Report I2007-2 Summary - September 2007

Investigations of Improper Activities by State Employees: February 2007 Through June 2007

HIGHLIGHTS

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

Wasting state funds by purchasing vehicles and allowing them to sit idle for at least two years.
Misusing state funds designated to purchase two law enforcement vehicles by using the vehicles for non-law enforcement purposes.
Viewing pornographic material on university computers.
Using a state computer for personal purposes, including uploading modeling photos of a spouse.
Providing an unfair advantage to a registration service by allowing a friend to circumvent the registration and payment processes.
Using state resources to conduct a private catering business.
Failing to charge their collective leave balances for 54 hours they did not work.
Failing to meet teacher credentialing requirements.

Some state departments have taken the following actions in response to previously reported investigations, including:

The Department of Conservation pursued adverse action against an employee whose activities were incompatible with his state employment and the employee resigned.
The Department of Corrections and Rehabilitation (Corrections) started requiring employees to charge leave in full-day increments for the days they are not at work.
Corrections terminated an employee who submitted false claims.
The Department of Personnel Administration established contracts or agreements with seven appraisal firms to obtain fair market appraisals for state-owned housing.

RESULTS IN BRIEF

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 nine investigations completed by the bureau or jointly with other state agencies between February 1, 2007, and June 30, 2007, 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. The following provides examples of the substantiated improper activities and actions the agencies have taken to date.

CALIFORNIA HIGHWAY PATROL

The California Highway Patrol (CHP) purchased 51 vans more than two years ago and has yet to use the vans for their intended purposes. Consequently, the CHP wasted $881,565 in state funds that it paid for the vans, which further resulted in lost interest earnings to the State of $90,385.

DEPARTMENT OF MENTAL HEALTH, COALINGA STATE HOSPITAL

Coalinga State Hospital (hospital) purchased two Ford Crown Victoria Police Interceptors (Police Interceptors) that it designated for use in police services but instead used them first for its general motor pool and later for three hospital officials, in violation of state law. The Department of General Services indicated that it would not have approved the purchases of the Police Interceptors had it known how they would be used. Also in violation of a state regulation, the three hospital officials did not maintain mileage logs for the Police Interceptors they drove. Further, the hospital did not accurately list the officials' addresses on home-storage permits, thus failing to disclose that two of the officials used the Police Interceptors to commute between 390 and 980 miles per week.

CALIFORNIA STATE POLYTECHNIC UNIVERSITY, POMONA

An official at California State Polytechnic University, Pomona (Pomona), used two university computers to view Internet sites containing pornographic material, in violation of state law. Specifically, Pomona found that the official viewed approximately 1,400 pornographic images on two university computers during several weeks in 2006 and also from February to May 2007. When interviewed, the official admitted to viewing pornographic Web sites regularly using university computers.

DEPARTMENT OF HEALTH SERVICES

An employee improperly used his state computer to access inappropriate Internet sites, in violation of state law and department policies. The employee visited modeling Web sites and Internet-based e-mail sites during his regular weekday work schedule and on six days that fell on either a weekend or a holiday. Furthermore, on nine days, eight of which were workdays, the employee spent more than three hours per day accessing the Internet, including viewing some modeling Web sites where his spouse had profiles posted. Finally, on one weekend day, the employee uploaded modeling photos of his spouse onto a Web site using his state-issued computer.

DEPARTMENT OF MOTOR VEHICLES

An employee allowed a friend who worked for a private registration service to hand deliver vehicle registration and payment documents at locations other than a Department of Motor Vehicles field office, such as the employee's home. By doing so, the employee provided an advantage to the registration service that was not available to the general public.

EMPLOYMENT DEVELOPMENT DEPARTMENT

An employee used state time and resources to conduct her private catering business, in violation of state law, and used her state computer and e-mail account to promote her personal business. Also, the employee did not have a valid health permit and violated state law relating to food preparation. Further, the employee conducted her personal business with the knowledge and assistance of her supervisor and directed a coworker to assist her.

SONOMA STATE UNIVERSITY

Sonoma State University management granted informal time off for eight employees on July 3, 2006, and did not require them to charge their leave balances for all or part of that day, in violation of a state regulation. As a result, the employees failed to charge their collective leave balances for a total of 54 hours they did not work.

CALIFORNIA DEPARTMENT OF EDUCATION, CALIFORNIA SCHOOL FOR THE DEAF, RIVERSIDE

Two teachers did not possess valid credentials or waivers for academic year 2005-06, in violation of state law. One teacher resigned when she was told to renew her teaching credential. The second teacher was dismissed from his position after failing to meet the requirements for continued employment.

CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM

The California Public Employees' Retirement System (CalPERS) hired an employee even though she was working at the CalPERS building as an employee for a private vendor that provided services to CalPERS. This violated a state law that prohibits state employees from engaging in any employment or activity from which the employee receives compensation through a state contract. The employee subsequently terminated her employment with the private vendor.

UPDATE ON PREVIOUSLY REPORTED ISSUES

In March 2006 we reported that between January 2002 and May 2005, the Department of Corrections and Rehabilitation (Corrections) failed to exercise its management controls by allowing nine exempt employees at the Sierra Conservation Center (center) to claim holiday credits for holidays that fell on the employees' scheduled days off, resulting in the accrual of 516 hours they were not entitled to receive. In addition, the center allowed them to work alternate work schedules consisting of 10-hour days, but the collective bargaining agreement required them to charge leave only in eight-hour increments (or their fractional equivalent depending on their time basis) for each full day of work missed. Overall, these two issues represented a gift of public funds of $66,258. Since we reported on this issue, we performed further analysis of attendance records and found that several employees continued to receive unearned holiday credits. As a result of Corrections' and the center's failure to exercise management controls, these employees received an additional gift of public funds of $30,070.

