Department of Parks and Recreation: Flaws in Its Budget Allocation Processes Hinder Its Ability to Effectively Manage the Park System

7/29/2019 Department of Parks and Recreation: Flaws in Its Budget Allocation Processes Hinder Its Ability to Effectively Mana

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Department ofParks and Recreation

Flaws in Its Budget Allocation Processes Hinder ItsAbility to Efectively Manage the Park System

Report 2012121.2

September 2

COMMITMENTINTEGRITY

LEADERSHIP


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Te rst ve copies o each Caliornia State Auditor report are ree. Additional copies are $3 each, payable by check

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Caliornia State Auditor

555 Capitol Mall, Suite 300

Sacramento, Caliornia 95814

916.445.0255 or Y 916.445.0033

OR

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For questions regarding the contents o this report ,

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Whistleblower Hotline: 1.800.952.5665.


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Doug CordinerChie DeputyElaine M. HowleState Auditor

5 5 5 C a pit o l Ma l l , Su i t e Sa c ra m ent o , C A 9 5 8 4 9 6 .4 4 5 . 5 5 9 6 . 7 . 9 a x www.a ud it o r .c a .go v

September 10, 2013 2012121.2

Te Governor o Caliornia

President pro empore o the SenateSpeaker o the AssemblyState CapitolSacramento, Caliornia 95814

Dear Governor and Legislative Leaders:

As requested by the Joint Legislative Audit Committee, the Caliornia State Auditor (state auditor)presents this audit report concerning the Department o Parks and Recreations (department)budgeting and personnel practices. Tis report concludes that the departments inormal processesor allocating budgets to its districts and or tracking district expenditures hampers its current eortsto budget and track expenditures at the park level. Specically, the department provides districts

with their budget allocations months ater the scal year begins. As a result, the districts operateduring the busy summer season using prioryear allocations as their budgets. However, this causesproblems or districts when the allocations they ultimately receive are less than what they receivedin the prior year. Additionally, the departments process or tracking district expenditures generatesduplicate inormation and is not helpul or districts to manage their allocations.

Tese issues i not addressed will negatively impact the departments current eorts to establish aprocess or budgeting and tracking expenditures at the park level. Despite state law requiring thedepartment to determine whether it sustained a required budget reduction, we concluded in ourFebruary 2013 report that the department lacked the ability to comply with this law because it did nottrack expenditures at the park level. In June 2013 the director o the department distributed a memodescribing the process the department intends to use in calculating each parks past expenditures anduture costs. Although its process begins to address our concern, the department must completeand ully implement the process to calculate park unit costs to comply with the provisions o state law.

We also identied signicant concerns related to some o the departments personnel processes.During our audit we identied additional instances in which the department inappropriately boughtback leave. Moreover, despite the recent scrutiny over the unauthorized leave buybacks it processedin 2011, the department still has not done enough to prevent such practices rom occurring again inthe uture. Although it disciplined our managers who were involved in the unauthorized leavebuybacks, the department has not changed its processes or provided appropriate training to itssta. We also noted that although the department has established an Executive Personnel ReviewCommittee (EPRC) to manage its stafng, it has not developed policies and procedures to govern the

roles and responsibilities o the EPRCs members nor does EPRC communicate its decisions tothe department director or executive ofce. Without better controls, training, and guidelines, thedepartment may encounter uture difculties in its stafng and personnel actions.

Respectully submitted,

ELAINE M. HOWLE, CPAState Auditor


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Blank page inserted or reproduction purposes only.


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California State Auditor Report 2012-121.2

September 2013

Contents

Summary 1

Introduction 7

Chapter Weaknesses in the Department o Parks and Recreations Processesor Allocating Budgets and Tracking Expenditures Limit Its Ability toManage the Park System 17

Recommendations 26

Chapter

The Department o Parks and Recreation Lacks Sucient Controlsand Processes Related to Some Personnel Activities 29

Recommendations 42

Appendix

Status o Select Recommendations From Our 2005 OHighwayMotor Vehicle Recreation Program Report 45

Response to the AuditDepartment o Parks and Recreation 47

Caliornia State Auditors Comment on the Response From theDepartment o Parks and Recreation 53


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vi California State Auditor Report 2012-121.2

September 2013



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September 2013

Audit Highlights . . .

Our audit on the budgeting and personnel

practices o the Department o Parks

and Recreation (department) revealed

the ollowing:

The department has not established

eective processes or providing districts

with their budget allocations and or

tracking district expenditures.

Districts do not receive their budget

allocations until several months into

the States scal year, making planning

o their expenditures challenging

during critical summer months.

Untimely budget allocations cause

districts to rely on prioryear

allocations to operate, resulting in

problems when the ofcial allocations

are less than the prioryear allocations.

The limitations o the departments

Fiscal Tracking System generates

duplicate inormation in tracking

district expenditures.

The department has not ully

implemented a process or tracking

expenditures at the park level to comply

with the provisions o state law.

The department has not done enough

to prevent unauthorized leave buybacksrom occurring in the uture.

The Executive Personnel Review

Committee (EPRC) does not have policies

and procedures in place to govern the

roles and responsibilities o its members.

The EPRC does not communicate its decisions

to the department director or executive

ofce to ensure its decisions are consistent

with the vision o the department.

Summary

Results in Brie

With a budget o nearly $574 million or scal year 201213, theDepartment o Parks and Recreation (department) manages280 park units, such as state beaches, state historic parks, andohighway vehicle parks. Yet despite the magnitude o its budgetand responsibilities, the department has not established eectiveprocesses or providing districts with their budget allocations andor tracking district expenditures. As a result, the ve districts wevisited identied signicant concerns with the inormal processesthe department employs. Specically, the department provides thedistricts with their budget allocations months ater the scal year

begins. As a result, the districts operate during the busy summerseason using prioryear allocations as their budgets, which somedistricts indicated was problematic in recent years because theocial allocations they eventually received were sometimessignicantly less than the prioryear allocations. In addition,the departments process or tracking district expenditures toensure that they remain within budget results in it perormingunnecessary and duplicative work.

Tese concerns, i not corrected, will hamper the departmentscurrent eorts to establish a process or budgeting andtracking expenditures at the park level. State law requires thati the department sustains a required budget reduction aterJune 30, 2014, it must conduct a specic analysis prior to closing,partially closing, or reducing services at its parks. However, in aprevious audit o the department that we issued in February 2013,we concluded that the department lacked the ability to complywith this law because it did not track expenditures at the park level.o address this issue, the director o the department distributeda memo in June 2013 to all managers and supervisors describingthe process the department intended to use in calculating eachparks past expenditures and uture coststhe elements neededto complete the analysis required by state law. Te methodology

outlines three phases: calculating expenditures by park unit orscal year 201011, dening a process to track expenditures by parkunit or scal year 201314, and developing individual park unitbudgets to dene what each park unit costs to operate.

Although the department received expenditure inormationor scal year 201011 by park unit rom the districts in earlyAugust 2013, it still needs to allocate additional expenditures topark units, such as headquarters overhead, to complete phase one.Additionally, we have concerns about the departments ability tocomplete the remaining two phases o the methodology beore themoratorium on park closures expires on June 30, 2014. Without a


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September 2013

2

complete and ully implemented process to calculate park unit costs,the department cannot comply with the provisions in state law or

provide inormation to decision makers concerning the undingneeded compared to the unding available to operate the parks.

