Report 2021-046 All Recommendation Responses

Report 2021-046: Proposition 56 Tobacco Tax: The Department of Health Care Services Is Not Adequately Monitoring Provider Payments Funded by Tobacco Taxes (Release Date: November 2022)

Recommendation for Legislative Action

To better protect Medi-Cal beneficiaries, the Legislature should consider amending state law to permit DHCS and the boards that license Medi-Cal providers to execute agreements that would allow those licensing boards to provide DHCS with timely information from the notifications sent to the licensing boards when Medi-Cal providers are arrested and the arrest involves a credible allegation of fraud or indicates the provider is under investigation for fraud or abuse.

Description of Legislative Action

As of January 23, 2023, the Legislature has not taken action to address this specific recommendation.

California State Auditor's Assessment of 60-Day Status: No Action Taken

Recommendation #2 To: Health Care Services, Department of

To ensure that managed care plans pay Proposition 56 supplemental payments to the appropriate providers, DHCS should require managed care plans to submit Medi-Cal beneficiary identification information with their quarterly reports by June 2023. Once DHCS obtains this information, it should reconcile those reports to medical encounter data and then recover any overpayments it identifies.

1-Year Agency Response

DHCS released technical guidance to Medi-Cal managed care plans (MCPs) 03/01/23 requiring submission of beneficiary level information in their Proposition 56 (Prop 56) expenditure reporting on a semi-annual basis (see Attachment 3 in Substantiation folder). All MCPs submitted the data leveraging the new dataset beginning on 05/15/23. Furthermore, all Prop 56 APLs have been updated to incorporate the adherence to the technical guidance requirement, the first APL was issued on 04/28/23 and the last was issued on 07/25/23 (see Attachments 4 through 9 in Substantiation folder).

DHCS will continue to identify and address material discrepancies and, where appropriate, to require MCPs to pay remittances under the terms of the applicable Prop 56 directed payment arrangements for future data submissions based on each program year after accounting for appropriate data reporting lag.

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

DHCS issued an all-plan letter directing managed care plans to submit a client index number with their required reports for directed payment programs. However, DHCS did not provide evidence to substantiate that it has received that information, reconciled those reports to medical encounter data, and recovered any overpayments. Thus, this recommendation is partially implemented.

6-Month Agency Response

Health Care Services did not submit a response to this recommendation.

California State Auditor's Assessment of 6-Month Status: No Action Taken

60-Day Agency Response

Health Care Services did not submit a response to this recommendation.

California State Auditor's Assessment of 60-Day Status: No Action Taken

Recommendation #3 To: Health Care Services, Department of

To ensure that managed care plans issue Proposition 56 supplemental payments only when providers have actually performed the services in question, DHCS should do the following:

-By June 2023, investigate those instances in which managed care plans were unable to provide evidence that the medical services we reviewed were provided. After determining why the managed care plans lacked this evidence, it should use its corrective action plan process to implement additional monitoring and oversight of those managed care plans.

1-Year Agency Response

DHCS has fully implemented this process. As stated in the prior update, DHCS has augmented its annual managed care program to specifically test for Prop 56 supplemental payments. See Attachment 2 in Substantiation folder for Exhibit 3-Audit Guide Cat 6. Specifically, subsection 6.3 within the exhibit. If there are findings of non-compliance in DHCS test work, specifically, MCP(s) unable to provide evidence of eligible medical services for reimbursement, DHCS would exercise its corrective action process and implement additional monitoring and oversight mechanisms.

California State Auditor's Assessment of 1-Year Status: No Action Taken

Although DHCS has implemented a process for annually selecting a sample of Proposition 56 supplemental payments and requesting the underlying medical records to confirm that the services were provided, there is no evidence in the documentation DHCS provided that it investigated those instances we identified in which managed care plans were unable to provide support that the medical services were provided.

6-Month Agency Response

Health Care Services did not submit a response to this recommendation.

California State Auditor's Assessment of 6-Month Status: No Action Taken

60-Day Agency Response

Health Care Services did not submit a response to this recommendation.

California State Auditor's Assessment of 60-Day Status: No Action Taken

Recommendation #4 To: Health Care Services, Department of

To ensure that managed care plans issue Proposition 56 supplemental payments only when providers have actually performed the services in question, DHCS should do the following:

-By June 2023, begin annually selecting a sample of Proposition 56 supplemental payments of a sufficient size to ensure that it can project the results of its review to the population of services that receive supplemental payments, and requesting the underlying medical records to confirm that the services were provided.

