COMMITMENT • INTEGRITY • LEADERSHIP	View full PDF report View Selected Abbreviations
Penalty Assessment Funds California’s Traffic Penalties and Fees Provide Inconsistent Funding for State and County Programs and Have a Significant Financial Impact on Drivers Report Number: 2017-126

Introduction

Background

As an approach to generating revenue for state and county programs, the Legislature has established in several sections of state law numerous financial penalties and fees that are levied on criminal and public offenses, including violations of the Vehicle Code.¹ Violations of the Vehicle Code are also referred to as traffic violations. Our review focused on penalties and fees resulting from traffic violations—those penalties and fees that are added to traffic tickets.² However, the data for penalty and fee revenue that the State collects, and that we reviewed, are an aggregate of all criminal penalties and fees, including those added to traffic and nontraffic violations. These penalties and fees currently generate more than $450 million annually. According to data available from the Judicial Council of California (Judicial Council), traffic cases comprised the large majority—approximately 82 percent on average—of all criminal case filings in the State from fiscal years 2014–15 through 2015–16.³ As such, we used the State’s penalty and fee data for our analysis.

An individual who receives a citation for a traffic violation is assessed an amount that consists of a base fine plus several penalties and fees, as defined in the text box. The base fine depends on the type of violation. Traffic violations fall into three categories: infractions, misdemeanors, and felonies. Traffic infractions are generally minor offenses not punishable by time in jail but by a base fine of up to $100, and they include offenses such as speeding or failing to stop at a stop sign. State law requires the Judicial Council to establish a uniform traffic penalty schedule for all nonparking infractions of the Vehicle Code unless a judge in a particular case specifies a different penalty. Traffic misdemeanors are offenses punishable by imprisonment in a county jail, a base fine of up to $1,000, or both. This type of violation includes driving under the influence of alcohol and/or drugs and reckless driving. Lastly, traffic felonies are generally serious offenses punishable by imprisonment, a base fine of no less than $1,000 and up to $10,000, or both. An example of a traffic felony is the failure of an individual to stop his or her vehicle after being involved in an accident resulting in injury or death to another person.

In addition to the base fine, state law imposes further penalties, surcharges, and fees on individuals cited for traffic violations. Many of the penalties we reviewed are calculated as a certain dollar amount per every increment of $10, or any part of $10, of the base fine. Figure 1 shows an example calculation for a $35 base fine and a penalty set at $10. As Table 1 demonstrates, many penalties have amounts that range from $1 to $10 per $10 of the base fine. Furthermore, the fees we reviewed are a set amount per conviction, and the state surcharge is calculated as a percentage of the total base fine used to calculate the state penalty.

Figure 1
Some Penalties Are Calculated Based on Increments of the Base Fine

Source: California State Auditor’s analysis of state law.

Table 1 also identifies the administering agencies responsible for overseeing the spending of revenue from the funds associated with the penalties we reviewed, the code and section that established the penalty or fee, and the respective fund into which the penalty or fee must be deposited. These funds support various state and local government programs and services. For the $7 county penalty, each county’s board of supervisors has determined by resolution the proportion of the revenue to be deposited into specific county funds. The base fines are generally transferred to specific funds within the local jurisdiction where the violation occurred. We discuss the different types of programs that these funds help pay for in more detail later in this report.

Table 1
The Numerous Penalties and Fees Imposed on All Traffic Violations Are Distributed Into Many State and County Funds

