Santa Barbara County

SANTA BARBARA COUNTY Audit Report REGIONAL HOUSING NEED DETERMINATION PROGRAM Chapter 1143, Statutes of 1980 July 1, 2000, through June 30, 2002 STEVE WESTLY California State Controller December 2004 STEVE WESTLY California State Controller December 3, 2004 Val Alexeeff, Director Planning and Development Department Santa Barbara County 123 East Anapamu Street Santa Barbara, CA 93101 Dear Mr. Alexeeff: The State Controller’s Office audited the claims filed by Santa Barbara County for costs of the legislatively mandated Regional Housing Need Determination Program (Chapter 1143, Statutes of 1980) for the period of July 1, 2000, through June 30, 2002. The county claimed $422,897 for the mandated program. Our audit disclosed that $384,153 is allowable and $38,744 is unallowable. The unallowable costs occurred because the county claimed unsupported costs. The State paid the county $158,399. Allowable costs claimed exceed the amount paid by $225,754. If you have any questions, please contact Jim L. Spano, Chief, Compliance Audits Bureau, at (916) 323-5849. Sincerely, Original Signed By: VINCENT P. BROWN Chief Operating Officer VPB:JVB/jj cc: The Honorable Robert W. Geis Auditor-Controller Santa Barbara County Betsy Blaine, Business Manager Planning and Development Department Santa Barbara County James Tilton, Program Budget Manager Corrections and General Government Department of Finance Santa Barbara County Regional Housing Need Determination Program Contents Audit Report Summary............................................................................................................................ 1 Background........................................................................................................................ 1 Objective, Scope, and Methodology................................................................................. 1 Conclusion.......................................................................................................................... 2 Views of Responsible Official........................................................................................... 2 Restricted Use.................................................................................................................... 2 Schedule 1—Summary of Program Costs........................................................................... 3 Finding and Recommendation.............................................................................................. 4 Attachment—County’s Response to Draft Audit Report Steve Westly • California State Controller Santa Barbara County Regional Housing Need Determination Program Audit Report Summary The State Controller’s Office (SCO) audited the claims filed by Santa Barbara County for costs of the legislatively mandated Regional Housing Need Determination Program (Chapter 1143, Statutes of 1980) for the period of July 1, 2000, through June 30, 2002. The last day of fieldwork was April 6, 2004. The county claimed $422,897 for the mandated program. Our audit disclosed that $384,153 is allowable and $38,744 is unallowable. The unallowable costs occurred because the county claimed unsupported costs. The State paid the county $158,399. Allowable costs claimed exceed the amount paid by $225,754. Background Chapter 1143, Statutes of 1980, established substantially more detailed requirements for the housing element of local agencies’ general plan. Cities and counties were required to have provisions in their housing elements for meeting their “appropriate share of the regional demand for housing” as determined by their regional Council of Government. On August 19, 1981, the State Board of Control (now the Commission on State Mandates) ruled that Chapter 1143, Statutes of 1980, resulted in state-mandated costs that are reimbursable pursuant to Government Code Section 17561. Parameters and Guidelines establishes the state mandate and defines criteria for reimbursement. The State Board of Control adopted Parameters and Guidelines on March 25, 1982. In compliance with Government Code Section 17558, the SCO issues claiming instructions for each mandate requiring state reimbursement to assist local agencies in claiming reimbursable costs. Objective, We conducted the audit to determine whether costs claimed represent Scope, and increased costs resulting from the Regional Housing Need Determination Program for the period of July 1, 2000, through June 30, 2002. Methodology Our audit scope included, but was not limited to, determining whether costs claimed were supported by appropriate source documents, not funded by another source, and not unreasonable and/or excessive. We conducted the audit according to Government Auditing Standards, issued by the Comptroller General of the United States, and under the authority of Government Code Section 17558.5. We did not audit the county’s financial statements. We limited our audit scope to planning and performing audit procedures necessary to obtain reasonable assurance concerning the allowability of expenditures claimed for reimbursement. Accordingly, we examined