San Diego County

SAN DIEGO COUNTY Audit Report SEXUALLY VIOLENT PREDATOR PROGRAM Chapters 762 and 763, Statutes of 1995, and Chapter 4, Statutes of 1996 July 1, 1999, through June 30, 2002 S W TEVE ESTLY California State Controller June 2005 S W TEVE ESTLY California State Controller June 30, 2005 Tracy Sandoval Assistant Chief Financial Officer/ Auditor and Controller San Diego County 1600 Pacific Highway, Room 166 San Diego, CA 92101 Dear Ms. Sandoval: The State Controller’s Office audited the claims filed by San Diego County for costs of the legislatively mandated Sexually Violent Predator Program (Chapters 762 and 763, Statutes of 1995, and Chapter 4, Statutes of 1996) for the period of July 1, 1999, through June 30, 2002. The county claimed $805,235 ($806,235 less a $1,000 penalty for filing a late claim) for the mandated program. Our audit disclosed that $738,178 is allowable and $67,057 is unallowable. The unallowable costs occurred primarily because the county claimed costs that were ineligible and unsupported. The State paid the county $548,554. Allowable costs claimed exceed the amount paid by $189,624. If you disagree with the audit findings, you may file an Incorrect Reduction Claim (IRC) with the Commission on State Mandates (COSM). The IRC must be filed within three years following the date that we notify you of a claim reduction. You may obtain IRC information at COSM’s Web site at www.csm.ca.gov (Guidebook link), and obtain IRC forms by telephone at (916) 323-3562 or by e-mail at csminfo@csm.ca.gov. 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/ams cc: (See page 2) Ms. Tracy Sandoval -2- June 30, 2005 cc: Arlene K. Smith, Assistant Chief Administrative Services San Diego County District Attorney’s Office Steven Carroll, Public Defender San Diego County Public Defender’s Office Jovy M. Lomibao, Senior Accountant San Diego County Sheriff’s Department Gina Surgeon, Cost Analyst San Diego County Auditor and Controller’s Department James Tilton, Program Budget Manager Corrections and General Government Department of Finance San Diego County Sexually Violent Predator Program Contents Audit Report Summary............................................................................................................................ 1 Background........................................................................................................................ 1 Objective, Scope, and Methodology................................................................................. 1 Conclusion.......................................................................................................................... 2 Views of Responsible Officials.......................................................................................... 2 Restricted Use.................................................................................................................... 3 Schedule 1—Summary of Program Costs............................................................................ 4 Findings and Recommendations........................................................................................... 6 Attachment—County’s Response to Draft Audit Report Steve Westly • California State Controller San Diego County Sexually Violent Predator Program Audit Report Summary The State Controller’s Office (SCO) audited the claims filed by San Diego County for costs of the legislatively mandated Sexually Violent Predator Program (Chapters 762 and 763, Statutes of 1995, and Chapter 4, Statutes of 1996) for the period of July 1, 1999, through June 30, 2002. The last day of fieldwork was March 11, 2004. The county claimed $805,235 ($806,235 less a $1,000 penalty for filing a late claim) for the mandated program. Our audit disclosed that $738,178 is allowable and $67,057 is unallowable. The unallowable costs occurred primarily because the county claimed costs that were ineligible and unsupported. The State paid the county $548,554. Allowable costs claimed exceed the amount paid by $189,624. Background Welfare and Institutions Code Sections 6250 and 6600 through 6608 (added by Chapters 762 and 763, Statutes of 1995, and Chapter 4, Statutes of 1996) establish new civil commitment procedures for the continued detention and treatment of sexually violent offenders following their completion of a prison term for certain sex-related offenses. Before detention and treatment are imposed, the county attorney is required to file a petition for civil commitment. A trial is then conducted to determine if the inmate is a sexually violent predator beyond a reasonable doubt. If the inmate accused of being a sexually violent predator is indigent, the test claim legislation requires counties to provide the indigent with the assistance of counsel and experts necessary to prepare the defense. On June 25, 1998, the Commission on State Mandates (COSM) determined that Chapters 762 and 763, Statutes of 1995, and Chapter 4, Statutes of 1996, imposed a reimbursable state mandate under Government Code Section 17561. Parameters and Guidelines establishes the state mandate and defines reimbursement criteria. COSM adopted Parameters and Guidelines on September 24, 1998. In compliance with Government Code Section 17558, the SCO issues claiming instructions for mandated programs, to assist local agencies in claiming reimbursable costs. Objective, We conducted the audit to determine whether costs claimed represent increased costs resulting from the Sexually Violent Predator Program for Scope, and the period of July 1, 1999, 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. Steve Westly • California State Controller 1 San Diego County Sexually Violent Predator Program 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 that costs claimed were allowable for reimbursement. Accordingly, we examined transactions, on a test basis, to determine whether the costs claimed were supported. 