We also noted signicant concerns related to some o thedepartments personnel processes. In 2012 three state agenciesreported on the departments unauthorized leave buybackscaused by weak controls and certain employees circumventiono state policies and procedures. A leave buyback occurs when adepartment purchases accumulated leave time rom employees inlieu o those employees taking the time o in the uture. Althoughthe State allows departments to purchase accumulated leave romemployees covered by collective bargaining unit agreements in

some specic circumstances, it has not authorized leave buybacksor employees not covered by bargaining unit agreements since2007. However, in March 2012 the departments internal auditoce reported that the department had inappropriately boughtback nearly $271,000 in leave rom 56 employees, primarily in itsadministrative services division, during 2011. Additionally, theinternal audit report indicated that the departments OHighwayMotor Vehicle Recreation Division (OHMVR division) had allowedunauthorized leave buybacks in 2007 and 2008. In May 2012the Oce o the Attorney General issued an investigative reportconcerning the administrative services divisions 2011 buybacksand recommended the termination o the deputy director oadministrative servicesthe highestranking employee whohad knowledge o the buybacks at the department. Further, inDecember 2012 the State Controllers Oce (state controller)released a payroll review in which it identied details on thecontrols the department breached to perorm the 2011 buybacks.

During our current audit, we ound additional instances inwhich the department inappropriately bought back leave. In itspayroll review, the state controller identied three employeesas possibly participating in the administrative services divisions2011 unauthorized leave buybacks. We determined that, although

these three employees were not part o the administrative servicesdivisions buyback, the department did inappropriately buy backleave rom them in 2011 totaling $15,400. We also ound that thedepartment inappropriately paid ve other employees nearly$16,400 in leave. Specically, in May 2010 the departments trainingocer at the time submitted a request to the personnel oce topay down compensating time o (CO) balances or three supportsta employees, even though their bargaining unit agreementdid not allow or it. In addition, one sta services analyst whoparticipated in the May 2010 buyback received an additionalunauthorized CO buyback o $8,721 in March 2011, and twoother employees received inappropriate buybacks or personal


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September 2013

holidays totaling $820 and $410 in October 2010 and February 2011,respectively. Te managers authorizing these leave buybacks either

relied on past practices or misunderstood the requirements relatedto leave buybacks, and the departments personnel oce processedthe transactions even though the department did not have theauthority to do so. Despite all the recent concern over and scrutinyo the unauthorized leave buybacks, the department still has notdone enough to prevent such practices rom occurring. Tis isbecause, although it disciplined our managers who were involvedin the 2011 leave buybacks, it has not changed its processes orprovided appropriate training to its sta.

In the course o this audit we also noted weaknesses in some o thedepartments other personnel processes. For example, although

the department established an Executive Personnel ReviewCommittee (EPRC) to manage its stang, it has not developedpolicies and procedures to govern the roles and responsibilitieso the EPRCs members. As a result, we noted that the EPRCmay not make consistent decisions on stang requests anddoes not communicate its decisions to the department director orexecutive oce.

Finally, until early 2012, the departments position control unit hada practice o circumventing state law to prevent the state controllerrom abolishing positions that were vacant or six consecutivemonthly pay periods. Te position control unit would temporarilytranser employees into vacant positions to avoid having thosepositions abolished. By making it appear as though vacant positionshad been lled, the department avoided having to justiy theneed or those positions. Te department told us that it has nowdiscontinued this practice, which appears to be consistent with thedata we reviewed. However, the department should improve itsoversight o the employees who process these types o transactionsto ensure that it does not violate state law in the uture. Withoutbetter controls, training, and guidelines, the department mayencounter uture diculties in its stang and personnel actions.

Recommendations

o ensure that districts receive timely budget allocations, thedepartment should establish and implement a ormal allocationprocess by January 2014 that includes the ollowing:

A timeline that describes when the department will provide parkdistricts with drat allocations, revisions to drat allocations, andnal allocations.


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4

A description o the roles and responsibilities o key stainvolved in the process, including budget oce sta, the

deputy directors and division chies or park operations andthe OHMVR division, and district superintendents.

o reduce duplicate expenditure tracking and increase theeectiveness o its budget process, the department should developprocedures requiring the districts to prepare and submit spendingplans and to periodically submit their total expenditures aterreconciling them with its internally developed accounting system.

o ensure that it can comply with state law in the event that it mustclose parks or reduce park services in the uture, the departmentshould improve its methodology or developing individual park unit

budgets and determining and tracking parklevel costs.

o ensure that the Legislature has the inormation necessary tomake any uture decisions related to service reductions or parkclosures, beginning in scal year 201415 the department shouldprovide it with an annual report that includes the costs to operateeach park unit.

o prevent unauthorized leave buyback transactions, thedepartment should do the ollowing:

Provide training by December 2013 to all department managersand personnel sta who might be involved in leave buybacktransactions to ensure that they understand the Statesrequirements regarding leave buybacks.

Establish written policies and procedures requiring the personneloces transactions unit to obtain documentation rom managerswho request leave buyback transactions. Te documentationshould speciy the authority or the leave buyback and includeappropriate authorizing signatures.

Increase the level o supervisory review to ensure that

transactions unit sta process only authorized and properlycoded leave buyback transactions.

o improve the eectiveness o the EPRC, the department shouldtake the ollowing actions by March 2014:

Update its administrative manual to speciy the members o theEPRC, the members roles and responsibilities, and the personnelactions that the EPRC is responsible or reviewing.


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Establish policies and procedures to govern the EPRCs decisionson personnel actions. Tese policies and procedures should

include the specic actors and their relative importance thatthe members must consider when making decisions and shouldrequire the EPRC to document its decisions and the reasons orthose decisions.

Require the EPRC to periodically provide a summary report o itsdecisions to the directors oce so that the director can monitorwhether those decisions are consistent with his priorities.

o ensure that its position control unit sta do not circumvent statelaw to preserve vacant positions, the department should establish aprocess to periodically review any personnel transactions that are

not subject to EPRC review. It should provide a summary report othis review to the directors oce and the EPRC.

Agency Comments

Te department indicated that it plans to implementour recommendations.


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6 California State Auditor Report 2012-121.2

September 2013



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Introduction

Background

Te Department o Parks and Recreation (department) isresponsible or preserving the States biological diversity;protecting natural, cultural, and historical resources; and creatingopportunities or highquality outdoor recreation or current anduture generations to enjoy. With more than 3,800 positionsand a budget o nearly $574 million or scal year 201213, thedepartment manages 280 park properties or units, such as statebeaches, state historic parks, recreational areas, historic homes,and ohighway vehicle parks. Te departments park system isorganized into 25 districts, ve o which include ohighway vehicle

parks. Many o the districts are urther organized into 68 smallergroupings called sectors, with each sector comprising severalpark properties or units.

The Departments Structure

Te departments director plans and controls the departmentsprograms and activities. Under the director, the chie deputydirector is responsible or the coordination and implementationo the departments mission as articulated by the director. Teresponsibilities o other key management positions are shown inable 1 on the ollowing page. Te departments park operationsand the OHighway Motor Vehicle Recreation Division (OHMVRdivision) each operates under the direction o its own deputydirector. A deputy director also oversees the administrative servicesdivision, which is composed o several sections, as discussed below.

Park operations is responsible or the administration o all eldoperations. Its duties include providing technical leadership orthe departments acilities maintenance program, cultural andnatural resources, interpretation and education, public saety,and dispatch responsibilities.

Trough its eld divisions, park operations provides directdaytoday service to the public in the state parks. Te departmentseld divisions are divided into districts that are under thesupervision o district superintendents. District superintendentsprovide leadership to the districts and ensure that districtoperations and programs are consistent with the departmentsmission, policies, and goals.


