California state auditor releases report on waste and fraud

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A semi-annual audit report released Tuesday revealed instances of gross waste, fraud and shoddy management, according to California State Auditor Elaine Howle.

“Through our investigations, we found patients placed at risk and state funds wasted during the continued employment of an incompetent psychiatrist, misuse of state resources, theft of registration fees, and failure to protect the security of confidential documents,” Howle wrote to Gov. Jerry Brown on Tuesday.

The investigations were conducted as part of a whistleblower program, in which the Bureau of State Audits looks into activities of agencies or employees that “violate any state or federal law or regulation; that is economically wasteful; or that involves gross misconduct, incompetence, or inefficiency.”

During the first half of 2010, the audit bureau received 2,444 allegations of improprieties, of which 420 were opened as official cases. The audit report highlighted eight significant instances of waste or mismanagement in state agencies including:

  • By not conducting a timely investigation of a psychiatrist’s competence, the Department of Corrections and Rehabilitation wasted at least $366,656 in state funds by continuing to pay him more than $600,000 in salary throughout the investigation. While the state was conducting the investigation of the psychiatrist, he received his full salary, was granted two-merit raises, and was paid 226 hours of leave, worth $29,149, when he left.
  • The California Conservation Corps evaded competitive bidding requirements to make purchases costing $64,666 from a single vendor, by splitting the purchase into three orders. It also failed to obtain from the same vendor the required price quotes for later purchases totaling $19,812.
  • A supervisor at a state prison allowed a subordinate employee to take two-hour breaks nearly every day for three years at an estimated cost of $23,937.
  • Managers failed to take appropriate steps to prevent a claims board employee from improperly removing confidential documents from her workplace, and thus failed to promptly process $10,567 in compensation claims.
  • A manager with the Department of General Services used state vehicles for daily commutes, which cost the state an estimated $12,379 over a three-year period.
  • Caltrans paid two employees a total of $2,080 for hours they did not work, because they left their offices early to teach classes at a community college.
  • An employee in the DMV was found to have stolen $448 in vehicle registration fees. After the investigation, he was convicted of one charge of misdemeanor theft and fired.

The entire audit report findings can be accessed here.

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Seattle highway project skids out of control

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Washington state’s auditor, responding to a whistleblower complaint, found that a road widening project on Highway 18, southeast of Seattle, cost taxpayers $98.5 million, even though it was approved by the Department of Transportation at an original bid of $55.9 million in 2003.

A state Department of Transportation worker called the runaway costs to the attention of the state auditor, who agreed that the public works project unnecessarily wasted large amounts of taxpayer funds, according to a story in The Seattle Times.

The report, which was released on Monday, said in part, “Based on our investigation … we find reasonable cause to believe an improper governmental action occurred. We found … failures in the design process, a lack of control and oversight during construction, failure to monitor wetland areas that resulted in environmental violations and fines. This resulted in a gross waste of public funds.”

The project included bridges and retaining walls, and was located in a wetlands area. The highway was widened to four lanes, over a distance of 21 miles.

The state auditor blamed most of the cost of the overruns on design mistakes, payroll errors, sloppy work and what was called “constantly changing environmental regulations.” The report said that workers regularly dumped logs and other debris in environmentally sensitive areas, resulting in fines of nearly $200,000.

The project was also doomed from the start in some respects, since the original design was based on digital three-dimensional aerial models, which proved to be inaccurate in the heavily wooded areas. Much of the design work in those areas had to be reworked.

During the course of the 5 year project, 156 change orders were issued by the DOT.

“This was a case where we fully recognized that we had problems with the project,” said Transportation Secretary Paula Hammond of the auditor’s investigation into the project. “This wasn’t new news for us.”

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L.A. child welfare department wasted $514,000 on sloppy cell phone management

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Government waste seems to be a sore point these days with taxpayers, but apparently not so much with some public sector employees. In a report published by the Los Angeles Times, in 2009, the Los Angeles County Department of Children and Family Services spent about $2.2 million on about 5,000 cell phones, although county auditors say that $514,000 was for devices never used, personal overseas calls and other improper uses.

County auditor-controller Wendy Watanabe said that about one-quarter of the monies spent was wasted on “unnecessary or inappropriate” charges. Watanabe said that it was likely that the “department paid for inappropriate charges in the prior and current years as well.”

The L.A. county child welfare department has over 1,400 cell phones activated, being paid for by taxpayers, and collecting dust.

Some of the abuses included poor records of who actually had the phones. Welfare officials could not determine the identity of users of over 250 phones.

Excessive long distant charges were commonplace, including one employee with over $2,000 in personal long-distance charges.

Auditors discovered the department was paying for 532 computer broadband access cards, yet only 222 were in actual use. Over $90,000 was billed by service providers on the unused cards.

Over 1,400 phones were activated, but never given to employees, incurring fees of over $330,000 in service charges. Earlier this year, the Times reported the department refused to provide phones to child abuse investigators.

Welfare officials are now evaluating its policy of denying investigators the cellphones after learning that so many were sitting around unused.

The department has been under fire throughout the year, and its longtime department head, Trish Ploehn, was recently removed from her position.

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Washington State parks commission squandered millions on failed project, says state auditor

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A report released by Washington State Auditor Brian Sonntag, claims that the state Parks and Recreation Commission wasted millions of dollars on a water and sewer project at Fort Flagler State Park near Port Townsend.

What started out as a project to fix the RV waste dump, turned into a multi-million dollar waste of taxpayers money.

A small project to replace a recreational vehicle sewage dump, budgeted at $140,000, eventually ballooned into massive bungled undertaking, costing taxpayers over $7 million. The auditor said that “ the Commission did not monitor or enforce terms of the contracts, did not hold contractors liable for failed systems … authorized change orders that appeared to be outside the scope of the original project and failed to ensure a construction contractor met safety requirements.”

The report was produced after an investigation triggered by the filing of an employee whistle-blower lawsuit, alleging gross negligence on the part of the commission and park employees.

In 2000, the agency hired a firm to repair the dump and drain field at the park, which was not operating properly. Although the contractor was paid in full to do the work, it was apparently never completed.

Next, the commission decided to replace the entire water and sewer system in the park in addition to replacing the dump and drain system. The park’s water and drain system was installed new in the 1950s, but not performing well. The agency paid $1.4 million for the design and build of the system in 2005, but that system failed the same year.

The system was apparently installed by a firm not licensed to do that type of work. The construction also deviated from the design drawings, based on changes suggested by the contractor. Because the changes were approved by a park employee, the commission decided not to go after the contractor to fix the system.

While the new system was being installed, the park spent several hundreds of thousands of dollars pumping sewage from holding tanks.

In 2006, the agency paid the same consultant who designed the just-built faulty system, another $1.3 million to design a different and larger system for the entire park. The job was given to licensed contractor this time, and the work was completed in 2009 at a cost of $3.2 million.

Virginia Painter, a spokeswoman for the commission admitted fault saying that “we didn’t do the job to the standard we would like to do.”

The Seattle Times

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