Penalty/Fee	Fund	Administering Agency	Code (In Effect as of June 26, 2017)	Amount ($)
State Penalty*	State Penalty Fund	California Governor’s Office of  Emergency Services (Cal OES)	Penal Code (PC) 1464	$10 for every $10
All revenue from the State Penalty transfers to these funds	Fish and Game Preservation Fund	California Department of Fish and Wildlife	PC 1464 (f)(1)	0.33%	These percentages add up to 100% of the $10 State Penalty
	Restitution Fund	California Victim Compensation Board	PC 1464 (f)(2)	32.02%
	Peace Officers’	Commission on Peace Officer Standards and Training	PC 1464 (f)(3)	23.99%
	Training Fund
	Driver Training Penalty Assessment Fund	California Department of Education	PC 1464 (f)(4)	25.70%
	Corrections Training Fund	Board of State and Community Corrections	PC 1464(f)(5)	7.88%
	Local Public Prosecutors and Public Defenders Training Fund	Cal OES	PC 1464(f)(6)	0.78% up to $850,000
	Victim-Witness Assistance Fund	Cal OES	PC 1464 (f)(7)	8.64%
	Traumatic Brain Injury Fund	Department of Rehabilitation	PC 1464 (f)(8)(A)	0.66%
County Penalty	Various	County	Government Code (GC) 76000	$7 for every $10 or part of $10
DNA Penalty (county)†	DNA Identification Fund (county)	County	GC 76104.6 (a)(1)	$1 for every $10 or part of $10
DNA Penalty (state)	DNA Identification Fund (state)	California Department of Justice (DOJ)	GC 76104.7 (a)	$4 for every $10 or part of $10
Emergency Medical Air Transportation (EMAT) Penalty	EMAT Act Fund	Department of Health Care Services	GC 76000.10 (c)(1)	$4 per conviction
Emergency Medical Services (EMS) Penalty	Maddy EMS Fund (county)	County	GC 76000.5	$2 for every $10 or part of $10
State Court Construction Penalty	Immediate and Critical Needs Account/State Court Facilities Construction Fund	Judicial Council	GC 70372	$5 for every $10 or part of $10
Criminal Conviction Assessment	Immediate and Critical Needs Account	Judicial Council	GC 70373	$30 per felony or misdemeanor/$35 per infraction
Court Operations Assessment	Trial Court Trust Fund	Judicial Council	PC 1465.8	$40 per conviction
State Surcharge	State General Fund	State	PC 1465.7	20% of base fine

Source: State law.

* The State Penalty is split, with 30 percent retained by the county and 70 percent deposited in the State Penalty Fund. This fund is a pass-through fund for the funds listed beneath it in the table. Historically, the State Controller’s Office (State Controller) has distributed the revenue based on the percentages stated in the law; however, recent legislation removed the previously required percentages. According to the Department of Finance (Finance), beginning June 27, 2017, applicable programs can spend directly out of the State Penalty Fund according to their authorized budget.

^† Of the revenue collected for the county DNA Penalty, 75 percent is deposited in the county DNA Identification Fund and 25 percent is transferred to the State’s DNA Identification Fund. All of the revenue collected for the state DNA Penalty is transferred to the State’s DNA Identification Fund.

The penalties and fees have been added to state law over time, resulting in a significant total cost for each traffic violation. Table 2 shows the year when each penalty or fee was added to state law and the total cost of a violation as of that year. Currently, for example, an individual who is guilty of a traffic infraction with a base fine of $35 could pay up to $237 after all associated penalties and fees are added to the base fine. In fact, the total cost for a traffic infraction almost doubled from 2002 to 2010. It is also important to note that failure to pay all or any portion of a fine may result in an additional civil assessment of up to $300. What is more, until state law changed in 2017, an individual’s driver’s license could be suspended for failure to pay a fine.

Table 2
Over Time, Penalties and Fees Have Significantly Increased the Cost of Traffic Violations

Penalty	Year Added to State Law	Amount	Examples of Total Amounts Owed
			Infraction*		Misdemeanor*
			Cost	Total Cost (As of year imposed)	Cost	Total Cost (As of year imposed)
Base fine†			$35		$300
State Penalty	1980	$10 for every $10 or part of $10	40	$75	300	$600
County Penalty	1991	$7 for every $10 or part of $10	28	103	210	810
State Court Construction Penalty	2002	$5 for every $10 or part of $10	20	123	150	960
State Surcharge	2002	20% of base fine	7	130	60	1,020
Court Operations Assessment	2003	$40 per conviction	40	170	40	1,060
DNA Penalty (county)	2004	$1 for every $10 or part of $10	4	174	30	1,090
DNA Penalty (state)	2006	$4 for every $10 or part of $10	16	190	120	1,210
EMS Penalty (county)	2006	$2 for every $10 or part of $10	8	198	60	1,270
Criminal Conviction Assessment	2008	$30 felony or misdemeanor/$35 infraction per conviction	35	233	30	1,300
EMAT Penalty	2010	$4 per conviction	4	237	4	1,304