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Table 1

Summary o Responsibilities or Certain Managers at the Department o Parks and Recreation

POSITION KEY RESPONSIBILITIES

Chie deputy director Coordinates the executive sta in planning, acquiring, developing, operating, and maintaining park units; develops

budget strategy to adequately nance operations; and represents the Department o Parks and Recreation

(department) in the directors absence.

Personnel ofcer Manages and supervises the personnel services program under the general direction o the assistant deputy

director o administration. Develops, administers, and evaluates all policies related to the departments personnel

services, while acting as the policy authority on personnel issues or other department divisions and executive

management. Provides direction and supervision to the personnel services division and labor relations ofce.

Budget ofcer Oversees the preparation o the departments annual budget instructions and budget change proposals as well as

its portion o the governors budget under the general direction o the assistant deputy director or administration.

Works with and makes recommendations to the directors ofce or policy or unding adjustments. Oversees

the process o determining initial allocations to districts and divisions and adjusting those allocations during the

year. Reviews and approves various documents, including personnel action requests, equipment requests, and

outostate travel requests.

Deputy director or

park operations

Directs the overall administration o the park units. Advises and assists the director in the ormulation,

administration, and continuing evaluation o departmental programs. Provides general direction to the division

chies and district superintendents concerning the operation and maintenance o the park units.

Park operations northern and

southern division chies

Implements the general policies established by the director and the State Park and Recreation Commission, with

general direction rom the park operations deputy director. Establishes operating procedures consistent with the

departments policies. Plans, organizes, and directs the operation o park units within their respective divisions.

Manages division programs or park operations.

Deputy director o

OHighway Motor Vehicle

Recreation Division

Directs and manages the OHighway Motor Vehicle Recreation Division (OHMVR division) and the OHighway

Motor Vehicle Recreation Program. Represents the director o the OHighway Motor Vehicle Recreation Commission

(OHMVR commission). Administers the grants and cooperative agreement program, including budgeting, public

hearings, and auditing. Oversees the management, maintenance, administration, and operation o lands in the

ohighway vehicle system.

OHMVR division chie Implements the general policies established by the director, deputy director, and the OHMVR commission.

Establishes operating procedures consistent with those policies. Plans, organizes, and directs the operation o park

units within the division. Manages all programs within the division.

District superintendent Manages a district under the supervision o a division chie. Plans, organizes, implements, directs, reviews, and

controls activities that contribute toward achieving the overall district and department mission and objectives.

Reviews and approves district budget and management plans. Monitors district unds and expenditures and

assures eective utilization o resources.

District administrative ofcer Oversees all components o the districts administration program under the direction o the district superintendent.

These components include personnel, scal administration, management and supervision, contract preparation,

budget preparation and management, and inormation technology.

Source: Duty statements provided by the departments personnel ofce.

Under administrative direction o the deputy director, the OHMVRdivision is responsible or the planning, acquisition, development,management, operation, and conservation o the state vehicularrecreation area and trail system. It also provides acilities or theuse o ohighway vehicles and is responsible or minimizingthe deleterious impact o ohighway vehicles on the environmentand native wildlie.


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September 2013

Finally, the administrative services division is responsible or thedepartments budget, accounting, business services, training,

inormation technology, and personnel management programs andtheir related support requirements. Each o these sections has itsown duties, as the ollowing examples show:

Te accounting section prepares nancial and statistical reports,controls the expenditure o unds, maintains accounting records,and assists other units in resolving scal issues.

Te budget section reviews proposed legislation to determine thescal impact on the department, assists management in planningand developing the departments budget, evaluates budgetrequests, and sets budget standards and procedures.

Te personnel section comprises several units that providea variety o centralized personnel services. For instance, thetransactions unit is responsible or managing the departmentspayroll and monitoring employees attendance and leavebalances. Te classication and pay unit establishes new types opositions and monitors transers between classications.

The States Process or Buying Back Employee Leave

Te State provides its employees with a number o dierent types oleave, such as vacation, annual, sick, and holiday. Depending on thetype o leave, employees may accrue it, use it with the departmentsapproval, or transer it to other employees. Additionally, certainemployees may be eligible to earn compensating time o (CO)when they work more than 40 hours in a week. Under certaincircumstances, the States collective bargaining unit agreements mayauthorize or require departments to purchase accumulated CO.For example, the bargaining unit 7 agreement between the Stateand the Caliornia Statewide Law Enorcement Association requiresdepartments to reduce employees CO balances to 80 hours or lesswhen the employees transer between park districts.

State regulations speciy that the Department o PersonnelAdministration will determine annually whether or not departmentscan oer to buy back leave rom employees who are not covered bycollective bargaining agreements, such as employees in managerialand supervisory positions. However, this responsibility shited tothe Caliornia Department o Human Resources (CalHR), which thegovernors reorganization plan recently created by consolidatingthe Department o Personnel Administration with certain programso the State Personnel Board. CalHR maintains theBenetsAdministration Manual, which is an online resource that covers allemployee benet programs. TeBenets Administration Manual


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has contained an admonition since October 2008 that the State hasindenitely suspended its leave buyback program in all instances that

are not covered by bargaining unit agreements.

In the event that CalHR or the bargaining unit agreements authorizeleave buybacks, CalHR or the bargaining unit agreements providespecic instructions to departments detailing when they areauthorized to buy back employee leave credits, what types o leavecredits they can buy back, and the specic types o employees romwhom they can buy leave. According to theBenets AdministrationManual, the State Controllers Oce (state controller) is responsibleor providing instructions or requesting leave buyback payments.Te state controller maintains aPayroll Procedures Manual, whichprovides personnel sta at departments with specic instructions or

processing payroll transactions such as leave buybacks and identiesthe specic coding that departments should use in each typeo transaction.

Other Audits, Investigations, and Reviews o the Departments

Unauthorized Leave Buybacks

In 2012 three dierent entities issued reports discussing thedepartments unauthorized leave buybacks. Specically, inMarch 2012 the departments internal audit oce reported thatduring June and August 2011 the departments administrative servicesdivision inappropriately bought back nearly $271,000 in leave rom56 employees, primarily in the administrative services division. Tereport noted that personnel services section management at the time othe 2011 buybacks stated that its intention was to spend surplus undsin the administrative services divisions budget or scal year 201011that would otherwise have reverted at the end o the scal year. Tereport also disclosed that the departments ormer deputy director oadministrative services authorized buyback payments or two employeesusing unds rom scal year 201112, as shown in Figure 1.

In addition, the internal audit report indicated that the department had

acilitated two earlier unauthorized leave buybacks in the OHMVRdivision in 2007 and 2008. Te department bought back leave rom20 employees in a July 2007 leave buyback, or a total o more than$111,000, and rom 40 employees in a July 2008 leave buyback, ora total o nearly $198,000. Te report states that in both instancesthe department deliberately circumvented controls by processing thetransactions as overtime payments. Tis is similar to the methodused or the buyback that occurred in 2011, which we discuss in moredetail in Chapter 2. Additionally, the departments internal auditreport identied concerns with the personnel services sections lacko documentation or the 2007 and 2008 buybacks, which made itdicult to determine who initiated and approved them.


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September 2013

Figure1

TimelineofEventsRelatedtothePre

viouslyReported2011UnauthorizedL

eaveBuybacksattheDepartmentofP

arksandRecreation

2011

2012

December18,

2012

TheStateController'sOffice(statecontroller)

releaseditspayrollreviewreport.

Thedepartmentreq

uestedtheOfficeofthe

AttorneyGeneral(attorneygeneral)investigatethe

2011buybacks.

March28,

2012

Thedepartmentsinternalauditsofficeissueditsa

uditreportonleave

buybacks,w

hichincludedbuybacksbytheadministrativeservices

divisionin2011andtwobuybacksbytheOff-HighwayMotorVehicle

RecreationDivisionin2007and2008.

