City of Oakland

CITY OF OAKLAND Audit Report DOMESTIC VIOLENCE ARREST POLICIES AND STANDARDS PROGRAM Chapter 246, Statutes of 1995 July 1, 2019, through June 30, 2023 M M. C ALIA OHEN C ALIFORNIA S TATE C ONTROLLER October 2025 MALIA M. COHEN CALIFORNIA STATE CONTROLLER October 29, 2025 CERTIFIED MAIL—RETURN RECEIPT REQUESTED Jestin D. Johnson, City Administrator City of Oakland 1 Frank H. Ogawa Plaza Oakland, CA 94612 Dear Mr. Johnson: The State Controller’s Office audited the costs claimed by the City of Oakland (the city) for the legislatively mandated Domestic Violence Arrest Policies and Standards Program for the period of July 1, 2019, through June 30, 2023. The city claimed and was paid $982,525 for costs of the mandated program. Our audit found that $794,734 is allowable and $187,791 is unallowable. The costs are unallowable because the city overstated salary and benefit costs, and related indirect costs. Following issuance of this report, the Local Government Programs and Services Division of the State Controller’s Office will notify the city of the adjustment to its claims via a system- generated letter for each fiscal year in the audit period. If you have any questions regarding this report, please contact Lisa Kurokawa, Chief, Compliance Audits Bureau, by telephone at 916-327-3138. Thank you. Sincerely, Original signed by Kimberly A. Tarvin, CPA Chief, Division of Audits KAT/rs MAILING ADDRESS P.O. Box 942850, Sacramento, CA 94250 SACRAMENTO 3301 C Street, Suite 700, Sacramento, CA 95816 | 916.324.8907 LOS ANGELES 901 Corporate Center Drive, Suite 200, Monterey Park, CA 91754 | 323.981.6802 Mr. Jestin D. Johnson October 29, 2025 Page 2 of 2 Copy: The Honorable Barbara Lee, Mayor City of Oakland Stephen Walsh, Controller City of Oakland Pooja Shrestha, Assistant Controller City of Oakland Jan Mazyck, Interim Finance Director City of Oakland Floyd Mitchell, Chief Oakland Police Department Chris Hill, Principal Program Budget Analyst Local Government Unit California Department of Finance Kaily Yap, Finance Budget Analyst Local Government Unit California Department of Finance Darryl Mar, Manager Local Reimbursements Section State Controller’s Office Everett Luc, Supervisor Local Reimbursements Section State Controller’s Office MAILING ADDRESS P.O. Box 942850, Sacramento, CA 94250 SACRAMENTO 3301 C Street, Suite 700, Sacramento, CA 95816 | 916.324.8907 LOS ANGELES 901 Corporate Center Drive, Suite 200, Monterey Park, CA 91754 | 323.981.6802 City of Oakland Domestic Violence Arrest Policies and Standards Program Contents Audit Report Summary ............................................................................................................................ 1 Background ........................................................................................................................ 1 Audit Authority.................................................................................................................. 1 Objective, Scope, and Methodology ................................................................................. 1 Conclusion .......................................................................................................................... 3 Follow-up on Prior Audit Findings .................................................................................. 4 Views of Responsible Officials .......................................................................................... 4 Restricted Use .................................................................................................................... 4 Schedule—Summary of Program Costs .............................................................................. 5 Findings and Recommendations ........................................................................................... 