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HomeMy WebLinkAboutMINUTES - 09161997 - C60 C (D TO: BOARD OF SUPERVISORSL- ;: � Contra FROM: t FAMILY & HUMAN SERVICES COMMITTEE :.: `z Costa County DATE: September 16, 1997 �Ty� S�'9 CUiltlf't . SUBJECT: PROPOSED RESPONSE TO REPORT NO. 9710 OF THE 1996-1997 GRAND JURY SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATIONS: 1 . ADOPT this report of our Committee as the Board of Supervisors ' response to 1996-1997 Grand Jury Report No. 9710: "Community Services Still a Troubled Department. " 2 . REMOVE this item as a referral to our Committee. BACKGROUND: The 1996-1997 Grand Jury filed the above report, which was reviewed by the Board of Supervisors and subsequently referred to the Family & Human Services Committee. On September 8, 1997 our Committee met to discuss the recommendations and review proposed responses . At the conclusion of those discussions, we prepared this report which clearly specifies : A. Whether the recommendation is accepted or adopted; B. If the recommendation is accepted, a statement as to who will be responsible for implementation and a definite target date; C. A delineation of the constraints if a recommendation is accepted but cannot be implemented within the calendar year; and i D. The reason for not adopting a recommendation. CONTINUED ON ATTACHMENT: YES SIGNATURE: RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTE APPROVE OTHER MARK DESAULNIER DONNA E BER SIGNATURE(S): ACTION OF BOARD ON APPROVED AS RECOMMENDED OTHER VOTE OF SUPERVISORS / I HEREBY CERTIFY THAT THIS IS A TRUE �L UNANIMOUS(ABSENT ) AND CORRECT COPY OF AN ACTION TAKEN AYES: NOES: AND ENTERED ON THE MINUTES OF THE BOARD ABSENT: ABSTAIN: OF SUPERVISORS ON THE DATE SHOWN. Dean Lucas 335-1077 ATTESTED Contact: Family & Human Services Committee PHIL BA HELOR,CLERK OF THE BOARD OF cc: County Administrator SUPERVISORS AND COUNTY ADMINISTRATOR Superior Court Presiding Judge GVand Jury Foreperson County Counsel .BY DEPUTY Community Services Director "COMMUNITY SERVICES STILL A TROUBLED DEPARTMENT" REPORT NO. 9710 The 1996-97 Contra Costa County Grand Jury makes the following recommendations : RECOMMENDATION NO. 1 : The Board of Supervisors direct the Acting Director of the Community Services Department to identify and address problems within the Department with a specific time line for corrective action. RESPONSE : A. This recommendation is accepted. B. The Community Services Director has submitted a list of corrective actions to be undertaken and their estimated completion dates in a letter to the State Department of Community Services and Development. A copy of that letter is attached to this report. RECOMMENDATION NO. 2 : The Acting Director of the Community Services Department implement an oversight system for all financial decisions . RESPONSE : A. This recommendation is accepted. B. Oversight for financial decisions will be implemented in two phases. First, a job analysis of the three current accountant positions will appropriately classify them in accordance with the work requirements and a new supervising accountant position will take a lead role in the accounting work of all divisions and in unifying the system. Second, the County' s audit firm Macias, Gini and Company will be engaged to review the existing system, policies and procedures, and to develop a work plan to implement improvements including training the accounting staff and program managers in properly utilizing the system. The fiscal audit review by the State of California dated June 2, 1997, a high priority issue, provides guidance to ensure that this recommendation is implemented by January 1998 . The Board directs the County Administrator to provide close and continuous monitoring of the Community Services Department operations . In addition, oversight of the Department will remain on referral to the Board' s Family and Human Services Committee. RECOMMENDATION NO. 3 : The Acting Director of the Community Services Department require all employees to meet written performance standards, including those for preparation of timely, accurate reports, properly supported by documentation. RESPONSE: A. This recommendation is accepted. B. All employees are evaluated annually in accordance with written standards consistent with their job classifications . Management employees are assessed on the basis of responsiveness, accuracy, fiscal management, interpersonal relations and judgement. Employees ' strengths and weaknesses are considered and, in areas where improvement is needed, specific expectations are identified with time lines for improvement so that progress can be assessed. RECOMMENDATION NO. 4 : The Acting Director of the Community Services Department develop written guidelines for ongoing review and evaluation of the Community Action Plan to ensure that updated information is submitted to the State. RESPONSE: A. This recommendation is accepted. B. The Community Action Plan is an annual process that requires an assessment of needs and a plan of action to address the State priority of Family Self-Sufficiency. Written guidelines are contained in the State rules and regulations that cover the Community Services Block Grant Program and are provided to department staff responsible for oversight. The department has established a matrix that covers each delegate agency contract to ensure that necessary reports are submitted to the State on a timely basis . RECOMMENDATION NO. 5 : The Acting Director of the Community Services Department utilize a rigorous employee evaluation process to identify employees