1-Year Agency Response

DHCS has fully implemented this process. As stated in the prior update, DHCS has augmented its annual managed care program to specifically test for Prop 56 supplemental payments. See Attachment 2 in Substantiation folder for Exhibit 3-Audit Guide Cat 6. Specifically, subsection 6.3 within the exhibit. If there are findings of non-compliance in DHCS test work, specifically, MCP(s) unable to provide evidence of eligible medical services for reimbursement, DHCS would exercise its corrective action process and implement additional monitoring and oversight mechanisms.

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

DHCS has fully implemented this recommendation by requiring its staff to select a sample of encounters with Proposition 56 codes and requesting managed care plans to provide the corresponding medical records. DHCS then compares those records to the encounter data submitted by the managed care plans.

6-Month Agency Response

Health Care Services did not submit a response to this recommendation.

California State Auditor's Assessment of 6-Month Status: No Action Taken

60-Day Agency Response

Health Care Services did not submit a response to this recommendation.

California State Auditor's Assessment of 60-Day Status: No Action Taken

Recommendation #5 To: Health Care Services, Department of

To comply with state law, reduce the amount of time it takes to suspend providers from delivering Medi-Cal services, and better protect Medi-Cal beneficiaries from potentially ineligible providers, DHCS should, by June 2023, begin issuing temporary provider suspensions or temporary payment suspensions when permissible or required by state law while it engages in the process of issuing a mandatory provider suspension.

1-Year Agency Response

The DHCS MSD has revised its suspension process. When MSD receives a notification of loss of license or conviction, MSD personnel will determine whether the activity contained in the notification constitutes a basis for the imposition of a temporary provider suspension under the statute. If it does, the information will be referred to the sanctions section within A&I for priority processing as a temporary suspension.

DHCS has met with the Department of Medi-Cal Fraud and Elder Abuse (DMFEA) and reached agreement to implement notifications to DHCS when charges are filed against a Medi-Cal provider. DHCS and DMFEA are currently formalizing this process for inclusion into each department/division's respective policies and procedures.

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

6-Month Agency Response

Health Care Services did not submit a response to this recommendation.

California State Auditor's Assessment of 6-Month Status: No Action Taken

60-Day Agency Response

Health Care Services did not submit a response to this recommendation.

California State Auditor's Assessment of 60-Day Status: No Action Taken

Recommendation #6 To: Health Care Services, Department of

To prevent providers from billing for services performed by other providers that have been suspended, DHCS should, by June 2023, revise its policies and billing system to assess all service-rendering providers included in claim data and verify that they have not been suspended.

1-Year Agency Response

Although DHCS was not able to identify any billing providers whom the Fiscal Intermediary paid while they were suspended, DHCS did identify that restitution payments did not check against providers under mandatory suspension. DHCS is conducting additional research to identify system checks used for restitution to learn where the breakdown occurred and will then issue policy guidance to implement edits, so that the system for restitution payments will check for suspended providers.

DHCS will also make an additional data run regarding identification of suspended rendering providers on claims prior to payment.

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

6-Month Agency Response

Health Care Services did not submit a response to this recommendation.

California State Auditor's Assessment of 6-Month Status: No Action Taken

60-Day Agency Response

Health Care Services did not submit a response to this recommendation.

California State Auditor's Assessment of 60-Day Status: No Action Taken

Recommendation #7 To: Health Care Services, Department of

To ensure that it reports accurate information to the public, DHCS should institute a more robust management review process for posting Proposition 56 expenditure information on its website beginning with the information it reports for fiscal year 2021-22.

1-Year Agency Response

The first and second-line managers review all formulas and data to ensure they are correct. Next, the second line manager reviews the information with the Branch Chief; and then the Branch Chief reviews with the Division Chief to mitigate the risk of errors in financial information posted to the website (see Attachment 1 in Substantiation folder).

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

Although DHCS describes its process for ensuring that it does not make errors in the financial information posted to its website, it did not provide documentation substantiating that it formalized these efforts.

6-Month Agency Response

Health Care Services did not submit a response to this recommendation.

California State Auditor's Assessment of 6-Month Status: No Action Taken

60-Day Agency Response

Health Care Services did not submit a response to this recommendation.