7 Attachment—City’s Response to Draft Audit Report City of Oakland Domestic Violence Arrest Policies and Standards Program Audit Report Summary The State Controller’s Office (SCO) audited the costs claimed by the City of Oakland (the city) for the legislatively mandated Domestic Violence Arrest Policies and Standards Program for the period of July 1, 2019, through June 30, 2023. The city claimed and was paid $982,525 for costs of the mandated program. Our audit found that $794,734 is allowable and $187,791 is unallowable. The costs are unallowable because the city overstated salary and benefit costs, and related indirect costs. Background Penal Code (PC) section 13701, subdivision (b) (added by Chapter 246, Statutes of 1995), required local law enforcement agencies to develop, adopt, and implement written arrest policies for domestic violence offenders by July 1, 1996. The legislation also required local law enforcement agencies to obtain input from local domestic violence agencies in developing the arrest policies. Under previous law, local law enforcement agencies were required to develop, adopt, and implement written policies for response to domestic violence calls and were encouraged, but not obligated, to consult with domestic violence experts. On September 25, 1997, the Commission on State Mandates (Commission) determined that Chapter 246, Statutes of 1995, imposed a state mandated program reimbursable under Government Code (GC) section 17561. The program’s parameters and guidelines establish the state mandate and define the reimbursement criteria. The Commission adopted the parameters and guidelines on August 20, 1998, and amended them on October 30, 2009. In compliance with GC section 17758, the SCO issues the Mandated Cost Manual for Local Agencies (Mandated Cost Manual) to assist local agencies in claiming mandated program reimbursable costs. Audit Authority We conducted this performance audit in accordance with GC sections 17558.5 and 17561, which authorize the SCO to audit the city’s records to verify the actual amount of the mandated costs. In addition, GC section 12410 provides the SCO with general authority to audit the disbursement of state money for correctness, legality, and sufficient provisions of law for payment. Objective, Scope, The objective of our audit was to determine whether claimed costs represent increased costs resulting from the legislatively mandated and Methodology Domestic Violence Arrest Policies and Standards Program. Specifically, we conducted this audit to determine whether claimed costs were supported by appropriate source documents, were not funded by another source, and were not unreasonable and/or excessive. Unreasonable and/or excessive costs include unsupported and ineligible costs that are not -1- City of Oakland Domestic Violence Arrest Policies and Standards Program identified in the program’s parameters and guidelines as reimbursable costs. The audit period was July 1, 2019, through June 30, 2023. To achieve our objective, we performed the following procedures: • We reviewed the annual mandated cost claims filed by the city for the audit period and identified the significant cost components of each claim as salaries and benefits, and related indirect costs. We then determined whether there were any errors or unusual or unexpected variances from year to year. We reviewed the claimed activities to determine whether they adhered to the SCO’s Mandated Cost Manual and the program’s parameters and guidelines. • We completed an internal control questionnaire by interviewing key city staff members. We discussed the claim preparation process with city staff members to determine what information was obtained, who obtained it, and how it was used. We determined which controls were significant to the audit objective. We determined the effect of the identified internal control weaknesses on the audit objective. • We assessed the reliability of the data (payroll, revenue and expenditure records) generated by the city’s information management system and the city’s Legal Record Management System (LRMS) by interviewing city staff members and examining supporting documentation. We determined that the data was sufficiently reliable to address the audit objective. • We verified that the city used the uniform time allowance and applied it properly. • We reviewed and analyzed the claimed domestic violence incident report counts and verified that these counts were supported by the city’s LRMS. • We used simple random sampling to select the following statistical samples from the audited population of incident reports: o We sampled 143 of 2,987 incident reports for fiscal year (FY) 2019-20. o We sampled 143 of 3,038 incident reports for FY 2020-21. o We sampled 143 of 2,916 incident reports for FY 2021-22. o We sampled 142 of 2,505 incident reports for FY 2022-23. • We determined whether the sampled incident reports included interviews with both parties involved in the domestic violence incident, and whether the