Thedeputydirectorofadministrationannouncedalea

vebuyback(buyback)

opportunityatabiweeklyadministrativemanagersme

eting.Heextended

theopportunitytomanagersandsupervisorsinthead

ministrativeservices

divisionwhohadmorethan640hoursofleaveaccumulated.

Bytheendoffiscalyear201011,t

heDepartmentofParks

andRecreation(department)hadboughtb

ackleavefrom

55em

loeesintheadministrativeservicesdivision.

AnemployeeintheCommunity

Involvementsection

requestedtoparticipateintheb

uyback.

May1,

2012

Theattorneygeneralissueditsinve

stigativereport.

June

July

August

September

October

NovemberDecember

January

February

March

April

May

June

July

August

September

October

NovemberDecember

Thedeputydirectorofadministrationauthorizedtwoadditional

buybackpaymentsin

fiscalyear201112onefortheemployeein

theCommunityInvolvementsectionandoneforhimself.

Thedepartmentsinternalauditsoffice

initiatedanauditofthebuybacks.

New

spaperreportsofthebuybackbrought

the

issuetotheattentionofthepublic.

Thedepartment'sinternalauditsofficesubmittedareportof

its

reviewofleavebuybacktransactionstothedirector.

Sources:Thedepartmentsinternalauditreport,theattorneygeneralsreportoinvestigation,thestatecontrollerspayrollreview,andnewspapera

rticles.


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September 2013

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As depicted in Figure 1, in January 2012 the departmentrequested that the Oce o the Attorney General investigate

the 2011 buyback. In May 2012 the attorney general released itsinvestigative report, which disclosed that the deputy directoro administrative services authorized the buybacks and was thehighestranking employee who had knowledge o them. Te reportstated that the deputy director had relied on his subordinatesthe acting and assistant personnel ocers at the timewhoinormed him that the department had previously bought backleave. According to the investigative report, he assumed that thesesubordinates had perormed the appropriate research to establishthe propriety o the buybacks and made no eort to determine i thedepartment had the necessary authority. Te report concluded thatthe selserving behavior o the deputy director o administrative

services caused him to be insubordinate and act with willuldisobedience and thereore recommended that the departmentterminate his employment.

Te state controller also perormed a review o the departmentspayroll processes or the period o July 1, 2009, throughJune 30, 2012, and issued its report in December 2012. Tereport identied concerns with the department managementscircumvention o controls, lack o proper supportingdocumentation, and ailure to ollow state personnel and payrollprocedures. In Chapter 2 we describe in more detail some o thespecic control weaknesses the state controller identied related tothe leave buybacks.

Scope and Methodology

Te Joint Legislative Audit Committee (audit committee)directed the Caliornia State Auditor (state auditor) to conductan audit o the departments oversight and management o thestate park system and its personnel, program, and budgetingpractices. We conducted this audit in two phases. We discuss themethodology and ndings or the rst phases objectives in our

audit report titledDepartment o Parks and Recreation: WeakProcedures Have Led to Inconsistent Budgetary Reporting andDiculties in Measuring the Impact o Eforts to Keep Parks Open,Report 2012121.1, February 2013. Within this current report,we have included the methodology and ndings related to theobjectives in the second phase, which we identiy in able 2.


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Table 2

Audit Objectives and the Methods Used to Address Them

AUDIT OBJECTIVE METHOD

Review and evaluate the laws, rules, and regulations

signicant to the audit objectives.

We reviewed relevant laws, regulations, and other background materials applicable to

the state park system and to state budgeting and accounting requirements.

Determine the Department o Parks and Recreations

(department) current number o vacant positions.

Further, determine the amount budgeted or these

vacant positions.

We obtained position roster data rom the State Controllers Ofce (state controller)

and determined the departments number o ulltime equivalent (FTE) vacant

positions as o March .

We used salary range inormation to calculate the value o the FTE vacant positions as o

March .

Review and assess the department s process or

monitoring stafng decisions. Determine whether

improvements in the process are necessary to ensure

management is aware o signicant stafng decisions.

We interviewed members o the department s Executive Personnel Review

Committee (EPRC) to gain an understanding o its processes.

We interviewed district sta about their interactions with the EPRC.

We interviewed executive management to understand the extent to which the directorand chie deputy director are inormed and involved in the EPRCs stafng decisions.

For any vacation buyouts that occurred at the

department in the most recent threeyear period,

determine the ollowing:

a. The number and dollar amount o the

vacation buyouts.

b. The source o unds used or the vacation buyouts.

c. The extent to which programs were aected by the

vacation buyouts.

d. The legal or regulatory authority the department

cited to support the vacation buyouts.

e. Whether any internal controls were breached to

perorm the vacation buyouts.

. Whether any additional controls should be

implemented to ensure only properly authorized

vacation buyouts occur in the uture.

Using leave balance and payroll inormation rom the state controller, we identied

transactions rom July 9 through March in which the department

paid employees or leave that were identied as buyback transactions in the

leave accounting system. We also identied buyback transactions based on our

knowledge o the process the department used in the buybacks. Further, we

requested documentation rom the department to show the authority or all new

buyback transactions we identied.

Using the position number inormation or the employees who participated

in the buybacks, we determined which unds the department used to support

those payments.

We determined the impact that unauthorized leave buybacks have had on the

departments programs.

We reviewed previously issued audits, investigations, and reports to identiy any

authority the department cited to authorize the buybacks.

We reviewed control weaknesses identied in previously issued audits, investigations,

and reports and ollowed up with key department sta to determine whether

the department had addressed those control weaknesses. We also determined the

control weaknesses that allowed the new leave buybacks we identied to occur and

suggested the additional controls needed to prevent uture unauthorized buybacks.

5 For the State Parks and Recreation Fund and the

OHighway Vehicle Trust Fund, perorm the ollowing

or the most recent threeyear period:

a. Identiy the statutory purposes or which the

revenue in each und is to be expended.

b. Identiy the revenue sources or each und.

c. Identiy any reserve balances and the accounts in

which the reserve balances are held.

d. Determine the period o time over which

the reserve amounts grew and whether the

reserve balances were accurately reported

to the Department o Finance (Finance) and

the Legislature during that time period. I this

inormation was not accurately reported to Finance

and the Legislature, determine the reasons.

e. Determine the methods used by the

department, Finance, and the state controller

to ensure the accuracy o nancial data in their

respective reports.

We addressed this objective in our previous report, Department o Parks and

Recreation: Weak Procedures Have Led to Inconsistent Budgetary Reporting and

Diculties in Measuring the Impact o Eforts to Keep Parks Open, Report .,

February .

continued on next page . . .


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September 2013

AUDIT OBJECTIVE METHOD

Determine the status o any cost reduction or revenue

enhancing measures, such as operational agreements,donations, and concessions, which have been or are

being negotiated by the department in an eort to keep

park units open. Determine the total amount o these

cost reduction or revenue enhancing measures and their

impact on the operations o the department, including its

park unit closure plan.

We addressed this objective in our February report.

7 Review and assess the process the department uses to

track the budget o each park unit. Determine whether

the department should take any corrective action to

ensure the accounting and reporting o unds and

eliminate any deciencies in the methods it uses to

track those unds.

We interviewed relevant sta in the budget ofce, OHighway Motor Vehicle

Recreation Division, and park operations to understand the departments process or

allocating budget amounts to districts and or tracking their budgeted allocations

throughout the year.

We visited ve park districts and interviewed key sta to understand the budget

allocation process and the challenges the districts ace as they begin to determine

individual park operating costs.