California State Auditor's Assessment of 60-Day Status: No Action Taken

Recommendation #8 To: Tax and Fee Administration, California Department of

To ensure that other tobacco product manufacturer-distributors pay the appropriate amount of OTP taxes, CDTFA should obtain sufficient documentation to verify the accuracy of those entities' wholesale costs. If these manufacturer-distributors refuse to provide necessary documentation, CDTFA should compel them to do so using the mechanisms existing in state law, such as administrative subpoenas, and it should consider referring them for criminal prosecution.

1-Year Agency Response

CDTFA completed the three audits referenced in the May 2023 update. The verifications of the wholesale costs performed in the audits, as indicated in the recommendation, resulted in minimal errors found. As a result, CDTFA will utilize Audit Examination Branch (AEB) team members' time and resources on the most productive areas of the audit.

Detailed training continues to be provided to the AEB team members. The training consists of, but is not limited to, other tobacco products (OTP) wholesale cost calculation methods, methods for obtaining records (including administrative subpoenas and/or referrals for criminal prosecution), and a review of Regulation 4076, Wholesale Cost of Tobacco Products , for alternative methods when the taxpayer's records are either inadequate and/or nonexistent. This matter is considered closed.

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

CDTFA provided us with documentation pertaining to the three audits that demonstrated it had determined whether manufacturer-distributors paid the appropriate amount of OTP tax and had obtained evidence to verify the accuracy of their wholesale costs. We consider this recommendation to be fully implemented.

6-Month Agency Response

Audit selection for fiscal year 2022/2023 focusing on CDTFA tobacco manufacturer and importer accounts is now complete. Three audits are in process and are anticipated to be completed by December 31, 2023.

Detailed training was provided to our Audit Examination Branch team members on January 18, 2023. This training covered items such as, but not limited to, other tobacco products (OTP) wholesale cost calculation methods, methods for obtaining records (including criminal prosecutions), and a review of Regulation 4076, Wholesale Cost of Tobacco Products , for alternative methods to assign wholesale costs when records are inadequate and/or nonexistent.

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

We have requested copies of the training that CDTFA provided to determine whether it addresses the concerns described in our recommendation. We look forward to reviewing those documents, the procedures CDTFA established for performing the audits currently in progress, CDTFA's audits of manufacturer-distributors' wholesale costs, and the supporting documentation CDTFA used to verify the accuracy of the amounts manufacturer-distributors used to calculate their wholesale costs.

60-Day Agency Response

A supplemental audit selection for fiscal year 2022/2023 which focuses on CDTFA tobacco manufacturer and importer accounts, is in process and is anticipated to be completed by the end of January 2023. Three audits are currently in progress and should be completed by December 2023.

Refresher training covering Requests for Records and the Subpoena Process was provided to team members on December 13, 2022. Additional detailed training covering OTP wholesale cost calculation methods, methods for obtaining records (including the subpoena process, obtaining third-party records, and criminal prosecution), proper comment writing for documenting the

request(s) for records, and review of Regulation 4076, Wholesale Cost of Tobacco Products, for alternative methods to assign wholesale costs when records are inadequate and/or nonexistent, is scheduled for January 18, 2023.

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

We will look forward to reviewing the results of CDTFA's audits of manufacturer-distributors' wholesale costs and the supporting documentation that CDTFA uses to verify the accuracy of the amounts manufacturer-distributors use to calculate their wholesale costs.

In addition, we will request CDTFA's training materials to confirm the nature of the training it provides.

Recommendation #9 To: Public Health, Department of

To ensure that it reports accurate information to the public, CDPH should compile the expenditure information for each of its Proposition 56 programs using the same type of accounting report beginning with the information it reports for fiscal year 2021-22.

60-Day Agency Response

CDPH used the Financial Statement Detailed Fund Balance (DF-303) Report to generate financial data to report Proposition 56 expenditure activities for fiscal year 2021-22. Proposition 56 expenditures are available online at https://www.cdph.ca.gov/Programs/CCDPHP/Pages/Proposition-56-Fiscal-Reporting.aspx. CDPH will continue to use this report going forward.

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

Although the fiscal year 2021-22 expenditure information that CDPH published on its website does not exactly match the amounts of funds transferred into its accounts according to the State Controller's Office's report of funds transferred, the numbers are materially similar and CDPH compiled the numbers for each of its Proposition 56 programs using the same type of report. Thus, we consider this recommendation fully implemented .