officer considered the 17 factors listed in the parameters and guidelines to identify the primary aggressor. We identified the following errors: o Of the 143 sampled incident reports for FY 2019-20, 67 were partially reimbursable and 12 were non-mandate-related. o Of the 143 sampled incident reports for FY 2020-21, 72 were partially reimbursable and 19 were non-mandate-related. -2- City of Oakland Domestic Violence Arrest Policies and Standards Program o Of the 143 sampled incident reports for FY 2021-22, 63 were partially reimbursable and 21 were non-mandate-related. o Of the 142 sampled incident reports for FY 2022-23, 81 were partially reimbursable and eight were non-mandate-related. Errors found were projected to the intended (total) population; see Finding 2. • We recalculated the allowable costs using the audited incident report counts. • We interviewed city staff members to determine what employee classifications were involved in performing the mandated activities during the audit period. • We traced the average productive hourly rate (PHR) calculations for the claimed employee classification to supporting information in the city’s payroll system. • We verified the indirect costs claimed by the city for the audit period. We found that the city overstated the indirect cost rates claimed for FY 2020-21 and FY 2022-23; see Finding 3. • We traced the benefit rate calculations for the claimed employee classification to supporting information in the city’s cost allocation plans. • We verified that the city’s claimed costs were not funded by any other sources. 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. Conclusion As a result of performing the audit procedures, we found instances of noncompliance with the requirements described in our audit objective. We did not find that the city claimed costs that were funded by other sources; however, we found that it claimed unsupported and ineligible costs as quantified in the Schedule and described in the Findings and Recommendations section. For the audit period, the city claimed and was paid $982,525 for costs of the legislatively mandated Domestic Violence Arrest Policies and Standards Program. Our audit found that $794,734 is allowable and $187,791 is unallowable. Following issuance of this report, the SCO’s Local Government Programs and Services Division will notify the city of the adjustment to its claims via a system-generated letter for each fiscal year in the audit period. -3- City of Oakland Domestic Violence Arrest Policies and Standards Program Follow-up on The city has not resolved the findings noted in our prior audit report for the period of July 1, 2007, through June 30, 2010, issued on June 19, 2013. Prior Audit Findings Views of We issued a draft audit report on August 28, 2025. The city’s Responsible representatives responded by letter dated September 4, 2025, agreeing with the audit findings. This final audit report includes the city’s response Officials as an attachment. Restricted Use This audit report is solely for the information and use of the city, 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 and is available on the SCO website at www.sco.ca.gov. Original signed by Kimberly A. Tarvin, CPA Chief, Division of Audits October 29, 2025 -4- City of Oakland Domestic Violence Arrest Policies and Standards Program Schedule— Summary of Program Costs July 1, 2019, through June 30, 2023 Actual Costs Allowable Audit Cost Elements Claimed per Audit Adjustment Reference ¹ July 1, 2019, through June 30, 2020 Direct costs: Salaries and benefits $ 181,054 $ 147,000 $ (34,054) Findings 1, 2 Indirect costs 58,945 53,772 ( 5,173) Findings 1, 2 Total direct and indirect costs 239,999 200,772 (39,227) Less offsetting revenues and reimbursements2 - - - Total program costs $ 239,999 200,772 $ (39,227) Less amount paid by the State3 (239,999) Amount paid in excess of allowable costs claimed $ (39,227) July 1, 2020, through June 30, 2021 Direct costs: Salaries and benefits $ 159,730 $ 129,113 $ (30,617) Findings 1, 2 Indirect costs 77,751 55,469 (22,282) Findings 1, 2, 3 Total direct and indirect costs 237,481 184,582 (52,899) Less offsetting revenues and reimbursements2 - - - Total program costs $ 237,481 184,582 $ (52,899) Less amount paid by the State3 (237,481) Amount paid in excess of allowable costs claimed $ (52,899) July 1, 2021, through June 30, 2022 Direct costs: Salaries and benefits $ 