Sources: State law, legislative bill analyses, and the Judicial Council’s Uniform Bail and Penalty schedules.

* An infraction is a minor violation, such as failing to stop at a stop sign ($35). A misdemeanor is a more significant violation, such as driving with a suspended license ($300).

^† The examples in this table reflect base fines for a first conviction. The base fine for certain Vehicle Code violations increases by $10 for each prior moving violation conviction within the past 36 months, so the base fine for an individual can be higher than the amounts shown.

Furthermore, counties can choose whether to levy certain penalties, so the total number and amount of penalties differs by county. For example, Sacramento County did not impose the $2 EMS penalty for every $10 increment or part of $10 until January 2018, so a violation in Sacramento County occurring earlier than 2018 would not have included this penalty while a violation in the counties of San Mateo, Merced, or Los Angeles would have included it. In addition, courts that conduct night or weekend sessions of the court can choose to impose a $1 per case night or weekend court fee.

Research has shown that California’s traffic fines are among the highest in the nation. For example, according to a May 2017 report published by the Lawyers’ Committee for Civil Rights, California’s $490 total fine for a red‑light violation is the highest amount of all the states. The Legislative Analyst’s Office (LAO) came to a similar conclusion in 2016, finding that California’s fines and fees associated with common traffic offenses were high compared to 33 other states that the LAO surveyed.

The State and County Entities That We Reviewed Have Distributed Penalty and Fee Revenue Appropriately

Several state and county entities have a role in collecting, distributing, and spending penalty and fee revenue. Although we did not review the collection processes, we verified that the collected amounts were distributed in the manner state law and county resolution require. As shown in Figure 2, the general process starts when a county court collects penalty and fee revenue from traffic citations in its county. ⁴ The court reports this revenue to the county’s auditor‑controller. The auditor‑controller then distributes the county’s portion of the money collected to relevant county funds and sends the State’s portion to the State Controller.⁵ The State Controller distributes this money to different state funds as the law requires. Administering agencies then must ensure that the funds from penalties and fees are used appropriately.

Figure 2
State and County Entities Distribute Penalty and Fee Revenue From Traffic Violations

Sources: Description of processes from staff at Los Angeles, Merced, and Sacramento counties’ auditor-controller’s offices, San Mateo County’s County Manager’s Office and county controller’s staff, and the State Controller.

* In San Mateo County, the County Manager’s Office distributes county penalty revenue to various county funds, while the county controller sends state penalty revenue to the State Controller.

In reviewing the distribution of penalty and fee revenue from fiscal years 2014–15 through 2016–17, we examined the distribution and expenditure processes at four counties: Los Angeles, Merced, Sacramento, and San Mateo. We found that for the months we reviewed, county auditor‑controllers had accurately distributed the revenue that the court reported collecting to the State and select county funds in the proportions required by state law and county resolution. We also reviewed the State Controller’s disbursement process and examined how five state entities spent the penalty and fee revenue; we found that the State Controller appropriately distributed the revenue from the State Penalty Fund to other state funds. Our review of expenditures from several state and county funds that receive penalty and fee revenue found that state and county entities spent the penalty revenue for allowable purposes.