Recommendation #10 To: Tax and Fee Administration, California Department of

To provide more accurate information to the public, CDTFA should report on its website the amount of Proposition 56 funds that it actually received beginning with the information it reports for fiscal year 2021-22.

60-Day Agency Response

CDTFA amended the Proposition 56 table on our website (https://www.cdtfa.ca.gov/taxes-and-fees/prop-56-summaryrev-and-exp.htm) to include a column that displays the amount of funding transferred to Fund 3319 and amended the Total Amount Received column to include the full transfer amount to Fund 3319 and the expenditure amount from Fund 3304.

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

The link CDTFA provided is incorrect, the correct URL is: https://www.cdtfa.ca.gov/taxes-and-fees/prop-56-summary-rev-and-exp.htm

The amount of Proposition 56 funds that CDTFA reported that it received in fiscal year 2021-22 differs from the amount that the State Controller reported transferring into CDTFA's account, but it is materially accurate.

Recommendation #11 To: Education, Department of

To provide more accurate information to the public, Education should report on its website the amount of Proposition 56 funds that it actually received beginning with the information it reports for fiscal year 2021-22.

60-Day Agency Response

Fully Implemented. On December 13, 2022, Education published on its website the fiscal year 2021-22 Proposition 56 funding information, which identified the actual amounts received. As recommended by the CSA, the following reports were utilized to source the information posted:

1. For Funds Received: Report 15 and the State Controller's Office Agency Reconciliation Report; and

2. For Funds Spent: Report 6.

The Proposition 56 funding information is posted and available on the CDE's website at https://www.cde.ca.gov/ls/he/at/prop56expendreport2122.asp.

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

Although the fiscal year 2021-22 information that Education published on its website does not exactly match the amounts of funds transferred into its accounts according to the State Controller's Office's report of funds transferred, the numbers are materially similar. Thus, we consider this recommendation fully implemented.

Recommendation #12 To: Public Health, Department of

To provide more accurate information to the public, CDPH should report on its website the amount of Proposition 56 funds that it actually received beginning with the information it reports for fiscal year 2021-22.

60-Day Agency Response

CDPH has reported on its website the amount of funds received from Proposition 56 per the Financial Statement Detailed Fund Balance (DF-303) Report. It has discontinued reporting on closed periods and will only report on the most recent budget year per Revenue and Taxation Code, Section 30130.56(c). The Proposition 56 funding report is available at https://www.cdph.ca.gov/Programs/CCDPHP/Pages/Proposition-56-Fiscal-Reporting.aspx.

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

Although the fiscal year 2021-22 information that CDPH published on its website does not exactly match the amounts of funds transferred into its accounts according to the State Controller's Office's report of funds transferred, the numbers are materially similar. Thus, we consider this recommendation fully implemented.

Recommendation #13 To: Health Care Services, Department of

To provide more accurate information to the public, DHCS should report on its website the amount of Proposition 56 funds that it actually received beginning with the information it reports for fiscal year 2021-22.

1-Year Agency Response

DHCS has included the amount of actual revenue received in the fund and added actual revenue to the financial information that is published on the DHCS website (see Attachment 1 in Substantiation folder).

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

DHCS submitted documentation from its website showing the amount of Proposition 56 funds it received in fiscal year 2022-23. We will evaluate the accuracy of that information as part of a subsequent audit.

6-Month Agency Response

Health Care Services did not submit a response to this recommendation.

California State Auditor's Assessment of 6-Month Status: No Action Taken

60-Day Agency Response

Health Care Services did not submit a response to this recommendation.

California State Auditor's Assessment of 60-Day Status: No Action Taken

Recommendation #14 To: Justice, Department of

To provide more accurate information to the public, Justice should report on its website the amount of Proposition 56 funds that it actually received beginning with the information it reports for fiscal year 2021-22.

60-Day Agency Response

As recommended, DOJ's fiscal year 2021-22 annual report, including the cash transfer amount, has been published on the AG's website as "CA DOJ Summary of Expenditures (FY 2021-22) for Funds Received" as a part of The California Healthcare, Research and Prevention Tobacco Tax Act of 2016 - Tobacco - Prop 56. Moving forward, the published annual reports will include the cash transfer amounts.

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

Justice reported on its website the amount of Proposition 56 funds that it actually received for fiscal year 2021-22.