171,281 $ 142,637 $ (28,644) Findings 1, 2 Indirect costs 64,824 63,232 ( 1,592) Findings 1, 2 Total direct and indirect costs 236,105 205,869 (30,236) Less offsetting revenues and reimbursements2 - - - Total program costs $ 236,105 205,869 $ (30,236) Less amount paid by the State3 (236,105) Amount paid in excess of allowable costs claimed $ (30,236) July 1, 2022, through June 30, 2023 Direct costs: Salaries and benefits $ 186,851 $ 149,037 $ (37,814) Finding 2 Indirect costs 82,089 54,474 (27,615) Findings 1, 2, 3 Total direct and indirect costs 268,940 203,511 (65,429) Less offsetting revenues and reimbursements2 - - - Total program costs $ 268,940 203,511 $ (65,429) Less amount paid by the State3 (268,940) Amount paid in excess of allowable costs claimed $ (65,429) -5- City of Oakland Domestic Violence Arrest Policies and Standards Program Schedule (continued) -6- S D I T L T L A C o s t E le m e n ts u m m a r y : J u ly 1 , 2 0 1 9 , th r o u g h J u n ir e c t c o s ts : S a la r ie s a n d b e n e f its n d ir e c t c o s ts o ta l d ir e c t a n d in d ir e c t c o s ts e s s o f f s e ttin g r e v e n u e s a n d r e im b o ta l p r o g r a m c o s ts 3 e s s a m o u n t p a id b y th e S ta te m o u n t p a id in e x c e s s o f a llo w a b le e 3 u r s c o 0 e s , 2 0 2 3 2 m e n ts ts c la im e d A c tu a l C o s ts C la im e d $ 6 9 8 ,9 1 6 2 8 3 ,6 0 9 9 8 2 ,5 2 5 - $ 9 8 2 ,5 2 5 A llo w a b le p e r A u d it $ 5 6 7 ,7 8 7 2 2 6 ,9 4 7 7 9 4 ,7 3 4 - 7 9 4 ,7 3 4 ( 9 8 2 ,5 2 5 $ ( 1 8 7 ,7 9 1 ) ) A u d it A d ju s tm e n $ ( 1 3 1 ,1 2 ( 5 6 ,6 6 ( 1 8 7 ,7 9 - $ ( 1 8 7 ,7 9 t ¹ 9 ) 2 ) 1 ) 1 ) FF inin dd inin gg ss 1 1 , 2 , 2 , 3 _________________________ 1 See the Findings and Recommendations section. 2 We determined that the claimed costs were not funded by any other sources. 3 Payment amount current as of July 17, 2025. City of Oakland Domestic Violence Arrest Policies and Standards Program Findings and Recommendations The city claimed $665,601 in salaries and benefits for the Implementation of New Domestic Violence Arrest Policies to Identify the Primary Aggressor cost component during the audit period. We found that the city had understated salaries and benefits by $52,499. The related indirect costs total $22,060, for a total finding of $74,559. For the audit period, the city’s claims identified a total of 10,598 domestic violence incident reports (2,913 for FY 2019-20; 2,663 for FY 2020-21; 2,517 for FY 2021-22; and 2,505 for FY 2022-23). The city used its LRMS to provide the summary incident report listings to support the number of domestic violence incident reports claimed for the audit period. We compared the LRMS information to the number of domestic violence incident reports that the city claimed. Based on our review, we found that for FY 2019-20 through FY 2021-22, the city had understated the number of domestic violence incident reports claimed. The city understated the number of reports because it did not adhere to the program’s parameters and guidelines or the SCO’s Mandated Cost Manual. The following table summarizes the audit adjustment for the understated number of incident reports: -7- D D U S UC UC U UC R A o m e s tic v io le n c e in c id e n t r e p o rts p e r L R M S o m e s tic v io le n c e in c id e n t r e p o rts c la im e d n d e r s ta te d d o m e s tic v io le n c e in c id e n t r e p o rts ta n d a r d tim e a llo w a n c e ( h o u r s ) n d e r s ta te d h o u r s la im e d a v e r a g e P H R ( s a la r y o n ly ) n d e r s ta te d s a la r ie s [ A ] la im e d b e n e fit r a te n d e r s ta te d b e n e fits [ B ] n d e r s ta te d s a la r ie s a n d b e n e fits [ C ] = la im e d in d ir e c t c o s t r a te [ D ] 1 e la te d in d ir e c t c o s ts [ E ] = [ A ] [ D × u d it a d ju s tm e n t [ F ] = [ C ] + [ E ] [ ] A ] + [ B ] 2 0 1 9 - 2 0 2 ,9 8 ( 2 ,9 1 + 7 × 0 .4 3 × $ 6 8 .7 2 ,4 7 × 8 8 .3 7 2 ,1 8 4 ,6 6 3 2 .5 5 1 ,5 1 $ 6 ,1 7 7 3 48 64 5% 7 2% 7 9 ) F is c a l Y e a r 2 0 2 0 - 2 1 3 ,0 3 ( 2 ,6 6 + 3 7 × 0 .4 1 8 × $ 7 0 .7 1 2 ,7 2 × 7 6 .7 5 9 ,7 6 2 2 ,4 9 4 8 .6 8 1 0 ,9 5 $ 3 3 ,4 4 8 3 58 00 6% 7 3% 0 3 ) 2 0 2 1 - 2 2 2 ,9 1 ( 2 ,5 1 + 3 9 × 0 .4 1 9 × $ 7 2 .2 1 3 ,8 7 × 8 2 .7 0 1 1 ,4 7 2 5 ,3 4 3 7 .8 5 9 ,5 9 $ 3 4 ,9 3 6 7 98 25 2% 2 4% 3 7 ) T o $ 5 2 $ 7 ta 2 2 4 l ,4 ,0 ,5 9 6 5 9 0 9 FINDING 1— Understated costs (repeat finding) Section IV, “Reimbursable Activities,” of