8 Review and assess any other issues that are signicant

to the departments oversight and management o the

state park system.

We perormed limited procedures on three recommendations that were

outstanding ater one year rom our report OfHighway Motor Vehicle Recreation

Program: The Lack o a Shared Vision and Questionable Use o Program Funds

Limits Its Efectiveness, Report , August 5, as shown in Table A o

the Appendix.

We reviewed the state controllers audit workpapers relating to employees

who received overtime pay during urlough periods and workpapers related

to potential additional leave buybacks. We ollowed up with key sta at the

department and reviewed relevant personnel documents.

Sources: Caliornia State Auditors analysis o Joint Legislative Audit Committee audit request number , the planning documents, andanalysis o inormation and documentation identied in the table column tit led Method.

Assessment o Data Reliability

In perorming this audit, we relied on various electronic datales extracted rom the inormation systems listed in able 3.Te U.S. Government Accountability Oce, whose standards weollow, requires us to assess the suciency and appropriatenesso computerprocessed inormation that we use to support ourndings, conclusions, or recommendations. able 3 shows theresults o our assessment.


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September 2013

Table 3

Methods to Assess Data Reliability

INFORMATION SYSTEM PURPOSE METHODS AND RESULTS CONCLUSION

Department o Parks and Recreation

(department)

Uniorm State Payroll System

(payroll system)

Departments payroll data as

maintained by the State Controllers

Ofce (state controller) or the

period rom July , 9, through

March , .

For the period rom July 9

through March , identiy

all instances in which the

department changed an

employees position number

but did not change his or her

civil service class or exempt

position title.

We perormed dataset verication procedures and

electronic testing o key data elements and ound no

signicant issues.

We relied on the completeness testing perormed as

part o the States annual nancial audit or payroll

transactions between July 9 and June . Since

the States nancial audit or scal year

is still in progress, we cannot rely on this report to

veriy completeness or the period rom July

through March . However, because we ound the

payroll data to be complete between July 9 and

June , we have reasonable assurance that the

payroll data or the period rom July throughMarch are also complete.

We perormed accuracy testing on a random

sample o 9 payroll transactions by tracing key data

elements to supporting documentation and ound

no errors.

Sufciently

reliable or the

purpose o

this audit.

Department

Payroll system

Payroll data as maintained by the

state controller or employees

o the department between

July , 9, and March , .


through March , determine

the total number and dollar

amount o potential leave

buyback transactions by

scal year.*



signicant issues.

We relied on the completeness testing perormed as

part o the States annual nancial audit or payroll

transactions between July 9 and June . Since

the States nancial audit or scal year

is still in progress, we cannot rely on this report to

veriy completeness or the period rom July through March . However, because we ound the

payroll data to be complete between July 9 and

June , we have reasonable assurance that the

payroll data or the period rom July through

March are also complete.

We did not perorm accuracy testing because

the department miscoded some o the

buyback transactions.

Not sufciently

reliable or the

purpose o

this audit.

We present

these data

despite the

problems

noted becausethey represent

the best

available

electronic

source o this

inormation.

Department

Caliornia Leave Accounting System

(leave accounting)

Departments leave accounting data

as maintained by the state controlleror the period rom July , 9,

through March , .


through March , determine

the total number and dollar

amount o potential leave

buyback transactions by

scal year.



signicant issues.

We did not perorm accuracy and completeness

testing o the leave accounting data because the

department miscoded some o its leave transactions

as though the employee was using leave when

the employee was actually receiving a payment in

exchange or the leave. Further, the departments

internal audit report conrmed the miscoding o

leave transactions rom as early as 7. As a result,

we determined that additional testing o this data

was not warranted.

Not sufciently

reliable or the

purpose o

this audit.

We presentthese data

despite the

problems

noted because

they represent

the best

available

electronic

source o this

inormation.

continued on next page . . .


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September 2013

INFORMATION SYSTEM PURPOSE METHODS AND RESULTS CONCLUSION

Department

Position Roster File (position roster)

Departments position data as

maintained by the state controller

or the period rom July , 9,

through March , .

For the March pay period,

identiy all positions or which

the ulltime equivalent units

paid were less than the ulltime

equivalent units authorized.


through March , identiy all

vacant positions and determine

the length o time they

remained vacant.


through March , identiy

all instances in which a position

was vacant or six or more

consecutive months.



signicant issues.

We were unable to veriy the accuracy and

completeness o the position roster data because

the state controller erroneously destroyed its

hardcopy source documents. Specically, as

o scal year , the state controllers

record retention schedule required it to retain

the hardcopy documents that support changes

to established positions occurring on or ater

July , 9. However, the state controller

prematurely destroyed the documents or the

period rom July 9 through April .

Not sufciently

reliable or the

purposes o

this audit.

We present

these data

despite the

problems

noted because

they represent

the best

available

electronic

source o this

inormation.

Sources: Caliornia State Auditors analysis o various documents and data obtained rom the state controller.

* A leave buyback occurs when eligible employees receive payment at their regular salary rate in exchange or certain leave benets.


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September 2013

Chapter 1

WEAKNESSES IN THE DEPARTMENT OF PARKS ANDRECREATIONS PROCESSES FOR ALLOCATING BUDGETSAND TRACKING EXPENDITURES LIMIT ITS ABILITY TOMANAGE THE PARK SYSTEM

Chapter Summary

Te Department o Parks and Recreations (department) inormalprocesses or providing park districts their budget allocations andtracking their expenditures are inecient and ineective. Becausethe department has not developed a ormal process or allocating

budgets to park districts, the ve districts we visited identiedconcerns that make it dicult or them to manage their operations.Specically, the districts told us they do not typically receive theirbudget allocations until several months into the States scal year,which begins on July 1. Tis makes planning their expenditureschallenging because they do not know their budgets during thesummer months, which are their busiest and most important interms o spending. In addition, the districts stated that the processthe department uses to ensure that they remain within theirallocations is unnecessarily redundant.

Tese concerns, i not addressed, will hamper the departmentscurrent eorts to budget and track expenditures at the park level.Te success o these eorts is critical or the department to complywith state law, which requires, beginning July 1, 2014, that thedepartment close parks or reduce park services to achieve anyrequired budget reductions i its unding alls below the amountneeded to ully operate its 278 parks at the 2010 level.

In June 2013 the director o the department distributed a memo toall managers and supervisors that described the methodology thedepartment intends to use to determine past expenditures and uturepark unit costs. Te methodology outlines the three phases that

the department intends to complete to accomplish the process oidentiying past expenditures and uture costs or each park. However,the methodology lacks critical inormation about how the departmentwill implement each phase and ails to provide a time rame oraccomplishing certain key steps. Specically, the department doesnot explain how it will reconcile individual park costs to the actualexpenditures or scal year 201011, when it will provide necessarytraining to the districts to ensure consistency in the way it capturesand retrieves data in its scal tracking system, and how and when itwill dene service levels at parks. Given the act that the departmenthas less than a year to establish an eective process or determiningpark costs, we are concerned about these signicant omissions.


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September 2013

The Department Lacks a Formal Budget Allocation Process

Although the department tracks budgets and expenditures at thedistrict level, its existing inormal processes are at times inecientand ineective. Key sta at the departments headquarters and theve park districts we visited conrmed that the department has nodocumented process that describes how and when it will distributebudget allocations to park districts. Based on conversations withthe budget ocer, the deputy director and division chies in parkoperations and the OHighway Motor Vehicle Recreation Division(OHMVR division), and district sta, we developed Figure 2 to showthe inormal budget allocation process the department used or scalyear 201213. District superintendents and administrative managersat the ve park districts we visited identied signicant concerns

with this inormal budget process.