Recommendation #15 To: Tax and Fee Administration, California Department of

When CDTFA posts information to its website about the amounts of Proposition 56 funds it has received and spent, it should also post links to that information on its social media platforms to increase transparency.

60-Day Agency Response

On Dec. 22, 2022, CDTFA's Financial Management Division (FMD) alerted the External Affairs Division (EAD) via email that the "Proposition 56 Summary of Revenues and Expenditures" had been posted to the Department's website at https://www.cdtfa.ca.gov/taxes-and-fees/prop-56-summary-rev-and-exp.htm. EAD had posted the link and a variation of the following language to its Facebook, Twitter, and LinkedIn accounts: "CDTFA administers CA's cigarette and tobacco products

taxes, including Prop 56, the Healthcare, Research & Prevention Tobacco Tax Act of 2016, which helps fund healthcare programs/services; youth prevention programs; & medical research."

Going forward, EAD is adding a reminder to its annual social media calendar at the end of December for the Proposition 56\Summary of Revenues and Expenditures post.

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

CDTFA implemented the recommendation by posting on a social media platform a link to its website about the amounts of Proposition 56 funds that it received and spent in fiscal year 2021-22.

Recommendation #16 To: Education, Department of

When Education posts information to its website about the amounts of Proposition 56 funds it has received and spent, it should also post links to that information on its social media platforms to increase transparency.

60-Day Agency Response

Fully implemented. On December 16, 2022, Education published the fiscal year 2021-22 Proposition 56 funding information on its social media page; the links to the post are as follows, Tobacco-Use Prevention Education Program - Home | Facebook and https://www.cde.ca.gov/ls/he/at/tupefunding.asp.

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

CDE implemented the recommendation by posting on a social media platform a link to the website on which it describes the amounts of Proposition 56 funds it has received and spent in fiscal year 2021-22.

Recommendation #17 To: Health Care Services, Department of

When DHCS posts information to its website about the amounts of Proposition 56 funds it has received and spent, it should also post links to that information on its social media platforms to increase transparency.

1-Year Agency Response

Health Care Services did not submit a response to this recommendation.

California State Auditor's Assessment of 1-Year Status: No Action Taken

6-Month Agency Response

Health Care Services did not submit a response to this recommendation.

California State Auditor's Assessment of 6-Month Status: No Action Taken

60-Day Agency Response

Health Care Services did not submit a response to this recommendation.

California State Auditor's Assessment of 60-Day Status: No Action Taken

Recommendation #18 To: Finance, Department of

To ensure that Education receives its proportional share of Proposition 56 funds, the Department of Finance (Finance) should determine the amount of fiscal year 2017-18 Proposition 56 funds that Education is owed and arrange for the transfer of those funds from CDPH to Education by June 2023.

1-Year Agency Response

Consistent with the California State Auditor's (Auditor) recommendations in Report 2021-046, the Department of Finance has determined the California Department of Education (Education) is owed $17,910,930.19 for its proportional share of Fiscal Year 2017-18 Proposition 56 funds.

Executive Order NO. E 22/23-135 transferring $15,233,233.08 to Education was submitted to the California State Controller (SCO) on January 20, 2023. On July 5, 2023, Finance submitted Executive Order NO. E 23/24-1 transferring $1,338,848.56 from Fund 3322 to Fund 3321. To complete the audit recommendation and consistent with the plan Finance provided to the Auditor in Finance's November 4, 2022 response to the audit and 6-month Implementation update, Finance will transfer $1,338,848.55 from Fund 3322 to Fund 3321 immediately after July 1, 2024. With this final transfer in July 2024, this audit finding will be fully implemented.

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

The Department of Finance has determined the amount owed to Education and has transferred a portion of those funds to Education. We will consider the recommendation to be fully implemented after Finance transfers the remaining funds to Education's account.

6-Month Agency Response

Consistent with the California State Auditor's (Auditor) recommendations in Report 2021-046, the Department of Finance has determined the California Department of Education (Education) is owed $17,910,930.19 for its proportional share of Fiscal Year 2017-18 Proposition 56 funds.

Executive Order NO. E 22/23-135 transferring $15,233,233.08 to Education was submitted to the California State Controller on January 20, 2023. To complete the audit recommendation and consistent with the plan Finance provided to the Auditor in Finance's November 4, 2022 response to the audit and 60-day Implementation update, Finance will transfer $1,338,848.56 from Fund 3322 to Fund 3321 on July 1, 2023, and $1,338,848.55 from Fund 3322 to Fund 3321 on July 1, 2024.