the parameters and guidelines begins: 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. Actual costs must be traceable and supported by source documents that show the validity of such costs, when they were incurred, and their relationship to the City of Oakland Domestic Violence Arrest Policies and Standards Program reimbursable activities. A source document is a document created at or near the same time the actual cost was incurred for the event or activity in question. Source documents may include, but are not limited to, employee time records or time logs, sign-in sheets, invoices, and receipts. . . . Section IV, “Reimbursable Activities,” of the parameters and guidelines continues: The claimant is only allowed to claim and be reimbursed for increased costs for reimbursable activities. . . . Increased cost is limited to the cost of an activity that the claimant is required to incur as a result of the mandate. Section IV.E, “Uniform Cost Allowance,” of the parameters and guidelines states: Pursuant to Government Code section 17557, the Commission on State Mandates has adopted a uniform cost allowance for reimbursement in lieu of payment of total actual costs incurred. The uniform cost allowance is applied only to Section IV, Reimbursable Activities, Component D (Implementation of the New Domestic Violence Arrest Policies to Identify the Primary Aggressor) and covers all costs (direct and indirect) of performing activities described under Component D. The uniform cost allowance provides the following: A standard time of twenty-nine (29) minutes may be claimed to identify the primary aggressor in any domestic violence incident. The standard time of twenty-nine (29) minutes is broken down as follows: • Seventeen (17) Minutes – Interview of both parties • Twelve (12) Minutes – Consideration of the factors listed [under Component D] The total cost will be determined by multiplying the number of reported responses × the average [PHR], including applicable indirect costs as specified in section V., paragraph B, herein, × .48 (29 minutes divided by 60 minutes). Recommendation We recommend that the city: • Follow the program’s parameters and guidelines and the SCO’s Mandated Cost Manual when preparing its reimbursement claims; and • Claim costs based on the number of domestic violence incident reports that its LRMS supports. City’s response The City agrees with the finding and will implement improved procedures to ensure that reimbursement claims accurately reflect the number of domestic violence incident reports as supported by the Local Records Management System (LRMS). -8- City of Oakland Domestic Violence Arrest Policies and Standards Program The city claimed ineligible salaries and benefits totaling $183,628. The related indirect costs total $41,353, for a total finding of $224,981. As noted in Finding 1, the city understated the claimed number of domestic violence incident reports for FY 2019-20 through FY 2021-22. The following table summarizes the audited population of incident reports and the claimed hours attributable to the audited population: -9- D o c u m e n te d n u m b e r o f d o m e s tic v io le n c e in c id e n t r e p o r ts ( a u d ite d S ta n d a r d tim e a llo w a n c e ( h o u r s ) T o ta l h o u r s a ttr ib u ta b le to d o c u m e n in c id e n t r e p o r ts ( a u d ite d p o p u la tio p o te d n ) p u la tio n ) × 2 0 1 9 - 2 0 2 ,9 8 0 .4 1 ,4 3 7 8 4 × F is 2 0 2 0 - 2 1 3 ,0 3 0 .4 1 ,4 5 c 8 8 8 a l Y × e a r 2 0 2 1 - 2 2 2 ,9 1 0 .4 1 ,4 0 6 8 0 × 2 0 2 2 - 2 3 2 ,5 0 0 .4 1 ,2 0 5 8 2 FINDING 2— Ineligible salaries and benefits (repeat finding) The reimbursable activities for this cost component consist of interviewing both parties involved in the domestic violence incident and considering the 17 factors identified in the program’s parameters and guidelines to identify the primary aggressor. To calculate the claimed costs, the city multiplied the number of reported responses to incidents by the average PHR, including the applicable indirect costs, then multiplied the resulting amount by the standard time of 29 minutes (0.48 hours). For each fiscal year, we selected a statistical sample from the documented number of domestic violence incident reports (the audited population) based on a 95% confidence level, a precision rate of ± 8%, and an expected error rate of 50%. We used statistical samples so that the results could