The Department Does Not Provide Districts With Their

Budget Allocations in a Timely Manner

Although the States scal year begins on July 1,managers at the ve districts we visitedidentiedin the text boxtold us that the departmentgenerally provides them with their budget allocationssometime between August and November. Tisdelayed distribution creates diculties or districtswhen planning their expenditures during the criticalsummer months. When we asked the budget ocerwhen the districts received their allocations or scalyear 201213, the only documentation she couldprovide us was a memorandum addressed to thedistricts dated in September 2012. Tis correspondswith statements by the park operations division chies,who told us they provided allocations to their districtsin a meeting in September 2012. Te administrativechie or the OHMVR division told us that the budgetoce provided the ohighway vehicle districts with

their allocations in November 2012.

Conversations we had with the park operationsdivision chies indicated that poor communicationbetween park operations management and thebudget oce contributed to the late distributiono allocations to districts or scal year 201213.As shown in Figure 2, in July 2012 the budgetoce provided drat budget allocations to thepark operations division chies to give them anopportunity to make adjustments based on thespecic needs o each district. According to the park

The Five Park Districts We Visited

Marin*: Headquartered in Petaluma, the Marin district

operates 26 parks within our sectors. It received a budget

allocation o $7.6 million or fscal year 201213.

Gold Fields: Headquartered in Folsom, the Gold Fields

district operates eight parks within our sectors. It received

a budget allocation o $5 million or fscal year 201213.

San Diego Coast: Headquartered in San Diego, the

San Diego Coast district operates 12 parks within

three sectors. It received a budget allocation o $9.3 million

or fscal year 201213.

Central Valley: Headquartered in Columbia, the Central

Valley district operates 14 parks within three sectors.

It received a budget allocation o $8.6 million or fscal

year 201213.

Oceano Dunes: Headquartered in Pismo Beach,

the Oceano Dunes district operates two parks, including

one state vehicular recreation area, within two sectors.

It received a budget allocation o $6.3 million or fscal

year 201213.

Sources: The Department o Parks and Recreations(department) Web site, the departments Caliornia State ParkSystem Statistical Reportor scal year , and budgetinormation provided by the departments budget ofcer andthe northern division chie o park operations.

* According to the Marin district superintendent, the Marindistrict is in the process o merging with the DiabloVista district. We, thereore, included both districts whenpresenting the number o the Marin districts parks and theamount o its allocation.


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September 2013

Figure 2

Department o Parks and Recreations Inormal District Budget Allocation Process

Fiscal Year 201213

The budget office provided draft budget

allocations for the Off-Highway Motor Vehicle

Recreation Division (OHMVR division) to the

OHMVR division deputy director and division

chief to review and make adjustments

based on their districts specific needs.

The budget office provided draft

allocations to the park operations

northern and southern division chiefs to

review and adjust based on the specificneeds of their districts.

REVIEW DRAFTS

District superintendents contacted their

division chiefs to discuss and convey specific,

anticipated budget needs for the fiscal year.

Depending on available funding, the division

chiefs took these into account when

determining allocation amounts.

DISCUSS NEEDS

The northern and southern division chiefs

provided their districts with their allocations.

The budget office distributed the OHMVR

division districts allocations.

DISTRIBUTE

Throughout the year, the district

superintendents and the division chiefs

discussed the districts budgets. The

districts initiated discussions if they

incurred significant unanticipated costs

or were running over budget. Division

chiefs discussed with the districts ways to

adjust their spending in order to stay

within their budgets.

DISCUSS SPENDING

The budget office began preparing the first draft of the districts budget allocations. Starting with the

prior-year allocations, the budget office took into consideration one-time adjustments as a result of

the governor's proposed budget and budget letters from the Department of Finance.

Conversations

Budget allocations

North Coast Redwoods

Mendocino

Northern Buttes

Russian River

MarinDiablo Vista

Capital

Sierra

Gold Fields

Santa Cruz

Monterey

Central Valley

Channel Coast

Angeles

Orange Coast

San Diego Coast

Colorado DesertInland Empire

Tehachapi

San Luis Obispo Coast

Twin Cities

Hollister Hills

Hungry Valley

Oceano Dunes

Ocotillo Wells

Northern District Staffat 12 Park Districts

District Staff atFive OHMVR Districts

Southern District Staffat Eight Park Districts

DISTRICT SUPERINTENDENT DISTRICT SUPERINTENDENT DISTRICT SUPERINTENDENT

DRAFT BUDGET ALLOCATIONS

2012

March

April

May

June

July

August

September

October

November

DEPUTY DIRECTOR

OF PARK OPERATIONS*

DEPUTY DIRECTOR OF

OFF-HIGHWAY MOTOR

VEHICLE RECREATION DIVISIO

NORTHERN

DIVISION CHIEF

SOUTHERN

DIVISION CHIEF*

OFF-HIGHWAY MOTOR VEHICLE

RECREATION DIVISION CHIEF

BUDGET OFFICE

Sources: Department o Parks and Recreations chie deputy director, deputy director o administrative services, park operations division chies, budgetofcer, and OHMVR division chie.

* The park operations chie or the southern division was also the acting deputy director o park operations rom July through March .


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September 2013

20

operations division chies, the budget ocer verbally inormedthem that the department had an additional $14 million, but it was

not included in the drat allocations. However, the park operationsdivision chies stated that they were unable to obtain conrmationrom the budget oce as to how much, i any, o the additional$14 million would go to park operations. Despite their attempts toobtain clarication regarding the $14 million, the division chiesstated that they provided each district with its allocationtheoriginal allocations provided by the budget oce in July 2012during a district superintendents meeting in September 2012.According to the division chies, in October 2012 the deputy directoro administrative services at the time conrmed that the additional$14 million would go to park operations, and the park operationsdivision chies emailed the revised allocations to the districts later

that month.

We expected that the park operations division chies would haveprovided the initial allocations to the districts in July and thenamended them later ater conrming that the additional allocationswould go to park operations, rather than waiting to distributethem in September. According to the park operations southerndivision chie, she did not provide the districts with their initialallocations in July because she was concerned that the allocationreductions were so extreme that they would cause massive cutsin park operations. She stated that she had hoped to conrmsooner that the additional $14 million would go to park operationsin order to provide the districts with more realistic allocations.However, we believe that park operations management shouldhave communicated such massive cuts in July so the districts couldplan accordingly in the event park operations did not receive theadditional $14 million. Additionally, the department would benetrom a more ormal budget allocation process that establishes clearlines o communication so that management in park operations canprovide clear budgetary inormation to park districts.

Te districts explained to us that as a result o not receivingtheir allocations in a timely manner, they would use the prior years

allocation to budget their expenditures during the rst crucialmonths o the scal year. Some stated that they also take intoconsideration any anticipated budget cuts. Four o the ve districtsexplained that relying on their prior years allocation has beenproblematic in recent years because the ocial allocations thedepartment eventually provided to them were at times signicantlyless than the allocations they had received in previous years. Asa result, these our districts stated that they spent the remaindero those scal years adjusting their spending to stay within theirbudget allocations.

The park operations chie or the southern division was also the acting deputy director o parkoperations rom July 2012 through March 2013.

As a result o districts not receiving

their budget allocations in a timely

manner, they would use the prioryears allocation to budget their

expenditures during the rst crucial

months o the scal year.