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

The Department of Finance has determined the amount owed to Education and has transferred a portion of those funds to Education. We will consider the recommendation to be fully implemented after Finance transfers the remaining funds to Education's account.

60-Day Agency Response

Consistent with the California State Auditor's recommendations in Report 2021 046, the Department of Finance has determined the California Department of Education (Education) is owed $17,910,930.19 for it's proportional share of Fiscal Year 2017-18 Proposition 56 funds.

Executive Order NO. E 22/23-135 transferring $15,233,233.08 to Education was submitted to the California State Controller on January 20, 2023. Finance has notified Education the funds are available to be spent. To complete the audit recommendation, Finance will transfer $1,338,848.56 from Fund 3322 to Fund 3321 on July 1, 2023, and $1,338,848.55 from Fund 3322 to Fund 3321 on July 1, 2024.

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

The Department of Finance has determined the amount owed to Education and states that it has transferred a portion of those funds to Education.

Recommendation #19 To: Finance, Department of

To ensure that Education can spend the funds that it was allocated in prior fiscal years, Finance should transfer the unspent portion of these funds to an account that Education can access by June 2023. Further, it should inform Education the funds are available to be spent.

1-Year Agency Response

Consistent with the California State Auditor's (Auditor) recommendations in Report 2021-046, the Department of Finance has determined the California Department of Education (Education) is owed $17,910,930.19 for its proportional share of Fiscal Year 2017-18 Proposition 56 funds.

Executive Order NO. E 22/23-135 transferring $15,233,233.08 to Education was submitted to the California State Controller (SCO) on January 20, 2023. On July 5, 2023, Finance submitted Executive Order NO. E 23/24-1 transferring $1,338,848.56 from Fund 3322 to Fund 3321. To complete the audit recommendation and consistent with the plan Finance provided to the Auditor in Finance's November 4, 2022 response to the audit and 6-month Implementation update, Finance will transfer $1,338,848.55 from Fund 3322 to Fund 3321 immediately after July 1, 2024. With this final transfer in July 2024, this audit finding will be fully implemented.

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

Executive Order E 22/23-135 transferred to Education approximately $15.2 million of the $17.9 million in funds Education is owed, and Finance has notified Education that the funds are available to be spent. We will consider the recommendation to be fully implemented after Finance transfers the remaining funds to Education's account.

6-Month Agency Response

Consistent with the California State Auditor's (Auditor) recommendations in Report 2021-046, the Department of Finance has determined the California Department of Education (Education) is owed $17,910,930.19 for its proportional share of Fiscal Year 2017-18 Proposition 56 funds.

Executive Order NO. E 22/23-135 transferring $15,233,233.08 to Education was submitted to the California State Controller on January 20, 2023. To complete the audit recommendation and consistent with the plan Finance provided to the Auditor in Finance's November 4, 2022 response to the audit and 60-day Implementation update, Finance will transfer $1,338,848.56 from Fund 3322 to Fund 3321 on July 1, 2023, and $1,338,848.55 from Fund 3322 to Fund 3321 on July 1, 2024.

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

Executive Order E 22/23-135 transferred to Education approximately $15 of the $17 million in funds Education is owed, and Finance has notified Education that the funds are available to be spent. We will consider the recommendation to be fully implemented after Finance transfers the remaining funds to Education's account.

60-Day Agency Response

Consistent with the California State Auditor's recommendations in Report 2021 046, the Department of Finance has determined the California Department of Education (Education) is owed $17,910,930.19 for it's proportional share of Fiscal Year 2017-18 Proposition 56 funds.

Executive Order NO. E 22/23-135 transferring $15,233,233.08 to Education was submitted to the California State Controller on January 20, 2023. Finance has notified Education the funds are available to be spent. To complete the audit recommendation, Finance will transfer $1,338,848.56 from Fund 3322 to Fund 3321 on July 1, 2023, and $1,338,848.55 from Fund 3322 to Fund 3321 on July 1, 2024.

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

We obtained Executive Order E 22/23-135 from Finance. This executive order transferred to Education approximately $15 of the $17 million in funds it is owed. Further, Finance notified Education that the funds are available to be spent. Once Finance transfers the remaining funds to Education's account, the recommendation will be considered fully implemented.

All Recommendations in 2021-046

Agency responses received are posted verbatim.