Report 2013-122 Recommendation 8 Responses

Report 2013-122: California Department of Toxic Substances Control: Its Lack of Diligence in Cost Recovery Has Contributed to Millions in Unbilled and Uncollected Costs (Release Date: August 2014)

Recommendation #8 To: Toxic Substances Control, Department of

To ensure it loads only accurate billing data into FI$Cal, the department should continue evaluating projects with outstanding costs in its billing system to meet the July 2015 implementation date.

Annual Follow-Up Agency Response From October 2016

As of June 30, 2016, DTSC evaluated and performed data clean up on all its backlog sites. DTSC has resolved costs at 1517 of the original 1621 backlog sites. DTSC has analyzed each site, documented paths forward and continues to pursue resolution on the remaining 104 sites. DTSC's formal data cleanup process reviewed site history, determined data gaps and assigned sites to categories to determine the most effective path forward for resolving uncollected costs. DTSC will continue to track categories, billing statuses, document workflow and process bottlenecks in its desktop application Cost Recovery Monitoring database. This database provides instant cost recovery updates and is also informing the creation of DTSC's replacement billing system called Cost Recovery Billing System III(CRBS III). CRBS III will perform the functions previously considered for FI$Cal. As envisioned, CRBS III will not only be a billing system but will also be a conduit for communication, data sharing and reporting that will help to ensure future unrecovered costs are held to a minimum. DTSC is conducting a Stage 2 Business Analysis following the States IT procurement process. The new system is due to be ready by 2021.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

Annual Follow-Up Agency Response From November 2015

In previous audit responses, DTSC reported that Fi$Cal had determined it could not meet the Department's billing needs. DTSC now is working with the Department of Technology to implement a new billing system as soon as possible. On Oct. 14, 2015 DTSC submitted a Stage 1 Business Analysis (S1BA) document to the Department of Technology to begin the project approval process. A meeting with the Department of Technology to discuss the business analysis as well as next steps in the project approval process is scheduled in November. Development and deployment for the new billing system are expected to take three to four additional years beyond project approval. DTSC continues to clean up data and reduce unresolved costs. DTSC is on track to complete data cleanup on backlog sites by June 30, 2016, well before a new billing system would be in place. DTSC's new procedures include enhanced guidelines and controls to help ensure that new data will be accurate.

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented

1-Year Agency Response

Since its last audit report in February, DTSC wrote and implemented a Backlog Resolution Desk Manual to further speed resolution on sites with outstanding costs of more than $5,000. DTSC evaluated, cleaned up data and determined a path forward for 458 of 1661 sites. DTSC continues to work down its prioritization schedule of high dollar sites with unresolved costs and sites where the statute of limitation for collecting costs could expire. DTSC fully implemented its Microsoft SharePoint based data management system and dashboard used to track cost recovery work flows and build a metric-based culture for cost recovery. As previously reported, Fi$Cal determined it could not meet DTSC's billing needs. A recently revised State-wide IT project approval process pushed CRBS project approval to July 2018. Development and deployment are expected to take 3-4 additional years beyond project approval. DTSC is working with the Department of Technology to implement this project as soon as possible. Although DTSC is making significant progress in evaluating projects with unresolved costs, some of the 1661 sites identified by the State Auditor will not be fully resolved until July 2016. This includes 543 sites of $5,000 or less that will be addressed by the proposed legislation outlined in Recommendation 11. The July 2016 timeframe coincides with the expiration of 14 two-year limited term positions hired to clean up data, reduce unresolved costs and develop strong processes for the future. DTSC has identified business needs and is exploring opportunities to make these positions permanent.

California State Auditor's Assessment of 1-Year Status: Partially Implemented

6-Month Agency Response

On January 5, 2015, DTSC received a letter from our FI$Cal Executive Partner acknowledging that the FI$Cal financial management system would be unable to meet the unique programmatic accounts receivable business needs of DTSC's current billing system (CRBS). In response to this setback, DTSC is pursuing funding and completing the prescribed IT procurement authorization process to replace its legacy, archaic and unsupported billing system. At the same time, DTSC continues to aggressively evaluate projects with outstanding costs and conduct data cleanup. DTSC implemented a Microsoft SharePoint based site to track cost recovery work flows. A dashboard generated from this site allows DTSC to track its progress and build a metric based culture for cost recovery. DTSC continues to balance the need for data cleanup with the need to focus on high dollar sites with unresolved costs. DTSC continues to work down its prioritization schedule for sites with outstanding balances of $1 million or more and sites of any balance with potentially expiring statutes of limitation dates. As of January 21, 2015, DTSC resolved 21 of 52 (40%) of the highest priority sites worth $17.5 million of an original $38.7 million. Although DTSC is making significant progress in evaluating projects with outstanding costs in its billing system, not all sites with outstanding costs will be fully resolved until July 2016.

California State Auditor's Assessment of 6-Month Status: Partially Implemented

60-Day Agency Response

DTSC issued 27 Departmental Procedures Memorandums in November 2013 to maximize cost recovery. The Legislature approved 14 limited-term positions to help eliminate the backlog and conduct data cleanup based on a proposed two-year plan. Those positions became effective in July 2014. Also in July, DTSC implemented 1) a system using SharePoint to track and report cost recovery progress for sites with outstanding costs, and 2) a database for tracking litigation holds and referrals for potential litigation to the Office of the Attorney General. In August 2014, DTSC hired an Accounting Administrator I (Specialist) partially dedicated to evaluating projects with outstanding costs and FI$Cal implementation. Building on this foundation as well as audit recommendations, DTSC is implementing a prioritization schedule to first evaluate the cost recovery potential for sites with outstanding balances of $1 million or more and sites of any balance with potentially expiring statutes of limitation dates. Sites will be analyzed and data cleanup done using those priorities to maximize cash collection. Data cleanup requires a site-by-site analysis and can include changing billing statuses or designating the site as an orphan with no viable party to bill. Analysis often can be complex and time-consuming. Focusing DTSC efforts with data clean up as the first priority could mean the department is unable to recoup taxpayer dollars or misses important collection deadlines. Although DTSC is making significant progress in evaluating projects with outstanding costs in its billing system, not all sites with outstanding costs will be fully resolved until July 2016.

California State Auditor's Assessment of 60-Day Status: Pending

All Recommendations in 2013-122

Agency responses received are posted verbatim.