Report I2006-1 Summary - March 2006

Investigations of Improper Activities by State Employees


July 2005 Through December 2005


State employees and departments engaged in improper activities, including the following:


The Bureau of State Audits (bureau), in accordance with the California Whistleblower Protection Act (Whistleblower Act) contained in the California Government Code, beginning with Section 8547, receives and investigates complaints of improper governmental activities. The Whistleblower Act defines an "improper governmental activity" as any action by a state agency or employee during the performance of official duties that violates any state or federal law or regulation; that is economically wasteful; or that involves gross misconduct, incompetence, or inefficiency. The Whistleblower Act authorizes the state auditor to investigate allegations of improper governmental activities and to publicly report on substantiated allegations. To enable state employees and the public to report these activities, the bureau maintains the toll-free Whistleblower Hotline (hotline): (800) 952-5665 or (866) 293-8729 (TTY).

If the bureau finds reasonable evidence of improper governmental activity, it confidentially reports the details to the head of the employing agency or to the appropriate appointing authority. The Whistleblower Act requires the employer or appointing authority to notify the bureau of any corrective action taken, including disciplinary action, no later than 30 days after transmittal of the confidential investigative report and monthly thereafter until the corrective action concludes. This report details the results of the six investigations completed by the bureau or jointly with other state agencies between July 1, 2005, and December 31, 2005, that substantiated complaints. This report also summarizes actions that state entities took as a result of investigations presented here or reported previously by the bureau. Following are examples of the substantiated improper activities.


The Department of Fish and Game (Fish and Game) allowed several state employees and volunteers to reside in state-owned homes without charging them rent. Consequently, Fish and Game violated the state law prohibiting state officials from providing gifts of public funds. We identified seven volunteers and six employees who resided in state-owned homes in Fish and Game's North Coast Region but were not required to pay rent. Because Fish and Game provided free rent to some employees and volunteers, the State did not receive more than $87,000 in rental revenue to which it was entitled during a 21-year period. Therefore, that amount represents a gift of state funds to the employees and volunteers residing in the state-owned homes and a loss in revenue to the State.

Additionally, when it charges an employee living on state property a rate below the fair market value, Fish and Game must report to the State Controller's Office the difference between the rate charged and the fair market value as a taxable fringe benefit; however, it failed to do so for all of its employees across the State. As a result, state and federal tax authorities were not notified that taxes were due on potential housing fringe benefits totaling almost $3.5 million for tax years 2002 through 2005, depriving those authorities of $1.3 million in potential tax revenues to which they were entitled.

Finally, although Fish and Game is the focus of this report, it has come to our attention that all 13 state departments that own employee housing may be underreporting or failing to report housing fringe benefits. According to a 2003 Department of Personnel Administration housing report, state departments may have failed to report housing fringe benefits totaling as much as $7.7 million. Additionally, because departments charged employees rent at rates far below market value, the State may have failed to capture as much as $8.3 million in potential rental revenue in 2003.


Contrary to the terms in the collective bargaining agreement, when a holiday fell on a scheduled day off, the Sierra Conservation Center (center) allowed exempt employees to accrue holiday credits for later use, even though they had not worked. For example, between January 2002 and May 2005, the center improperly allowed one employee to accrue 48 hours of holiday credit for holidays that she was not scheduled to work, resulting in a gift of public funds of $1,653 to the employee. Overall, between January 2002 and May 2005, the center improperly allowed nine exempt employees to accrue 516 hours, resulting in gifts of public funds totaling $17,164.

In addition, the center allowed these nine exempt employees to work alternate schedules involving 10-hour days, which as a result of the language in the bargaining unit contract, allowed them to miss work without having to charge a total of 1,460 hours to their leave balances. This management decision resulted in a gift of public funds to the employees totaling $49,094.


A supervisor at the Department of Forestry and Fire Protection (Forestry) improperly authorized around-the-clock overtime payments to several of his employees, which resulted in payments totaling nearly $58,000 to which these employees were not entitled and $3,907 for questionable overtime.

We also found that a heavy fire equipment operator at another Forestry location received more than $16,000 in questionable or improper overtime payments by taking advantage of a lack of oversight by his direct supervisor and a lack of communication among all battalion chiefs with authority to sign time sheets.


Between October 2000 and May 2002, a physician filed multiple claims with the Victim Compensation and Government Claims Board (Board) and the Department of Corrections and Rehabilitation (Corrections), claiming he was entitled to a monthly $2,700 recruitment and retention bonus given to Corrections employees in the chief psychiatrist classification. Although we believe the Board had no legal standing to hear the physician's claim, he received payments from both the Board and Corrections, resulting in duplicate payments to the physician of $25,950. Additionally, although both entities were aware that he was about to receive state funds to which he was not entitled prior to receiving his final payment, they neither adjusted the physician's final claim nor recovered the overpayment.


A Corrections employee falsified his time sheets and received pay to which he was not entitled. Specifically, Corrections identified almost 150 instances in which department sign-in logs or timekeeping records maintained by the employee's nonstate employer indicated that the employee falsified his time sheets to inflate the actual number of hours he worked at his state job. By falsifying his state time sheets, the employee violated state law and received $2,875 in wages for hours he did not work. Further, Corrections found at least 14 instances in which the employee called in sick or simply did not show up to work but worked at his second job on those days. This improper use of 134 hours of leave resulted in payments to the employee totaling $3,960.


In violation of state law, from July 2004 through October 2004, an Employment Development Department employee made 420 personal telephone calls, or 77 percent of all her calls, totaling 21 hours and 10 minutes, that were not related to state business or were to her outside employer and its various representatives. In addition, the employee inappropriately used her state computer for personal purposes. Specifically, of the 1,229 e-mail messages stored on her state computer, 1,012, or 83 percent, were of a personal nature.