State Entities Have Previously Identified Issues With the Distribution and Use of Penalties and Fees

Other state entities have previously raised concerns about the State’s system of penalties and fees. The LAO issued a report in January 2016 that explained its concerns with the State’s system, such as the difficulty the Legislature has in controlling the use of revenue from fines and fees. In addition, the LAO concluded that the existing system distributes revenue in a manner that is generally not based on program needs, which results in certain programs receiving more or less funding than needed. The report also stated that the complexity of the current distribution process makes it difficult to distribute revenue accurately and that complete and accurate data on collections and distributions were lacking. The LAO recommended that the Legislature reevaluate the overall structure of the fine and fee system and that it increase legislative control over the use of this revenue.

In an April 2016 white paper, the Judicial Council also noted the complex structure required to administer California’s criminal fines and fees. It reported that the number of criminal case filings dropped overall from fiscal years 2005–06 through 2014–15, and it indicated that future collections may decline in the near term, according to these trends. In addition, the white paper discussed significant public policy issues the Judicial Council believes must be considered, such as the complexity of administering the current fine and fee system, the Legislature’s role in deciding how to spend penalty revenue, and the overall significant increase in the total costs of violations. The Judicial Council recommended to the Legislature that any funding that is decreased or eliminated through a change to the current structure should be assessed for need and any resulting loss in revenue to the judicial branch and the trial courts be fully addressed. It also recommended that the overall structure of criminal fines and fees, including collection and distribution, be simplified.

The Legislature Has Acted to Revise the State’s Approaches to Imposing and Distributing Penalty and Fee Revenue

To provide relief to individuals who are in violation of court orders because of unpaid traffic fines as well as to collect revenue by encouraging individuals to pay old unpaid fines, the Legislature established an amnesty program in 2015. From October 1, 2015, to April 3, 2017, the one‑time program offered individuals with qualifying infractions and misdemeanors an opportunity to resolve delinquent debt that had been initially due on or before January 1, 2013. Depending on their income, these individuals were allowed to resolve their outstanding debts by paying 20 percent or 50 percent of the total amount due, including fines, fees, and penalties. The program also allowed driving privileges that had previously been suspended to be restored under certain conditions. More recently, legislation proposed in 2017 would require the court, in any case involving an infraction filed with the court, to determine whether the defendant is indigent. If the defendant can prove indigence through specified information, the court would then be required to reduce the base fine and associated fees by 80 percent and offer a payment plan option. This legislation is currently pending consideration in the Legislature.

The Legislature has also recently changed the way some penalty revenue is distributed to associated funds. Specifically, changes to state law removed the authority, and the previously required percentages, for distributing revenue from the State Penalty Fund to other state funds as shown earlier in Table 1. Instead, according to Finance, beginning June 27, 2017, applicable programs can spend directly out of the State Penalty Fund according to their authorized budget. While this change may alter the specific allocations for the programs that receive funding from the State Penalty Fund, it does not revise the amount of the State Penalty, which is still $10 for every increment of $10, or part of $10, of the base fine on all criminal and traffic violations.

Scope and Methodology

The Joint Legislative Audit Committee (Audit Committee) directed the California State Auditor (State Auditor) to review the funds that the State and local governments receive from the penalties assessed according to specified Government and Penal Code sections. Table 3 lists the objectives that the Audit Committee approved and the methods we used to address them.