transactions, on a test basis, to determine whether the costs claimed were supported. Steve Westly • California State Controller 1 Santa Barbara County Regional Housing Need Determination Program We limited our review of the county’s internal controls to gaining an understanding of the transaction flow and claim preparation process as necessary to develop appropriate auditing procedures. Conclusion Our audit disclosed an instance of noncompliance with the requirements outlined above. This instance is described in the accompanying Summary of Program Costs (Schedule 1) and in the Finding and Recommendation section of this report. For the audit period, Santa Barbara County claimed $422,897 for Regional Housing Need Determination Program costs. Our audit disclosed that $384,153 is allowable and $38,744 is unallowable. For fiscal year (FY) 2000-01, the State paid the county $158,399. Our audit disclosed that $128,275 is allowable. The county should return $30,124 to the State. For FY 2001-02, the State made no payment to the county. Our audit disclosed that $255,878 is allowable. The State will pay $255,878 to the county, contingent upon available appropriations. Views of We issued a draft audit report on October 5, 2004. Val Alexeeff, Director Responsible of the county Planning and Development Department, responded by letter dated October 18, 2004, agreeing with the audit results. The Official county’s response is included as an attachment to this final audit report. Restricted Use This report is solely for the information and use of Santa Barbara County, 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 Chief, Division of Audits Steve Westly • California State Controller 2 Santa Barbara County Regional Housing Need Determination Program Schedule 1— Summary of Program Costs July 1, 2000, through June 30, 2002 Actual Costs Allowable Audit Cost Elements Claimed per Audit Adjustments1 July 1, 2000, through June 30, 2001 Salaries and benefits $ 57,864 $ 40,060 $ (17,804) Services and supplies 76,713 71,723 (4,990) Indirect costs 23,822 16,492 (7,330) Total costs $ 158,399 128,275 $ (30,124) Less amount paid by the State (158,399) Allowable costs claimed in excess of (less than) amount paid $ (30,124) July 1, 2001, through June 30, 2002 Salaries and benefits $ 179,608 $ 173,759 $ (5,849) Services and supplies 9,617 9,297 (320) Indirect costs 75,273 72,822 (2,451) Total costs $ 264,498 255,878 $ (8,620) Less amount paid by the State — Allowable costs claimed in excess of (less than) amount paid $ 255,878 Summary: July 1, 2000, through June 30, 2002 Salaries and benefits $ 237,472 $ 213,819 $ (23,653) Services and supplies 86,330 81,020 (5,310) Indirect costs 99,095 89,314 (9,781) Total costs $ 422,897 384,153 $ (38,744) Less amount paid by the State (158,399) Allowable costs claimed in excess of (less than) amount paid $ 225,754 _________________________ 1 See the Finding and Recommendation section. Steve Westly • California State Controller 3 Santa Barbara County Regional Housing Need Determination Program Finding and Recommendation FINDING— The county claimed a portion of program costs based on percentage estimates of time spent by its employees performing the mandated Unsupported costs activities. The county did not maintain contemporaneous time claimed distribution records that showed the actual time spent by each employee on these specific functions. Also, the county did not furnish any support for the percentages it used to allocate costs to these activities. Parameters and Guidelines for the Regional Housing Need Determination Program specifies that only actual increased costs incurred in the performance of the mandated activities and supported by appropriate documentation are reimbursable. Since salaries and benefits, services and supplies, and indirect costs were all allocated using the same unsupported methodology, claimed costs have been adjusted as follows: Fiscal Year 2000-01 2001-02 Total Salaries and benefits $ (17,804) $ (5,849) $ (23,653) Services and supplies (4,990) (320) (5,310) Indirect costs (7,330) (2,451) (9,781) Audit adjustment $ (30,124) $ (8,620) $ (38,744) Recommendation We recommend that the county ensure that all costs claimed are eligible increased costs incurred as a result of the mandate and are supported by appropriate documentation. County’s Response The county agreed with the finding. OTHER ISSUE— In its response, the county requested that the $30,124 overpaid by the State for FY 2000-01 be used to offset the $255,878 underpaid by the Adjustment to State for FY 2001-02. over/underpaid amounts SCO’s Comment Each fiscal year is funded by the Legislature through separate appropriations. Therefore, the $30,124 overpayment by the State cannot be used to offset other fiscal year underpayments. Steve Westly • California State Controller 4 Santa Barbara County Regional Housing Need Determination Program Attachment— County’s Response to Draft Audit Report Steve Westly • California State Controller State Controller’s Office Division of Audits Post Office Box 942850 Sacramento, California 94250-5874 http://www.sco.ca.gov S04-MCC-045