be projected to the population for each fiscal year. For testing purposes, we selected a random sample of 571 incident reports (143 for FY 2019-20; 143 for FY 2020-21; 143 for FY 2021-22; and 142 for FY 2022-23). We reviewed the sample incident reports to determine whether the city had performed the required mandated program activities. The results of our review are as follows: • Allowable – 228 incident reports were fully reimbursable under the mandated program. These reports are reimbursable at 29 minutes (0.48 hours) per report. • Partially reimbursable – 283 incident reports were partially reimbursable because the officers did not interview both parties involved in the domestic violence incident. These reports are reimbursable at 20.5 minutes (0.34 hours) per report, based on 8.5 minutes to interview one party and 12 minutes to consider the various factors identified in the program’s parameters and guidelines. • Unallowable – 60 incident reports were unsupported or were non- mandate-related. Incidents were unsupported because the city did not City of Oakland Domestic Violence Arrest Policies and Standards Program maintain or was unable to provide reports for review. Non-mandate- related incidents were those that did not meet the definition of domestic violence as provided in PC section 13700, incidents that were related to violations of restraining orders, or incidents in which the relationship between individuals did not satisfy the criteria described in PC section 13700(b). During testing, we found that the city had claimed the entire standard time of 29 minutes for incident reports that were only partially reimbursable, and had claimed reimbursement for ineligible and unsupported incident reports. The city overstated these costs because it did not claim costs in accordance with the program’s parameters and guidelines or the SCO’s Mandated Cost Manual. The following table summarizes the results of the statistical samples: -10- A P U T llo w a b le in c id e n a r tia lly r e im b u r s ( o n ly o n e p a r n a llo w a b le in c id o ta l r e p o r ts s a m t r e p o r ts a b le in c id e n ty in te r v ie w e n t r e p o r ts p le d t r e d e ) p o r ts 2 0 1 9 - 2 0 6 4 6 7 1 2 1 4 3 F is c a 2 0 2 0 - 2 1 5 2 7 2 1 9 1 4 3 l Y e a r 2 0 2 1 - 2 2 5 9 6 3 2 1 1 4 3 2 0 2 2 - 2 3 5 3 8 1 8 1 4 2 T o ta l 2 2 8 2 8 3 6 0 5 7 1 The following table summarizes the unallowable hours based on the results of the statistical samples by fiscal year: Fiscal Year 2019-20 2020-21 2021-22 2022-23 Total Allowable incident reports 6 4 5 2 5 9 5 3 2 28 Standard time allowance (hours) × 0.48 × 0.48 × 0.48 × 0.48 Subtotal [A] 3 1 2 5 2 8 2 5 Partially reimbursable incident reports (only one party interviewed) 6 7 7 2 6 3 8 1 2 83 Allowable standard time allowance (hours) × 0.34 × 0.34 × 0.34 × 0.34 Subtotal [B] 2 3 2 4 2 1 2 8 Total reimbursable hours for sampled reports [C] = [A] + [B] 5 4 4 9 4 9 5 3 Statistical sample size ÷ 143 ÷ 143 ÷ 143 ÷ 142 Reimbursable hours per report 0.38 0.34 0.34 0.37 Documented number of domestic violence incident reports (audited population) × 2,987 × 3,038 × 2,916 × 2,505 Total reimbursable hours 1,135 1,033 991 927 Hours per documented number of domestic violence incident reports (audited population) + (1,434) + (1,458) + (1,400) + (1,202) Total unallowable hours ( 299) ( 425) ( 409) ( 275) City of Oakland Domestic Violence Arrest Policies and Standards Program The following table summarizes the unallowable costs based on the unallowable hours identified from the statistical samples by fiscal year: Fiscal Year 2019-20 2020-21 2021-22 2022-23 Total Unallowable hours (299) (425) (409) (275) Claimed average PHR (salary only) × $ 6 8.74 × $ 7 0.70 × $ 72.25 × $ 73.27 Unallowable salaries [A] ( 20,553) ( 30,048) (29,550) (20,149) Claimed benefit rate [B] × 88.37% × 76.75% × 82.70% × 87.67% Related unallowable benefit costs [C] = [A] × [B] ( 18,163) ( 23,062) (24,438) (17,665) Total unallowable salaries and benefits [D] = [A] + [C] ( 38,716) ( 53,110) (53,988) (37,814) $ (183,628) Claimed indirect cost rate [E] 32.55% 48.68% 37.85% 43.93% Related indirect costs1 [F] = [A] ×[ E] (6,690) ( 14,627) (11,185) (8,851) (41,353) Audit adjustment [G] = [D] + [F] $ (45,406) $ (67,737) $ (65,173) $ (46,665) $ (224,981) Section IV, “Reimbursable Activities,” of the parameters and guidelines begins: 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. Actual