Effective January 2007 the center began charging leave in 10-hour increments for the employees we examined, in accordance with the current collective bargaining agreement. In August 2007, approximately 19 months after we originally reported this issue, Corrections provided us with a copy of a settlement agreement between the collective bargaining unit and the State, which provides that these employees are entitled to receive holiday credits when holidays fall on the employees' scheduled days off.

We also reported that all state departments that own employee housing may be underreporting or failing to report housing fringe benefits. Also, 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. The Department of Personnel Administration (DPA) is the agency responsible for administering state housing regulations, and state law provides that the director of DPA shall determine the fair and reasonable value of state housing. DPA reported that it became aware that some departments that attempted to contract for appraisal services received bids that were too costly and not in the best interest of the State. As a result, DPA reported in July 2007 that it had established contracts or agreements with seven appraisal firms and that once a Master Service Agreement User's Manual (user's manual) was completed, it would provide the user's manual to department directors, who would then be able to enter into agreements with any of the seven contractors to obtain fair market appraisals of any state-owned housing.

In September 2006 we reported that on two occasions an employee with Corrections improperly submitted two sets of time sheets for the same time period to different supervisors for approval. As a result of her action, the employee submitted false claims for payment and received $1,373 for 78 hours she did not work. In August 2007 Corrections reported that it had terminated the employee, effective August 31, 2006.

In March 2007 we reported that an employee with the Department of Conservation (Conservation) engaged in various activities that were incompatible with his state employment and improperly used state resources to perform work for the benefit of his spouse's employer. In addition, the employee violated financial disclosure requirements of the Political Reform Act of 1974 by failing to disclose his ownership of stock issued by companies his office regulates. We also reported that the employee's manager did not adequately monitor the employee's activities, failed to properly disclose his own financial interests, and engaged in incompatible activities. Since we reported on this issue, Conservation pursued adverse action against the employee and he resigned. Conservation also reported that it has adverse action pending against the manager.

Table 1 on the following page displays the issues and the financial impact of the cases in this report, the dates we initially reported on them, and the current status of any corrective actions taken.

Table 1:
Issues, Financial Impact, and Corrective Action Status of Cases in This Report
	Chapter	Department	Date Initially Reported	Issue	Dollar Amount as of June 30, 2007	Status of Corrective Action
New Cases	1	California Highway Patrol	September 2007	Waste of State Funds Purchase price of unused vehicles Lost interest earnings to the State	$881,565 90,385	Pending
	2	Department of Mental Health	September 2007	Improper Use of State Vehicles, Waste of State Funds, and Failure to Maintain Vehicle Mileage Logs	18,682 to 19,640	Partial
	3	California State Polytechnic University, Pomona	September 2007	Viewing Inappropriate Internet Sites and Misuse of State Equipment	NA	None
	4	Department of Health Services	September 2007	Misuse of State Equipment and Resources	NA	Partial
	5	Department of Motor Vehicles	September 2007	Incompatible Activities	NA	Complete
	6	Employment Development Department	September 2007	Misuse of Time and State Resources	NA	Complete
	7	Sonoma State University	September 2007	Improper Closure of Offices and Failure to Charge Employee Leave Balances	NA	Partial
	8	California Department of Education	September 2007	Failure to Meet Teacher Credentialing Requirements	NA	Complete
	9	California Public Employees' Retirement System	September 2007	Conflict of Interest	NA	Complete
Previously Reported Issues	10	Department of Corrections and Rehabilitation	March 2005	Improper Pay	238,184	Partial
	10	Department of Corrections and Rehabilitation	September 2005	Failure to Account for Employee Use of Union Leave	558,015	Partial
	10	Department of Health Services	September 2005	Improper Contracting Practices	98,486	Pending
	10	Victim Compensation and Government Claims Board and the Department of Corrections and Rehabilitation	March 2006	Overpayments on an Employee's Claim and Mismanagement	25,950	Complete
	10	Multiple State Departments*	March 2006	Gift of State Resources and Mismanagement	8,313,600	Partial
	10	Department of Corrections and Rehabilitation	March 2006	Gift of Public Funds	96,328	Complete
	10	Department of Forestry and Fire Protection	March 2006	Improper Overtime Payments	77,961	Pending
	10	Department of Forestry and Fire Protection	September 2006	False Claims for Wages	17,904	Pending
	10	Department of Corrections and Rehabilitation	September 2006	False Claims for Wages	1,373	Complete
	10	Department of Consumer Affairs	March 2007	Time and Attendance Abuse	NA	Complete
	10	Department of Conservation	March 2007	Misuse of State Resources, Incompatible Activities, and Behavior Causing Discredit to the State	NA	Partial

Source: Bureau of State Audits

NA = Not applicable because there was no dollar amount involved.

* This case focused on the Department of Fish and Game but also involved the California Highway Patrol, the California Conservation Corps, the Department of Corrections and Rehabilitation, the Department of Developmental Services, the Department of Food and Agriculture, the Department of Forestry and Fire Protection, the Department of Mental Health, the Department of Parks and Recreation, the Department of Personnel Administration, the Department of Transportation, the Department of Veterans Affairs, and the Santa Monica Mountains Conservancy.