with marginal or unsatisfactory performance and take appropriate action. RESPONSE : A. This recommendation is accepted. B. The Director has established a rigorous employee evaluation process and takes appropriate actions as indicated by the evaluations . RECOMMENDATION NO. 6 : The Board of Supervisors select a permanent director who has demonstrated strong business management skills . RESPONSE: A. This recommendation is accepted. B. An executive search firm has been engaged to conduct a nation- wide recruitment to attract a pool of qualified candidates with demonstrated fiscal, programmatic and labor relations skills . The Board of Supervisors anticipates selecting a permanent director in September 1997 . The Community Services Director has provided the following comments for consideration by the Grand Jury: I share the Grand Jury' s concern with the events that have transpired during 1994, 1995 and 1996 and have made every effort to improve the operation of the department, both in my supportive role as Chief Assistant County Administrator and subsequently as interim Community Services Director. I offer the following as evidence of the improvements that have occurred in the department since April 1996 : 1 . The Head Start Program was saved by virtue of a combined team effort of the Board, Policy Council, staff and the cooperation of organized labor to correct deficiencies and provide leadership that allowed the Federal Administration for Children and Families in June 1996 to allow the program' s continuation under the Contra Costa County government. A follow-up review is scheduled in November. 2 . Head Start, which is the largest division of the department, is now managed by a new management team. Four of five top managers, including the Program Director, have been replaced and the division is applying for an expansion grant that if approved will increase Head Start services by. 30% over current levels . 3 . The Weatherization Program was suspended in September 1996 and restructured in February 1997 through an interagency agreement with the Housing Preservation Program of the County Building Inspection Department. This arrangement has increased oversight and vastly improved productivity. The program is currently weatherizing 30 homes per month and operating within the allowed budget, rather than losing $5,000 to $12 ,000 per month prior to its suspension. 4 . The department accounting system is being unified with new policies and procedures, reclassification of accountants, and a new supervising accountant will be hired. 5 . The Department applied for a received a $55, 000 competitive grant under the new State Mentoring Initiative. 6 . The 15-member Economic Opportunity Council has been provided consistent staff support, monthly meetings, minutes and staff reports to improve effective program oversight and policy setting. 7 . The Child Development Division continues to provide essential center based State subsidized child care to approximately 1,200 children per day in low-income areas of the County. In addition, both Child Development and Head Start are actively involved in the collaborative aspects of implementing the County' s child care component of Welfare Reform. 8 . The Community Services Block Grant and Community Action program are being restructured, including a change in senior management staff. Community Services DepartmentContra Child Development 374-3994 Child Nutrition 374-3850 Administration Costa CommuntyAction 313-7363 1220 Morello Avenue, Suite 101 Head Start 646-5540 Martinez,California 94553-4711 unHousing and Energy 646-5756 �O1 �/ (510)313-7350 ��/ Fax:(510)313-7385 s ..c Scott Tandy, Director ST'S CUUN'� July 24, 1997 Mr. Wayman Yee, M.B.A., C.G.F.M. Management Auditor Audit Services Unit Department of Community Services and Development 700 North 10th Street, Room 258 Sacramento, Ca 95814 Dear Mr. Yee: This letter is in response to your audit review letter dated June 2, 1997. We appreciate the additional time you provided us so that a complete response can be provided including a review by the Economic Opportunity Council. A. INTERNAL CONTROL ISSUES SEPARATION OF DUTIES Recommendation 1: Review the work flow and responsibilities of the Executive Secretary and the Accounting Supervisor, and provide for reasonable separation of duties. Consideration should be given to using employees from other units to provide for essential checks and balances. Response: The Department agrees with the recommendation, The Department has requested that the County's Human Services Department conduct desk reviews of both the Executive Secretary and Accounting Supervisor. In the interim, the Department is restructuring the more critical duties of both employees to provide for better segregation of internal control functions. Estimated Completion Date: September 30, 1997. Recommendation 2: Comply with Contra Costa County (CCC) Administrative Bulletin 105 which establishes procedures for receiving, safeguarding, and reporting money received. Response: The Department agrees with the recommendation. The requirements of Administrative Bulletin 105 will be enforced. In addition, the Department's Administrative Services Officer developed for the former Department Head a proposed procedures manual for receiving, safeguarding and reporting money received that was never implemented. The Department is in the process of implementing both sets of procedures. Estimated Completion y Date: July 31, 1997. ACCOUNTING SYSTEM NOT DOCUMENTED Recommendation 3: Develop and implement an accounting system procedures manual. Another