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September 2013

In addition to receiving their allocations ater the scal year wasunderway, our o the districts told us that at times the department

has inormed them in April or May that they would receive extraunding. However, district sta explained that receiving additionalallocations that late in the scal year makes it dicult to increasestang levels or enter into contracts beore the end o the scalyear. Te park operations southern division chie stated that whenthe districts could not use the additional money, the departmentmanagement tried to use it or general operational support thatcould accomplish critical tasks that would carry over into the nextscal year, such as perorming deerred maintenance or enteringinto a paving or trash contract. However, she could not providedocumentation or a specic example.

Although the deputy director o administrative services and thepark operations division chies agree that the department needsto ormally outline its budget allocation process, they have notworked to develop written policies and procedures. Te deputydirector o administrative services stated that recent changes inmanagement have made it dicult or the budget oce to ndthe time to document its process. However, she agreed that thewritten procedures should dene the roles and responsibilities othe parties involved in the budgeting process. She urther statedthat she expects the budget oce will begin to develop a ormalbudget allocation process in September 2013 and that it should takeat least two months or the department to nalize and implementthe necessary policies and procedures. When we spoke with thetwo park operations division chies, neither could provide anexplanation o why the department had not developed writtenpolicies and procedures, but they agreed that it should do so in theuture to ensure that inormation received by the districts is timelyand useul.

When the department establishes a ormal budget process, webelieve that it should ollow a timeline similar to the one the Stateemploys. Te deputy director o administrative services explainedthat late budget hearings in May or June can cause delays in the

park districts receiving their budget allocations, and she believes itis more eective to wait until the hearings are over beore providingdistricts with their allocations, because changes in the allocationswould create more conusion and questions rom the districts.However, we believe the department should establish a processthat mirrors the States, in which the governors budget proposesunding in January, is adjusted and revised in May, and is nalizedin June. I the department ollowed this timeline, it could distributeallocations to districts at the beginning o the scal year in July. Justas state departments manage the fuctuations rom the preliminaryallocations they receive, the districts could manage fuctuations ithe department administered the process consistently.

We believe the department should

establish a process that mirrors

the States, in which the governors

budget proposes unding in

January, is adjusted and revised in

May, and is nalized in June; thus,

it could distribute allocations to

districts at the beginning o the

scal year in July.


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September 2013

22

When we spoke with the chie deputy director, he agreed that aprocess similar to the States would be a reasonable alternative

to the departments current approach, and he indicated that hewould consider implementing such a process. Developing a ormalbudget allocation process with set timelines would alleviate districtuncertainty, because districts would know when to expect theirallocations or changes to allocations. Moreover, we believe thatproviding the districts with their allocations earlier in the yearevendrat allocations that are subject to changewould allow them tomanage their operations more eectively.

The Departments Process or Tracking District Expenditures Results in

Duplicative Work

Although districts and headquarters use the departments internallydeveloped Fiscal racking System (FS) track expenditures andmonitor spending, our o the ve districts we visited told us they alsouse other tools to separately track their expenditures to manage theiroperations. Tese districts stated that they developed other means otracking their spending because o FSs limitations.

Te FS limitations noted by some districts we visited involve theinability to run necessary reports and access current inormation.Te departments FS manual states that FS is more fexible inreporting because it allows users to view more data in a single systemand provides the ability to create custom reports. However, two districtswe visited told us that even though they can enter parklevelexpenditures into FS, its reports show only activity at the sector level.In addition, the districts explained that the expenditures refected inthe FS may not be up to date. For example, the administrative ocerat the Oceano Dunes district explained that credit card purchases maytake several weeks to show up in the FS because o the length o timeit takes accounting services to pay the bill and key the inormationinto the Caliornia State Accounting and Reporting System. Teadministrative ocer added that as o early June 2013, the mostuptodate credit card expenditure inormation refected in the FS

was or late Marcha lag o more than two months.

As a result, our o the ve districts we visited indicated that theyhave developed their own spreadsheets or databases to track theirexpenditures on a more realtime basis. For example, the San Diegodistrict superintendent told us that the district uses spreadsheets totrack its expenditures and then reconciles the spreadsheets with theFS. He also stated that the district develops a spending plan orthe entire year that breaks down how much the district will spend onsalaries and operating expenditures. He indicated that this tracking oexpenditures in real time allows the district to have a better senseo what it has actually spent than the budget oce does. Similarly, the

The FTS limitations noted by some

districts we visited involve the

inability to run necessary reports

and access current inormation.


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September 2013

Central Valley district superintendent said that his district developsannual spending plans or its sectors and uses an internal database to

track sector expenditures on a realtime basis.

Although the department uses the FS to oversee district spending,its eorts duplicate work some o the districts are already perorming.Specically, the division chies stated that they use the FS tomonitor the districts spending during the scal year so that they canollow up with district superintendents i districts overspend or areprojected to overspend their budget allocations. However, because theinormation the districts separately maintain is more current thanthe inormation in the FS, the division chies may have inaccurateor outdated inormation. A more eective oversight process wouldinclude having the districts periodically update their spending plans,

internal expenditure tracking reports, and reconciliations with theFS and provide these documents to the division chies or review.Te chie deputy director told us that the approach we suggested issomething he would consider implementing.

Additionally, the budget ocer told us that her oce uses theFS to monitor district spending and develop and provideexpenditure projections to the districts to help them stay withintheir budget allocations. However, because districts track theirown expenditures and generally use more uptodate inormationthan is available in the FS, the budget oces projection reportsmay not be useul. For example, the administrative chie at theGold Fields district stated that it is unclear to most eld staexactly what ormula or calculations the budget oce uses toarrive at its yearend projections. Further, she explained that thebudget oce sends data produced rom the FS to the districtswith emails detailing transactions that the districts themselvesentered into the FS, which she does not nd useul. Te San Diegodistrict superintendent also said that the reports the budget oceprovides cannot take the place o his districts internal trackingprocess and that the budget oces projections are either infatedor underestimated because the budget oce bases them on datarom the FS that is not current. However, he did state that regular

contact with the budget oce is valuable because it provides anopportunity to clariy the status o the districts expenditures.

Moreover, because its projections may not be accurate, the budgetoces recommendations to approve or deny personnel action requestsmay be fawed. As we discuss more ully in Chapter 2, the ExecutivePersonnel Review Committee (EPRC) considers the availabilityo unds as a actor when it makes decisions regarding personnelrequests. o aid this process, the budget oce provides the EPRC withrecommendations to approve or deny requests based on the availabilityo unds. However, the inormation on which the budget oce bases itsrecommendations may not be accurate or up to date.

Because districts track their own

expenditures and generally use

more uptodate inormation

than is available in the FTS, the

departments budget oces

projection reports may not

be useul.


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September 2013

24

On the whole, the time the budget oce uses to develop theinormation it sends to districts could be better spent providing

support to districts in other ways. For example, rather thanproviding the districts with outodate projections or inormationthat district sta have already entered into the FS, the budgetoce could provide oversight by working with the districts todevelop a better understanding o their spending plans and realtimeexpenditures. With this better understanding, the budget oce maybe better positioned to make accurate recommendations to the EPRC.

Until It Fully Implements a Process or Tracking Park Costs, the

Department Cannot Comply With State Law

In our February 2013 report titledDepartment o Parks andRecreation: Weak Procedures Have Led to Inconsistent BudgetaryReporting and Diculties in Measuring the Impact o Eforts to KeepParks Open, Report 2012121.1, we reported that the departmentdid not track expenditures at the park level, which it needs to doto comply with state law. Specically, on July 1, 2014, state lawmandates that the department achieve required budget reductionsby closing, partially closing, or reducing services at its parks iits unding alls below the amount necessary to ully operate its278 parks at the 2010 level. o calculate the need or potential parkclosures, state law requires the department to consider, amongother actors, the net savings that would result rom closing eachpark unit to maximize savings to the state park system. o makethis calculation, the department needs to know how much it coststo operate each park in the system.