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 instances of noncompliance with the requirements outlined above. These instances are described in the accompanying Summary of Program Costs (Schedule 1) and in the Findings and Recommendations section of this report. For the audit period, San Diego County claimed $805,235 ($806,235 less a $1,000 penalty for filing a late claim) for Sexually Violent Predator Program costs. Our audit disclosed that $738,178 is allowable and $67,057 is unallowable. For fiscal year (FY) 1999-2000, the State paid the county $238,825. Our audit disclosed that $198,257 is allowable. The county should return $40,568 to the State. For FY 2000-01, the State paid the county $246,969. Our audit disclosed that $220,480 is allowable. The county should return $26,489 to the State. For FY 2001-02, the State paid the county $62,760. Our audit disclosed that $319,441 is allowable. The State will pay allowable costs claimed that exceed the amount paid, totaling $256,681, contingent upon available appropriations. Views of We issued a draft audit report on April 20, 2005. Tracy M. Sandoval, Responsible Assistant Chief Financial Officer/Auditor and Controller, responded by letter dated May 31, 2005 (Attachment), agreeing with the audit results. Official This final audit report includes the county’s response. The county raised two issues in their response that are also addressed in the Findings and Recommendations section of the report. Steve Westly • California State Controller 2 San Diego County Sexually Violent Predator Program Restricted Use This report is solely for the information and use of San Diego 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 3 San Diego County Sexually Violent Predator Program Schedule 1— Summary of Program Costs July 1, 1999, through June 30, 2002 Actual Costs Allowable Audit Cost Elements Claimed per Audit Adjustments Reference 1 July 1, 1999, through June 30, 2000 Salaries $ 79,360 $ 49,565 $ (29,795) Finding 1 Benefits 20,664 12,935 (7,729) Finding 1 Services and supplies 130,800 130,800 — Training and travel — — — Total direct costs 230,824 193,300 (37,524) Indirect costs 8,001 4,957 (3,044) Findings 1, 2 Total claimed costs $ 238,825 198,257 $ (40,568) Less amount paid by the State (238,825) Allowable costs claimed in excess of (less than) amount paid $ (40,568) July 1, 2000, through June 30, 2001 Salaries $ 96,628 $ 77,271 $ (19,357) Finding 1 Benefits 24,344 19,690 (4,654) Finding 1 Services and supplies 115,239 115,239 — Training and travel 553 553 — Total direct costs 236,764 212,753 (24,011) Indirect costs 10,205 7,727 (2,478) Findings 1, 2 Total claimed costs $ 246,969 220,480 $ (26,489) Less amount paid by the State (246,969) Allowable costs claimed in excess of (less than) amount paid $ (26,489) July 1, 2001, through June 30, 2002 Salaries $ 36,544 $ 44,990 $ 8,446 Finding 1 Benefits 10,679 12,704 2,025 Finding 1 Services and supplies 268,641 268,641 — Training and travel — — — Total direct costs 315,864 326,335 10,471 Indirect costs 4,577 4,499 (78) Findings 1, 2 Total claimed costs 320,441 330,834 10,393 Less late penalty (1,000) (1,000) — Subtotal 319,441 329,834 10,393 Allowable costs in excess of amount claimed — (10,393) (10,393) Total claimed costs $ 319,441 319,441 $ — Less amount paid by the State (62,760) Allowable costs claimed in excess of (less than) amount paid $ 256,681 Steve Westly • California State Controller 4 San Diego County Sexually Violent Predator Program Schedule 1 (continued) Actual Costs Allowable Audit Cost Elements Claimed per Audit Adjustments Reference 1 Summary: July 1, 1999, through June 30, 2002 Salaries $ 212,532 $ 171,826 $ (40,706) Benefits 55,687 45,329 (10,358) Services and supplies 514,680 514,680 — Training and travel 553 553 — Total direct costs 783,452 732,388 (51,064) Indirect costs 22,783 17,183 (5,600) Total claimed costs 806,235 749,571 (56,664) Less late penalty (1,000) (1,000) — Subtotal 805,235 748,571 (56,664) Allowable costs in excess of amount claimed — (10,393) (10,393) Total claimed costs $ 805,235 738,178 $ (67,057) Less amount paid by the State (548,554) Allowable costs claimed in excess of (less than) amount paid $ 189,624 _________________________ 1 See the Findings and Recommendations section. Steve Westly • California State Controller 5 San Diego County Sexually Violent Predator Program Findings and Recommendations FINDING 1— The county overstated Public Defender’s Office salaries and benefits by $51,064 for the audit period. The related indirect cost is $4,070. Salaries Overstated salary and and benefits consist of costs claimed for three departments: District benefit costs Attorney, Public Defender, and Sheriff. Following is a summary of the audit adjustment. Fiscal Year 1999-2000 2000-01 2001-02 Total Salaries $ (29,795) $ (19,357) $ 8,446 $ (40,706) Benefits (7,729) (4,654) 2,025 (10,358) Total (37,524) (24,011) 10,471 (51,064) Indirect costs (2,979) (1,936) 845 (4,070) Audit adjustment $ (40,503) $ (25,947) $ 11,316 $ (55,134) For fiscal year (FY) 1999-2000, the county overstated salary and benefit costs by $37,524. The county overclaimed 664.2 hours, which it did not support, for