Board of State and Community Corrections - Proposition 47 Safe Neighborhoods and Schools Fund Grants Program

BOARD OF STATE AND COMMUNITY CORRECTIONS Audit Report PROPOSITION 47 SAFE NEIGHBORHOODS AND SCHOOLS FUND GRANTS PROGRAM July 1, 2016, through June 30, 2017 BETTY T. YEE California State Controller December 2018 BETTY T. YEE California State Controller December 14, 2018 Kathleen Howard, Executive Director Board of State and Community Corrections 2590 Venture Oaks Way, Suite 200 Sacramento, CA 95833 Dear Ms. Howard: The State Controller’s Office conducted a performance audit of the Board of State and Community Corrections’ (BSCC) Proposition 47 Safe Neighborhoods and Schools Fund grants program for the period of July 1, 2016, through June 30, 2017. The purpose of the audit was to determine BSCC’s compliance with laws and program regulations, as well as to ensure that Proposition 47 funds are disbursed and expended in accordance with program requirements. We determined that during fiscal year (FY) 2016-17, BSCC approved 23 grant awards totaling $103,651,000 and that no funds were disbursed to awardees during that period. Additionally, we verified that BSCC charged $765,083 in administrative costs to the SNSF grants program during FY 2016-17. Our audit found that BSCC has adequate internal control over administration and implementation of the Proposition 47 SNSF grants program. The agency is properly awarding grant funds, and providing oversight and monitoring of the program in accordance with internal policies and procedures, program requirements, and applicable state laws and regulations. If you have any questions, please contact Andrew Finlayson, Chief, State Agency Audits Bureau, by telephone at (916) 324-6310, or by email at afinlayson@sco.ca.gov. Sincerely, Original signed by JEFFREY V. BROWNFIELD, CPA Chief, Division of Audits JVB/ls cc: Mary Jolls, Deputy Director of Corrections Planning and Grant Programs Board of State and Community Corrections Juanita Reynaga, Senior Management Auditor Board of State and Community Corrections Board of State and Community Corrections Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Contents Audit Report Summary ............................................................................................................................ 1 Background ........................................................................................................................ 1 Objectives, Scope, and Methodology ............................................................................... 2 Conclusion .......................................................................................................................... 4 Follow-up on Prior Audit Findings .................................................................................. 4 Views of Responsible Officials .......................................................................................... 4 Restricted Use .................................................................................................................... 4 Board of State and Community Corrections Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Audit Report Summary The State Controller’s Office (SCO) conducted a performance audit of the Board of State and Community Corrections’ (BSCC) Proposition 47 Safe Neighborhoods and Schools Fund (SNSF) grants program for the period of July 1, 2016, through June 30, 2017. The purpose of the audit was to ensure that program funds were disbursed and expended in accordance with program requirements and as required by Government Code (GC) section 7599 through 7599.2. Our audit found that BSCC has adequate internal control over administration and implementation of the Proposition 47 SNSF grants program. The agency is properly awarding grant funds, and providing oversight and monitoring of the program in accordance with internal policies and procedures, program requirements, and applicable state laws and regulations. We conducted the audit pursuant to GC section 12410, which states: Background The Controller shall superintend the fiscal concerns of the state. The Controller shall audit all claims against the state, and may audit the disbursement of any state money, for correctness, legality, and for sufficient provision of law for payment. Additional authority is provided by GC section 7599.2(c), which states: Every two years, the Controller shall conduct an audit of the grant programs operated by the agencies specified in paragraphs (1) to (3), inclusive, of subdivision (a) to ensure the funds are disbursed and expended solely according to this chapter and shall report his or her findings to the Legislature and the public. The BSCC website states that: Proposition 47 was a voter-approved initiative on the November 2014 ballot that reduced from felonies to misdemeanors specified low-level drug and property crimes. Each year, the state savings generated by the implementation of Proposition 47 are deposited into the Safe Neighborhoods and Schools Fund. Sixty-five percent of these savings are set aside annually for the BSCC to administer a competitive grant program. Proposition 47 required that these funds be awarded to public agencies to provide mental health services, substance use disorder treatment and/or diversion programs for those in the criminal justice system. Additional legislation (AB 1056, Chap. 438, Stats. of 2015) requires that the grants be awarded competitively, specifies that funds may serve both adults and juveniles and allows funds to be used for housing-related assistance and other community-based supportive services, including job skills training, case management or civil legal services. We determined that BSCC approved 23 grant awards totaling $103,651,000 and that no funds were disbursed to awardees during that period. Additionally, we verified that BSCC charged $765,083 in administrative costs to the SNSF grants program during fiscal year (FY) 2016-17, as shown in Table 1. -1- Board of State and Community Corrections Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Table 1 – BSCC’s Proposition 47 SNSF Grant Awardees Projects Selected by SCO for Public Agency Funding Testing 1 Alameda County Health Care Services Agency $ 6,000,000 2 Contra Costa Health Services Department 5 ,984,047 3 Corning, City of 1 ,000,000 4 El Rancho Unified School District 997,436 5 Los Angeles, City of, City Attorney’s Office 6 ,000,000 6 Los Angeles, City of, Mayor’s Office of Reentry 5 ,998,383 Los Angeles County Department of Health Services, Office of 7 Diversion and Reentry 20,000,000 20,000,000 8 Marin County Health and Human Services 998,504 9 Merced County Probation Department 960,667 10 Monterey County Health Department, Behavioral Health Bureau 6 ,000,000 11 Oceanside Unified School District 998,300 12 Orange County Health Care Agency 6 ,000,000 13 Pasadena Police Department 2 ,511,537 2,511,537 14 Placer County Health and Human Services Agency 990,000 15 Plumas County District Attorney 1 ,000,000 16 Rialto, City of 996,975 996,975 17 Riverside University Health System-Behavioral Health 6 ,000,000 18 San Bernardino County Department of Public Health 1 ,246,936 19 San Diego County 6 ,000,000 6,000,000 20 San Francisco Department of Public Health 6 ,000,000 6,000,000 21 San Joaquin County Behavioral Health Services 6 ,000,000 22 Solano County Health & Social Services 6 ,000,000 23 Yolo County Health and Human Services Agency 5 ,968,215 Total $ 103,651,000 $ 35,508,512 Objectives, Scope, The objectives of our audit were to assess BSCC’s implementation and administration of the SNSF grants program, and to ensure that program and Methodology funds were disbursed and expended as required by GC sections 7599 through 7599.2 and program requirements for the audit period of July 1, 2016, through June 30, 2017. To achieve our objectives, we:  Identified the Proposition 47 SNSF grants program background, criteria, purpose, and requirements by reviewing the FY 2016-17 Governor’s Budget, GC sections 7599 through 7599.2, and the California Department of Finance fund classification and basis for the Safe Neighborhoods and Schools Fund;  Interviewed key personnel to gain a general understanding of BSCC’s internal controls, such as procedures performed by staff during the grant award process; expenditure reviews and approvals; program monitoring; accounting records and grantees’ invoices; and recording of SNSF grants program disbursements and expenditures in the agency’s financial management systems;  Examined BSCC’s internal controls related to the SNSF grants program by reviewing policies and procedures, guidelines, grant agreements, grant processes; direct testing of claimed costs, invoices, -2- Board of State and Community Corrections Proposition 47 Safe Neighborhoods and Schools Fund Grants Program and supporting documentation; and verifying BSCC’s compliance with applicable provisions of laws, regulations, and grant agreements. We did not examine the agency’s information systems controls;  Identified 23 grants totaling $103,651,000 that were awarded by BSCC during the audit period, FY 2016-17, and verified that no funds were disbursed to awardees during that period;  Selected a sample of five out of 23 grants awarded, totaling $35,508,512, to determine whether sampled grants had been approved by the BSCC board; whether grant agreements specified standard contract language established by the California Department of General Services, including scope of work, budgets, terms and conditions, and services to be provided; and whether grant agreements were in compliance with program requirements, BSCC internal control policies and procedures, guidelines, and applicable laws and regulations;  Verified that BSCC charged $765,083 in administrative costs to the SNSF grants program during FY 2016-17. Verified that the administrative costs charged to the SNSF grants program were within the 5% threshold, as required by GC 7599.2(b). Judgmentally selected 16 transactions totaling $282,969 (37%) and verified that costs were eligible, allowable, reasonable, adequately supported by financial records and/or accounting records, and were in compliance with program requirements; and  Verified the accuracy of SNSF grants program financial information reported by BSCC, such as agency fund reconciliation reports submitted to SCO; SNSF grants program disbursement and activity reports; general ledger activity reports, detail ledger reports, trail balance reports, and budget detail expense reports. 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 finding and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our finding and conclusions based on our audit objectives. We did not examine the economy, efficiency, or effectiveness of the program. Our audit of the program requirements was related solely to program expenditures as required by GC section 7599.2(c). We did not audit BSCC’s financial statements. We limited our audit scope to planning and performing audit procedures necessary to achieve our audit objectives. In addition, our review of internal controls was limited to gaining an understanding of the transaction flows, the financial management accounting system. We performed limited tests of controls regarding BSCC’s ability to accumulate and segregate reasonable and allowable grantee costs. -3- Board of State and Community Corrections Proposition 47 Safe Neighborhoods and Schools Fund Grants Program Conclusion Our audit found that BSCC has adequate internal control over administration and implementation of the Proposition 47 SNSF grants program. The agency is properly awarding grant funds, and providing oversight and monitoring of the program in accordance with internal policies and procedures, program requirements, and applicable state laws and regulations. Follow-up on BSCC did not have any prior audits related to the objectives of this audit report. Prior Audit Finding Views of We discussed our audit results at an exit conference with Mary Jolls, Deputy Director of Corrections Planning and Grant Programs, and other Responsible BSCC representatives. The auditee agreed with the audit results, declined Officials a draft report, and agreed that we could issue the audit report as final. Restricted Use This audit report is intended for the information and use of the BSCC 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 audit report, which is a matter of public record. Original signed by JEFFREY V. BROWNFIELD, CPA Chief, Division of Audits December 14, 2018 -4- State Controller’s Office Division of Audits Post Office Box 942850 Sacramento, CA 94250 http://www.sco.ca.gov S18-P47-0001