claimed for the audit period. This is due to the City inadvertently including arrests made by outside agencies (e.g., City of Signal, California Highway Patrol) who utilize the City’s booking facilities and claiming duplicate case numbers. Upon completion of our work with your audit staff and all parties involved in the City’s claim preparation process, the Long Beach Police Department will implement a more detailed process to ensure accuracy in its claimed case counts. FINDING 2— The city did not offset any reimbursements on its claim forms for the audit period. We found that the city should have offset $5,674 in federal grant Unreported offsetting funds that were used by the city to pay for mandated activities. reimbursements The city received a federal grant titled “Minimum Penalties for Repeat Offenders for Driving While Intoxicated” that passed through the California Department of Transportation. These funds were used by the city to pay for the salaries and benefits of peace officers at DUI checkpoints and during DUI Saturation Patrols. The city did not offset these funds because it was not aware of the requirement outlined in the parameters and guidelines to offset federal funding. -8- City of Long Beach Administrative License Suspension – Per Se Program We confirmed with the city that 205 drivers were arrested for violation of the DUI statute at DUI checkpoints and during DUI saturation patrols for the audit period. As such, we determined that the city should have offset $5,674, as follows: No. of Drivers Arrested for Uniform Indirect Indirect Fiscal Violation of Time Salary Salary Benefit Benefit Cost Cost Total Year DUI Statute Allowance Rate Offset Rate Offset Rate Offset Offset 2013-14 (90) 0.251 $ 54.36 $ (1,223) 42.34% $ ( 518) 69.53% 2 $ ( 850) $ (2,591) 2014-15 (77) 0.251 $ 50.84 (979) 58.38% (572) 63.37% 2 (620) (2,171) 2015-16 (38) 0.251 $ 43.79 (416) 60.14% (250) 36.91% 3 (246) (912) Total (205) $ (2,618) $ (1,340) $ (1,716) $ (5,674) 1 The uniform time allowance of 0.25 is equivalent to 15 minutes. 2 For FY 2013-14 and FY 2014-15, the indirect cost rate is applied to salaries only. 3 For FY 2015-16, the indirect cost rate is applied to salaries and benefits. Section VII. (Offsetting Savings and Reimbursements) of the parameters and guidelines states, in part: In addition, reimbursement for this mandate received from any source, including but not limited to, service fees collected, including fees collected pursuant to Vehicle Code section 14905; federal funds and other state funds; and grant monies received by the state and passed through to local agencies (obtained by Public Law 100-690, which added United States Code, title 23, sections 408 and 410), shall be identified and deducted from this claim. Recommendation We recommend that the city:  Follow the mandated program’s claiming instructions and the parameters and guidelines when filing its reimbursement claims; and  Deduct from its claims all federal grant funds that were used to pay for mandated activities. City’s Response For Finding #2, the City agrees with the SCO’s finding that the City did not offset claims for the “Minimum Penalties for Repeat Offenders for Driving While Intoxicated” grant. This is due to the City’s misunderstanding of the timing of when staff completed the mandated activities. Rather than completing the mandated activities following the conclusion of a DUI checkpoint operation, Police staff sometimes complete the mandated activities on-site at the DUI checkpoint. This resulted in the unintended overlap between the reimbursement claim and staff time offset by the grant. Through the audit process, the Long Beach Police Department will make certain that its claims are reviewed for any potential overlap with grant funding and that adjustments for grant funding is applied in all future claims. -9- City of Long Beach Administrative License Suspension – Per Se Program Attachment— City’s Response to Draft Audit Report State Controller’s Office Division of Audits Post Office Box 942850 Sacramento, CA 94250 http://www.sco.ca.gov - S17-MCC-0040