County department may already have a manual which may be emulated by CCCSD. Response: The Department agrees with the recommendation. The development of a new accounting systems procedure manual should run concurrently with the development of a new centralized accounting system. The Department, in conjunction with the Auditor-Controller's Office and the independent audit firm of Macias and Gini, will develop and implement a new accounting system and procedures manual. Estimated Completion Date: January 31, 1998. Recommendation 4: Ensure that a policy and procedures manual is developed, implemented, and subject to periodic, intensive review and modification. Response: The Department agrees with the recommendation. Using the County's Administrative Bulletin format as a guideline, the Department will develop a policies and procedures manual that will provide staff uniform guidance for routine administrative issues. The proposed manual will not only be consistent with County and funding source expectations, but will assure better compliance with the new Accounting Policies and Procedures Manual noted above. Built into the procedures manual will be the requirement/expectation that all systems change and evolve over time, and that periodic review and amendments of the existing procedures will be mandated. Estimated Completion Date: January 31, 1998. Recommendation 5: Document existing desk procedures and update, as needed. Response: The Department agrees with the recommendation. The new Policies and Procedures manuals will be expanded to include desk procedures for all DCSD funded accounting positions. Estimated Completion Date: January 31, 1998. 2 EMPLOYEE TIME REPORTING Recommendation 6: Submit monthly/quarterly expenditures reports based on actual costs, including employee time charges. Response: The Department agrees with the recommendation. Monthly and quarterly expenditure reports to DCSD are based solely on actual contract related costs. Costs for employee wages and fringe benefits are taken from each employee's Personal Activity Reports (PARS). Other charges are based on cost allocation plans based in part on actual employee activity. Recommendation 7: Ensure time sheets are properly completed and signed/certified by both the employee and the supervisor. Response: The Department agrees with the recommendation. Employees have been instructed by management to fill out and complete their personal activity reports in accordance to work actually performed by funding source. Time sheets are also now being signed and certified by both the employee and the supervisor. Recommendation 8: Document allocation methods used to charge time to various contracts. Cost allocations need to be updated routinely to ensure accuracy. Response: The Department agrees with the recommendation. The Department is now reviewing and updating current cost allocation methods for DSCD's 1997 contracts. All mid - year budgets are being reviewed in conjunction with actual year-to-date program charges to determine not only our budget status, but also the accuracy of our allocation process. Recommendation 9: Refrain from charging expenditures to unapproved contract line items. Response The Department agrees with the recommendation. Contract budgets attempt to project program expenditures for a future period. Sometimes, actual program costs do not coincide with the original budget projections. The current CSBG contract language gives contractors flexibility to expend funds in excess of 10 % of approved line items without State approval. The DOE and LIEHEAP contracts are silent on this issue. Contract budgets should continue to match a combination of actual and projected program expenditures, and be reviewed and adjusted periodically. Any proposed or anticipated changes in a budget will be sent to DCSD for consideration. Recommendation 10: Review charges made by the County's GSD for reasonableness and correctness. 3 Response: The Department agrees with the recommendation. The Department will incorporate in the proposed Accounting Policies and Procedures Manual additional steps to ensure better internal controls regarding this issue. We will also ask the General Services Department to'review their current systems to ensure that all charges to the Department are both accurate and appropriate, thus ensuring a better quality control process. Recommendation 11: Do not claim personal services costs based on the budget for funds available. Response: The Department agrees with the recommendation. All personal services costs charged to State contracts shall be based on either personal activity worksheets, or, other state approved methods of cost.allocation. Recommendation 12: Require employees working on more than one program to maintained detailed time distribution records. As an alternative, CCC may charge personal services costs on an approved cost allocation plan. The methodology used to allocate salaries and benefits must be documented, reasonable, and consistently applied. Response: The Department agrees with the recommendation. All Departmental staff funded by CSBG, DOE and LIHEAP contract funds are maintaining Personal Activity Reports to record not only the contract worked, but the kind of work actually performed. Recommendation 13: Review cost allocations (including personal service charges) for accuracy, propriety, and supporting documentation. Response: The Department agrees with the recommendation. Recommendation 14: Determine if charges made against CSD contracts are appropriate and amend the expenditure reports, as necessary. This should