Since the issuance o our February 2013 report, the departmenthas taken steps toward tracking individual park costs. InMarch 2013 it created a team charged with the task o producinga methodology or calculating park unit expenditures. Someteam members included the budget ocer, the accounting chie,and superintendents rom various park districts. As a result othe teams work, in June 2013 the director distributed a memo

to all managers and supervisors describing the process that thedepartment plans to use or calculating park unit costs. Specically,the departments plan outlines three phases to determine pastexpenditures and uture costs:

Calculating expenditures by park unit or scal year 201011.

Dening a process to track expenditures by park unit or scalyear 201314.

Developing individual park unit budgets to dene what each parkunit costs to operate.

On July 1, 2014, state law mandates

that the department achieve

required budget reductions by

closing, partially closing, or

reducing services at its parks i its

unding alls below the amount

necessary to ully operate its

278 parks at the 2010 level.


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September 2013

Tis process begins to address the statutory requirement; however,the department has not yet ully explained how it will accomplish

all o its goals. For example, the rst phase o the departmentsmethodology requires districts to calculate and compile the cost torun each park unit in scal year 201011 by determining a numbero actors, such as the percentage o time each employee spentat each park unit in that year. Although the departments processprovides districts with a detailed plan or determining these costs,it does not address how the department will reconcile all o theindividual park costs to that scal years actual expenditures tooperate the parks, as we recommended in our prior report issuedin February 2013. Te June 2013 memo required the districts tocalculate expenditures or scal year 201011 and report themthrough their chain o command by August 1, 2013. However,

although the expenditures the department received show thebreakdown by park unit, some expenditures or overhead had notyet been allocated at the park unit level. For example, the districtsprovided their departmentwide overhead amounts but some didnot allocate those expenditures to the individual parks. Also, thedistricts parklevel expenditures do not include headquartersoverhead amounts, which, according to the deputy director oadministrative services, are being generated by administrativeservices and will be allocated to the individual parks bySeptember 2013.

Te departments descriptions o the second and third phases o theprocess are also incomplete and lack the detail that the districtswill need to successully track expenditures and budget by parkunit going orward. Te departments description o the secondphase o the methodology states that several changes must occurin the way the department captures and retrieves data beore it cantrack expenditures at the park unit level. For instance, one changeinvolves resolving the current limitations o the departments FSso that the system can generate reports by park unit. In August 2013the department was able to demonstrate that the FS can nowgenerate such reports. Te description o the second phase alsostates that the department must provide training to the districts to

ensure consistency with data collection. However, the methodologydoes not address when the training will occur. Although thedirectors memo states that the department will begin its processo capturing all expenditures by park unit in July 2013, we areconcerned that the department has not established a detailedtimeline or completing each o the key components o this phase,such as identiying when it plans to complete the training or thedistricts. Until they receive the necessary training, the districts maynot capture and report the data consistently, which could result ininaccurate or incomplete expenditures.

Although the districts reported

expenditures show the breakdown

by park unit, some expenditures or

overhead amounts had not yet been

allocated at the park unit level.


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September 2013

26

Te departments description o the third phase ocuses ondeveloping park unit budgets but does not provide enough detail

or us to determine whether its approach is reasonable. Specically,the description explains that in order to determine a cost or budgetor each park unit, the department must dene the service level oreach park unit and develop measures that quantiy whether theservice levels are being met. Although the department identiessome examples o possible measures and the related data it wouldneed to capture, it does not speciy a time rame or when it willdene service levels or determine which measures it will actuallyuse. Tereore, we cannot comment on the reasonableness othe departments plan or its time rame or this phase o themethodology. Until the department denes the service levels orits park units, it may be dicult or the department to convince

the Legislature and other decision makers o the necessity orappropriateness o proposed increases to its budget to operate thepark system.

State law has placed a moratorium on the department closingany parks through June 30, 2014. However, it is critical thatthe department complete and ully implement its process ordetermining individual park costs soon so that it has the capabilityto comply with state law regarding uture park service reductions orclosures. Moreover, the departments ability to provide inormationon parklevel expenditures is key or decision makers to make ullyinormed decisions regarding unding or the park system.

Recommendations

o ensure that districts receive timely budget allocations, thedepartment should establish and implement a ormal allocationprocess by January 2014 that includes the ollowing:

A timeline that mirrors the States budget process and describeswhen the department will provide park districts with dratallocations, revisions to drat allocations, and nal allocations.

A description o the roles and responsibilities o key stainvolved in the process, including budget oce sta, thedeputy directors and division chies or park operations and theOHMVR division, and district superintendents.

o reduce duplicate expenditure tracking and increase theeectiveness o its budget process, the department should developprocedures requiring the districts to prepare and submit spendingplans and to periodically submit their total expenditures aterreconciling them with the FS. Te procedures should speciy how


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oten districts should provide this inormation to the departmentto ensure that the budget oce and park management can

appropriately oversee the districts budgets and spending.

o ensure that it can comply with state law in the event that it mustclose parks or reduce park services in the uture, the departmentshould improve its methodology or developing individual park unitbudgets and determining and tracking parklevel costs. Specically,the department should take the ollowing steps:

Update its description o phase one to adequately explain how itwill reconcile individual park costs or scal year 201011 to thedepartments total actual expenditures to operate the parks.

Develop specic time rames and deliverables or the completiono phases two and three o its plan. Tese time rames shouldinclude specic completion dates or each key component othe phases.

Provide training as soon as possible to park operations stato ensure that they consistently collect the data necessary orphase two.

Determine how it will dene service levels and measure whetherthose levels are being met so it can provide budgets or each parkunit, as phase three o its process requires.

o ensure that the Legislature has the inormation necessary tomake any uture decisions related to service reductions or parkclosures, beginning in scal year 201415 the department shouldprovide it with an annual report that details the costs to operateeach park unit.


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Chapter 2

THE DEPARTMENT OF PARKS AND RECREATION LACKSSUFFICIENT CONTROLS AND PROCESSES RELATED TOSOME PERSONNEL ACTIVITIES

Chapter Summary

Te Department o Parks and Recreation (department) mustimprove its controls to ensure that unauthorized leave buybacksdo not occur. As discussed in the Introduction, the departments2012 internal audit report concluded that the department hadinappropriately bought back nearly $271,000 in leave rom 56 o its

employees. Specically, a ormer deputy director o administrativeservices authorized the inappropriate leave buybacks and thedepartments payroll transactions unit purposely circumventedstatewide controls to process the transactions. In our reviewo payroll transactions between July 2009 and March 2013, weound nearly $16,400 in additional inappropriate leave buybacktransactions. When the department participates in inappropriateleave buybacks, it spends unds that it could use or more criticalneeds. Furthermore, the department has done little to preventuture unauthorized buybacks. Although it took disciplinaryaction against our managers involved in the 2011 buybacks, ithas neither changed its processes nor provided training to theappropriate personnel.

In addition, the department established the Executive PersonnelReview Committee (EPRC) to manage its stang, but it has notdeveloped policies and procedures identiying the structure o thecommittee, the roles and responsibilities o its members, or theactors members should use to make decisions on stang requests.Further, the directors oce has not provided the EPRC with ormalguidance and direction about the directors vision, goals, andpriorities related to stang, nor has it required the EPRC to submita summary o its decisions to the director to allow him to determine

w

Documents

Department of Parks and Recreation: Flaws in Its Budget Allocation Processes Hinder Its Ability to Effectively Manage the Park System