three deputy public defenders. The county also underclaimed 48.5 hours for one deputy public defender. For FY 2000-01, the county overstated salary and benefit costs by $23,113. The county overclaimed 445.5 hours, which it did not support, for five deputy public defenders. The county also underclaimed 74.7 hours for two deputy public defenders. In addition, the county overstated salary and benefit costs by $898 because it overstated the productive hourly rates for six deputy public defenders. For FY 2001-02, the county understated salary and benefit costs by $10,471. The county underclaimed 198.9 hours for two deputy public defenders. Parameters and Guidelines for the Sexually Violent Predator Program requires that the claimant describe the reimbursable activities performed and specify the actual time devoted to each reimbursable activity by each employee, the productive hourly rate, and related fringe benefits. Parameters and Guidelines also states that all costs claimed are to be traceable to source documents that show evidence of the validity of such costs and their relationship to the mandated program. Recommendation We recommend the county establish procedures to ensure that all claimed costs are properly supported. County’s Response The finding consists of overstated costs as a result of Public Defender hours claimed during the three-year audit period which did not have adequate supporting documentation. The Department of the Public Defender has instituted new procedures for time accounting related to Steve Westly • California State Controller 6 San Diego County Sexually Violent Predator Program all Sexually Violent Predator (SVP) cases. Implementation of new internal controls in this area will ensure that claimed costs will have complete and valid documentation for reimbursement. SCO’s Comment The finding remains unchanged. FINDING 2— The county overstated District Attorney’s Office indirect costs by $1,530 during the audit period. The overstatement occurred because the county Overstated indirect applied the default indirect cost rate of 10% to salaries and benefits. The costs default rate can be applied only to direct labor, excluding fringe benefits. Following is a summary of the overstated indirect costs. Fiscal Year 1999-2000 2000-01 2001-02 Total Claimed salaries $ 79,360 $ 96,628 $ 36,544 $ 212,532 Claimed indirect cost rate × 10% × 10% × 10% × 10% Allowable costs 7,936 9,663 3,654 21,253 Claimed indirect costs (8,001) (10,205) (4,577) (22,783) Audit adjustment $ (65) $ (542) $ (923) $ (1,530) Parameters and Guidelines states that claimants have the option of using 10% of direct labor, excluding fringe benefits, or of preparing an indirect cost rate proposal (ICRP) for the department if the indirect cost rate exceeds 10%. If more than one department is claiming indirect costs for the mandated program, each department must have its own ICRP prepared in accordance with Office of Management and Budget (OMB) Circular A-87. Recommendation We recommend the county establish procedures to ensure that it applies the indirect cost rate to the correct base. County’s Response The overstatement of indirect costs occurred because the County applied the default indirect cost rate of 10% to both salaries and benefits, however, a default rate may only be applied to direct labor. The fiscal staff in the District Attorney’s Office who prepares SVP claims have been trained on the correct method of determining indirect costs. In the future, indirect cost rates will be applied to the correct base amount. SCO’s Comment The finding remains unchanged. Steve Westly • California State Controller 7 San Diego County Sexually Violent Predator Program OTHER ISSUES In the county’s response (Attachment), it addressed the following additional issues. The SCO’s comments follow the county’s responses. Issue 1 County’s Response Findings 1 and 2 in the draft audit report currently reflect audit adjustments of $56,664, and not the $67,057 disallowance as summarized on page 5 of the report. The difference, $10,393, represents audit allowable costs, in excess of the County’s claim for FY 2001/02, but which are not available due to the statute of limitations for filing an amended claim – one year from the date of filing having lapsed. With regard to this amount, no Finding was expressly stated in the audit report. We request that the final Audit Report expressly state a Finding 3 for this audit adjustment so that the Findings reflect the sum of all audit adjustments, or $67,057. SCO’s Comment For FY 2001-02, the county underclaimed $10,393 in allowable costs when preparing the mandate claim. We limit allowable costs to amounts actually claimed in any one fiscal year. Since we did not identify any unallowable costs to include in the audit report for FY 2001-02, the underclaimed costs are not reimbursable. The county was unable to file an amended reimbursement claim because the statute of limitations to file an amended claim expired pursuant to Government Code Section 17568. County’s Response Issue 2 Of the total allowable costs, the County was paid $548,544. Pursuant to the State Controller’s Local Agencies Mandated Cost Mandated Cost Manual, Section 2.5 – Payment of Claims, we anticipate that the remaining balance of $189,624 will be paid to the County with the prescribed interest. SCO’s Comment The amount is payable contingent upon available appropriation. Steve Westly • California State Controller 8 San Diego County Sexually Violent Predator 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-019