include salaries and benefits of employees charged to CSD contracts while on administrative leave and unauthorized expenditures. Response: The Department agrees with the recommendation. Current 1997 expenditure reports for the 1997 CSBG, DOE and LIHEAP contracts are all based on actual employee time records and recognized cost allocation methods. Recommendation 15: Monitor funds earned from the sale of scrap/salvage weatherization materials to ensure that the proceeds are used to offset the costs of the appropriate CSD contracts. Response: The Department agrees with the recommendation. Any sale of scrap /salvage 4 weatherization materials should only take place after formal authorization by the Department Head, and only with a salvage company that provides a written receipt and a check noting the quantity of material scrapped and the amount numerated. Check proceeds should be deposited into the County Treasury and be used to offset contract costs. CONTRACTING - GENERAL Recommendation 16: Refrain from limiting the bidding process to only a limited number of bidders. Promote open and free competition. Response: The Department agrees with the recommendation. Future bidding or RFP processes with take place in accordance with Federal, State and County Regulations. Recommendation 17: Implement budget controls to prevent deficit spending, i.e., incurring obligations in excess of the total contract funds or budget line items. Recommendation 18: Establish a mechanism to identify budgeted costs and actual costs, and keep a running balance of expenditures by line item and the total contract balance. Recommendation 19: Develop procedures to track and control budget line items, and report results to operating/program units on a monthly basis. Recommendation 20: Centralize the accounting staff at the Morello Administrative Office to maintain control of contract expenditures. Expenditure controls should be under the direction of the ASO and not under individual program managers. Response: . The Department agrees with recommendations 17, 18, 19 and 20. The accounting system and oversight for financial decisions will be implemented in three phases. First, we will be completing a.job analysis for the three current accounting positions to appropriately classify them in accordance with the level of the work they are performing. Second, we will create and fill the new Supervising Accountant position that will take a lead role in the accounting work of all Divisions with the intent of unifying the system. Third, we will engage the County's new audit firm of Macias and Gini to review the existing system, policies and procedures, develop a work plan to implement improvements, including the training of accounting staff and program managers in the proper utilization of the new system. Estimate Completion Date: December 31, 1997. This is a high priority issue for the Department. B. OTHER FINDINGS 5 Recommendation 21: Document cost allocation methodology. Cost allocations must be consistently applied. Response: The Department agrees with the recommendation. Proposed cost allocation methodology has been developed for each State contract, and continues to be tested and evaluated for both accuracy and appropriateness. The Department is also seeking approval with the Federal Administration for Children and Families to develop an indirect cost allocation plan for the entire Department. Estimated Completion Date October 31, 1997. Recommendation 22: Remit$10,125 in disallowed costs claimed as Weatherization Program storage costs. Response: The Department requests that DSCD reconsider this recommendation. In this instance, the Supervising Accountant erred in charging program allowable costs to the wrong line item. Had they been billed to the correct line items such as assessment, outreach and/or labor, they would have been allowable costs. We propose that we be allowed to reallocate these charges using the Department's year-to-date Personal Activity Reports for the 1997 Weatherization program, and adjust the 1996 close-out accordingly. Recommendation 23: Charge labor costs based on the actual time employee(s) work on each program. Response: The Department agrees with the recommendation: All labor charges for current 1997 DCSD contracts are based on actual employee time reports. Recommendation 24: Ensure proper salary allocations are made prior to reporting monthly/quarterly reports to CSD. Response: The Department agrees with the recommendation. Monthly salary allocations to DCSD contracts are based solely on each employee's Personal Activity Report. If an employee fails to turn in his or her PAR, the cost for that employee's salary and fringe benefits is automatically charged to a County General Fund account. Recommendation 25: Refund $8,530 for over claimed costs, identified above., to CSD. Response: The Department agrees with the recommendation. The original allocations for both Millar and Prince's time for the months of September and August respectively have been identified and corrected. The amount identified above as being overclaimed was corrected in a subsequent report. Recommendation 26: Require all employees who work on more than one program to maintain time distribution records. 