Table 3
Audit Objectives and the Methods Used to Address Them

AUDIT OBJECTIVE		METHOD
1	Review and evaluate the laws, rules, and regulations significant to the audit objectives.	Reviewed relevant laws, rules, guidelines, and policies related to penalties generated from traffic violations. We found that criminal violations, such as misdemeanors and felonies, may be punishable by imprisonment. Infractions are not punishable by imprisonment and are typically not considered criminal violations. However, in this report, we consider all violations of the Vehicle Code that constitute felonies, misdemeanors, or infractions as “criminal” violations and characterize all penalties, surcharges, fines, fees, and assessments imposed for violations of the Vehicle Code as “criminal.” Interviewed key staff at the State Controller, the Judicial Council, county auditor‑controllers’ offices, and local county departments. Reviewed reports from the Judicial Council and the LAO on the subject of criminal fines and fees. Identified penalties related to traffic violations by reviewing state law and the Judicial Council’s Uniform Bail and Penalty schedules. The penalties and fees we identified are listed in Table 1.
2	Identify the total revenue, expenditures, and fiscal year-end fund balances for each of the state funds that receive revenue from penalties for traffic violations from fiscal years 2014–15 through 2016–17.a. Identify by program the number of applications the Authority received, reviewed, approved, denied, or deemed deficient. For those applications that were denied or deemed deficient, identify the reasons for denial or deficiency.b. Determine the consistency of the review of applications for HUD’s CoC program and other similar programs across the eight service areas. If there is significant variation in the approval process between service areas, determine the cause.c. Assess the Authority’s practices for communicating and publicizing its criteria for approving or denying applications. Determine whether the process is transparent.	Reviewed state law to identify the state funds that receive penalty and fee revenue. Queried the State Controller’s fiscal system to determine total yearly cash collected (revenue) and cash disbursed (expenditures) for the funds identified. Also determined the revenue generated specifically from the penalties and fees listed in Table 1 and identified the year‑end balances for those funds. Queried the State Controller’s fiscal system to determine total yearly cash collected (revenue) and cash disbursed (expenditures) for the funds identified. Also determined the revenue generated specifically from the penalties and fees listed in Table 1 and identified the year‑end balances for those funds. Identified trends in revenue, expenditures, and year-end balances. Interviewed staff at administering agencies to identify reasons for and impacts of these trends. Interviewed State Controller staff to identify internal controls for processing counties’ remittances and reviewed its process for distributing the State Penalty Fund revenue to other funds.
3	From a selection of four counties, identify the total revenue, total and types of expenditures, and fiscal year‑end fund balances for each of the local funds that received revenue from traffic violation fines and fees from fiscal years 2014–15 through 2016–17.	To select four counties for review, we considered the following factors: The amount of penalty revenue generated in the county. Representation of urban, suburban, and rural populations. Population demographics such as ethnicity and median income to cover a range of socioeconomic levels. The volume of traffic based on average daily miles traveled and major travel corridors. The region of California in which the county is located. Selected the counties of Los Angeles, Merced, Sacramento, and San Mateo and performed the following: Reviewed and analyzed data from each county’s auditor-controller’s office to determine annual revenues, expenditures, and year-end fund balances for county funds that receive penalty and fee revenue. We present the types of expenditures that are allowable from each of the funds in Table 7. Interviewed staff at local administering agencies to identify reasons for trends in these amounts. Reviewed internal controls each county put in place to ensure that revenue amounts distributed are accurate and complete as established in state law and county resolution. Reviewed the configuration in the case management system at a superior court responsible for traffic violations in each county to verify that the system is configured with the penalty and fee amounts established in state law and county resolution. Examined the processes used by each auditor-controller’s office for distributing the penalty and fee revenues. Determined whether each auditor-controller distributed revenue completely by verifying that the total revenue received from the respective court was fully distributed to the required state and local funds for one month in each of the fiscal years from 2014–15 through 2016–17. Determined whether each county auditor-controller distributed revenue accurately by verifying that it distributed the correct revenue amounts (as determined by the court’s case management system) into selected funds as established in state law and county resolution.
4	Determine whether state agencies spent revenue from the penalties that state funds received from fiscal years 2014–15 through 2016–17 in accordance with the requirements and stated purposes of those funds.	Reviewed state law to identify the agencies responsible for administering the state funds that receive penalty and fee revenue. Reviewed state law and the Manual of State Funds to identify the purpose and allowable uses of each state fund that receives penalty and fee revenue. Selected five state funds to review by identifying the total revenue received, the percentage of the total revenue that was from penalties and fees, the fund’s purpose and whether that purpose was related to traffic violations, and the administering agency. Obtained expenditure data from the administering agencies for fiscal years 2014–15 through 2016–17 and selected five expenditures for testing to determine whether each expenditure was allowable. We did not perform completeness testing on these data because it would have been cost-prohibitive to collect supporting documents located throughout the State. Reviewed each administering agency’s design of internal controls over processing expenditures.
5	Determine whether the four selected counties spent the revenue from the penalties that local governments received from fiscal years 2014–15 through 2016–17 in accordance with the requirements and stated purposes of those funds.	Selected four county funds to review by examining expenditure data obtained from each county and identifying the total revenue received, the fund’s purpose, and the administering county department. Identified the administering agency of each of the selected funds and interviewed staff to gain perspective on how the fund is managed, how expenditures are processed, and the controls in place to ensure that fund revenue is spent appropriately. Selected five expenditures from each of the four funds for testing to determine whether each expenditure was allowable. We did not perform completeness testing on these data because it would have been cost-prohibitive to collect supporting documents for numerous county systems. Reviewed each administering agency’s design of internal controls over processing expenditures.
6	Review and assess any other issues that are significant to the audit.	Determined whether the amount of each penalty was based on program needs by reviewing the electronically available legislative history and bill analyses for each penalty and fee. Evaluated how well the purposes for which the penalty or fee can be used aligned with traffic violations. We reviewed the purposes of each fund that receives penalty revenue and assessed whether the purposes directly, indirectly, or do not align with the nature of traffic violations. Analyzed the increase in total fines from traffic-related penalties and fees over time. Interviewed key staff at Finance regarding the recent change in state law concerning the transfers from the State Penalty Fund.