costs must be traceable and supported by source documents that show the validity of such costs, when they were incurred, and their relationship to the reimbursable activities. A source document is a document created at or near the same time the actual cost was incurred for the event or activity in question. Source documents may include, but are not limited to, employee time records or time logs, sign-in sheets, invoices, and receipts. . . . Section IV, “Reimbursable Activities,” of the parameters and guidelines continues: The claimant is only allowed to claim and be reimbursed for increased costs for reimbursable activities. . . .Increased cost is limited to the cost of an activity that the claimant is required to incur as a result of the mandate. Section IV.E, “Uniform Cost Allowance,” of the parameters and guidelines states: Pursuant to Government Code section 17557, the Commission on State Mandates has adopted a uniform cost allowance for reimbursement in lieu of payment of total actual costs incurred. The uniform cost allowance is applied only to Section IV, Reimbursable Activities, Component D (Implementation of the New Domestic Violence Arrest Policies to Identify the Primary Aggressor) and covers all costs (direct and indirect) of performing activities described under Component D. The uniform cost allowance provides the following: A standard time of twenty-nine (29) minutes may be claimed to identify the primary aggressor in any domestic violence incident. The standard time of twenty-nine (29) minutes is broken down as follows: • Seventeen (17) Minutes – Interview of both parties -11- City of Oakland Domestic Violence Arrest Policies and Standards Program • Twelve (12) Minutes – Consideration of the factors listed [under Component D] The total cost will be determined by multiplying the number of reported responses × the average [PHR], including applicable indirect costs as specified in section V., paragraph B, herein, × .48 (29 minutes divided by 60 minutes). Recommendation We recommend that the city: • Follow the program’s parameters and guidelines and the SCO’s Mandated Cost Manual when preparing its reimbursement claims; • Claim costs based on the number of domestic violence incidents that its LRMS supports; • Claim costs for only those reports that document incidents meeting the definition of domestic violence by PC section 13700; and • Claim only the portion of the standard time allowance that is attributable to the mandated activities performed. City’s response The City agrees with the finding and will strengthen the internal review procedures to ensure only fully supported and eligible incident reports are claimed, with accurate standard time allocations. FINDING 3— For the audit period, the city claimed indirect costs based on indirect cost rate proposals (ICRP) prepared for the police department. We found that Overstated indirect the city had overstated its indirect costs for FY 2020-21 and FY 2022-23 cost rates (repeat by $37,369. finding) During testing, we reviewed the city’s expenditure report for FY 2020-21 and found that the city had not consistently allocated departmental costs to the indirect and direct cost pools. We identified the following errors: • Operating expenses were allocated in conjunction with other expense categories. • Salary and benefit costs were allocated as an operating expense. • Leave pay benefits were incorrectly allocated as salaries. • Grant programs were erroneously allocated as indirect costs (e.g., Department of Justice, Alameda County Vehicle Abatement, Traffic Safety, and Measure Y: Public Safety). We recalculated the city’s indirect cost rate for FY 2020-21 by adjusting the costs consistently between indirect and direct cost pools. The city claimed an indirect cost rate of 48.68%. We determined that 34.27% is allowable; this represents a difference of 14.41% from the claimed indirect cost rate. We applied the error rate to allowable salaries and benefits and found that the city had overstated indirect costs by $18,605. -12- City of Oakland Domestic Violence Arrest Policies and Standards Program We reviewed the city’s FY 2022-23 expenditure report and found that the city had excluded direct salaries and benefits attributable to grant programs (e.g., Department of Justice, Alameda County Vehicle Abatement, Traffic Safety, and Measure Y: Public Safety). We recalculated the city’s indirect costs for FY 2022-23 by consistently adjusting the direct salaries and benefits to include grant program costs. The city claimed an indirect cost rate of 43.93%. We determined that 31.34% is allowable; this represents a difference of 12.59% from the claimed indirect cost rate. We applied the error rate to allowable salaries and benefits and found that the city had overstated indirect costs by $18,764. The following table summarizes the claimed, allowable, adjusted indirect costs rates: Claimed Allowable Fiscal Indirect Cost Indirect Cost Audit Year Rate Rate Adjustment 2020-21 48.68% 34.27% (14.41)% 2022-23 43.93% 31.34% (12.59)% The following table summarizes the adjustment to the indirect costs: -13- A C E A A llo w a b le in d ir e c t c o s t r a la im e d in d ir e c t c o s t r a te r r o r r a te llo w a b le s a la r ie s a n d b e u d it a d ju s tm e n t te n e f its + × $ F is c 2 0 2 0 - 2 1 3 4 .2 7 % ( 4 8 .6 8 ) % ( 1 4 .4 1 ) % 1 2 9 ,1 1 ( 1 8 ,6 0 5 a 3 ) l Y + × e a r 2 0 2 2 - 2 3 3 1 .3 4 % ( 4 3 .9 3 ) % ( 1 2 .5 9 ) % 1 4 9 ,0 3 $ ( 1 8 ,7 6 4 7 ) $ T o ( 3 ta l 7 ,3 6 9 ) Title 2, Code of Federal Regulations, Part 225, Appendix A, Part C, subdivision 3.b. states: All activities which benefit from the governmental unit’s indirect cost including unallowable activities and services donated to the governmental unit by third parties, will receive an appropriate allocation of indirect costs. Section IV, “Reimbursable Activities,” of the parameters and guidelines begins: 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. Actual costs must be traceable and supported by source documents that show the validity of such costs, when they were incurred, and their relationship to the reimbursable activities. A source document is a document created at or near the same time the actual cost was incurred for the event or activity in question. Source documents may include, but are not limited to, City of Oakland Domestic Violence Arrest Policies and Standards Program employee time records or time logs, sign-in sheets, invoices, and receipts. . . . Section IV, “Reimbursable Activities,” of the parameters and guidelines continues: The claimant is only allowed to claim and be reimbursed for increased costs for reimbursable activities. . . . Increased cost is limited to the cost of an activity that the claimant is required to incur as a result of the mandate. Section V.B., “Indirect Costs,” of the parameters and guidelines states: Indirect costs are defined as costs which are incurred for common or joint purpose, benefiting more than one program and are not directly assignable to a particular department of program without efforts disproportionate to the result achieved. Indirect costs may include both (1) overhead costs of the unit performing the mandate; and (2) the costs of central government services distributed to other departments based on a systematic and rational basis through a cost allocation plan. Compensation for indirect costs is reimbursable utilizing the procedure provided in the OMB A-87 [Title 2, Code of Federal Regulations, Part 225]. Claimants have the option of using 10% of direct labor, excluding fringe benefits, or preparing a departmental Indirect Cost Rate Proposal (ICRP) for the department if an indirect cost in excess of 10% is claimed. If more than one department is claiming indirect costs for the mandated program, each department must have its own ICRP prepared in accordance with OMB A-87. An ICRP must be submitted with the claim when the indirect cost rate is in excess of 10%. Recommendation We recommend that the city: • Follow the program’s parameters and guidelines and the SCO’s Mandated Cost Manual when preparing its reimbursement claims; and • Prepare indirect cost rates that are supported by its expenditure ledgers and allocate costs consistently between fiscal years in accordance with Title 2, Code of Federal Regulations, Part 225, Appendix A, Part C, subdivision 3.b. City’s response The City agrees with the finding and will enhance internal oversight during the preparation of indirect cost rate proposals (ICRPs) to ensure that allocations are consistent and fully supported by expenditure records. -14- City of Oakland Domestic Violence Arrest Policies and Standards Program Attachment— City’s Response to Draft Audit Report State Controller’s Office Division of Audits Post Office Box 942850 Sacramento, CA 94250 www.sco.ca.gov S24-MCC-0011