Sources: California State Auditor’s analysis of the Audit Committee’s audit request number 2017-126 and state law, and information and documentation identified in the column titled Method.

Assessment of Data Reliability

In performing this audit, we obtained electronic data from state and county entities’ information systems. Table 4 describes the analyses we conducted using data from these information systems, our methods for testing, and the results of our assessments. Although these determinations may affect the precision of the numbers we present, there is sufficient evidence in total to support our audit findings, conclusions, and recommendations.

Table 4
Methods Used to Assess Data Reliability

Information System	Purpose	Method and Result	Conclusion
State Controller’s fiscal system	To identify total revenue, expenditures, and year-end fund balances for state funds that received revenue from penalties for traffic violations from fiscal years 2014–15 through 2016–17.	We assessed the reliability of revenue, expenditures, and fund balances by reviewing the testing of the fiscal system’s features and control environment performed as part of the State’s financial audit.	Sufficiently reliable for the purposes of this audit.
Selected county auditor-controller and departmental accounting systems	To identify total revenue, expenditures, and year-end fund balances for county funds that received revenue from penalties for traffic violations from fiscal years 2014–15 through 2016–17.	We performed electronic testing and data-set verification procedures for the funds we selected under objective 5 and did not identify any issues. We performed testing to verify that each county auditor‑controller accurately deposited into the relevant county funds the penalty revenue collected for one month in each of the three fiscal years from 2014–15 through 2016–17. Some county funds receive other revenue that we did not test. We also did not test expenditure and fund balance data for accuracy or completeness because collecting supporting documents for numerous county systems would have been cost-prohibitive.	Undetermined reliability for the purposes of this audit. Although this determination may affect the precision of the numbers we present, there is sufficient evidence to support our findings and conclusions.

Sources: California State Auditor’s analysis of various documents, interviews, and data from the entities listed in this table.

 

---

Footnotes

¹ We explain violations of the Vehicle Code in more detail in the Scope and Methodology section. Go back to text

² The penalties and fees that we reviewed are not imposed on parking tickets. Go back to text

³ The Judicial Council incorporated traffic and nontraffic infractions into its data on criminal case filings. Go back to text

⁴ Some courts use private collection agencies. Go back to text

⁵ State law requires that before making any other required distribution, the county treasurer shall transmit 2 percent of all fines, penalties, and forfeitures collected in criminal cases into the State Trial Court Improvement and Modernization Fund to be used exclusively to pay the costs of automated systems of the trial courts, such as automated data collection through case management systems. Go back to text

 

---

Back to top