6 ` Response: The Department agrees with the recommendation. All Departmental staff funded by CSBG, DOE and LIHEAP contract funds are maintaining Personal Activity_Reports that record not only the contract worked, but the kind of work performed. Recommendation 27: Ensure all supervisors review and sign-off/certify all time sheets. This should be done before distributing the payroll checks. Response: The Department agrees with the recommendation. The Department will add an additional step to the existing procedure to ensure that all supervisors review and sign-off and certify all employee time sheets before distributing the payroll checks. Estimated Completion . Date: July 31, 1997. CONTRACT NO. 95BD-7013 Recommendation 28: Remit$2,550 to CSD for duplicate charges claimed under Contract No. 95BD-7013 ECIP ($1,530) and WX ($1,020). Response: The Department agrees with the recommendation, and will request that the Board of Supervisors direct the Auditor-Controller's Office to remit this amount. CONTRACT NO. 95C-8012 Recommendation 29: Determine if the method used to allocate labor costs charged were properly allocated as administrative costs. Response: The Department agrees with the recommendation. The Department allocates both administrative and program costs solely on what is reported in each employee's bi-monthly Personal Activity Report. Employees are now directed not only to maintain individual time records for each contract worked on, but also the kind of work performed (accounting, personnel, intake, client assessment). We believe the current system represents a reasonable basis for the proper allocation of costs between contract line items. Recommendation 30: Do not claim administrative costs based on the availability of funds or the budget. Response: The Department agrees with the recommendation. Administrative costs are now being charged based on actual employee time records and approved cost allocation plans, and not on the availability of the budget. CONTRACT NOS. 94J-9808 AND 95J-1008 Recommendation 31: Remit$36,347 for unsupported costs charged to Contract Nos. 94J- 9808 ($24,598) and 95J-1008 ($11,749). ( Note: On 5130197, CSD received payment of $36,347 from CCCCSD ). 7 Response: The Department agrees with the recommendation. Warrants totaling-$,36,347 for the above charges were issued and mailed to the State in May of 1997. Recommendation 32: Implement controls to verify that only actual / allowable expenditures are charged against CSD contracts. Response: The Department agrees with the recommendation. In this case, the former Director directed the Accounting Supervisor to submit reimbursement claims against Contract # 94J-9808 for costs that apparently both knew had not been incurred. In the second matter, the former Program Manager directed the Accounting Supervisor to charge the time of several CSD staff to Contract# 95J-1008 for program related services. During the audit review, the former Program Manager was unable to provide any proof to DCSD staff that program related services had ever been provided. In both cases, former Department management circumvented existing administrative and internal controls, and inappropriately billed DCSD for charges that were not supportable by source documentation. System violations of this kind are difficult to prevent if top management ignores proper procedures and fail to control charges. This problem will be addressed and corrected by the following: 1. The completion of job analysis and desk reviews for existing accounting positions. 2. The creation and employment of a new Accounting Supervisor position responsible for supervising accounting staff and unifying the new accounting system. 3. The retention of the County's independent audit firm of Macias and Gini to review the existing system, policies and procedures, and assist in the implementation of needed improvements. 4. Accounting staff and Program Managers are trained on how to use new accounting systems and procedures. Estimated Completion Date: January 31, 1998 Recommendation 33: Document the methodology used to allocate above costs. Response: The Department is unable to comply with this request. Our research indicates that while time and.attendance records were maintained for all Department employees, the allocation of staff time for specific DOE contract line items,were apparently not based on any specific methodology other than convenience. Allocation of staff time for current DOE and LIHEAP contract activities are based solely on data taken from each employee's bi-monthly Personal Activity Report. Recommendation 34: Submit the results (of the allocation study) to CSD_ for review and comment. 8 Response: The Department is unable to comply with this request. As stated in Recommendation 33, it appears that the allocation of staff time between DOE-line items was based on convenience. However, while the allocation of costs between specific line items are in question, the allowability of program costs should not. Funds provided by Contract# 94C-7012 resulted in the weatherization of approximately 170 homes benefiting over 500 clients due in part to the work of staff identified. We believe that consideration should be given with respect to this matter. UNAUTHORIZED SUBCONTRACTORS Recommendation 35: Disallow$61,073 in unapproved subcontractor costs claimed for Pittsburg Preschool Coordinating Council ($40,000), Paradigm Innovations ($16,245), and Family and Community Services ($4,828). Response: Paradigm Innovations: The Department agrees with the recommendation and will remit any remaining charges that remain in either Contract Number 95F-1207 and 9617-1333. Family & Community Services: The Department agrees with the recommendation and will remit any remaining charges that remain in Contract Number 95F-1207. Pittsburg Preschool Coordinating Council: The Department requests that DCSD reconsider this recommendation. DCSD's June 2, 1997 letter recommends that$40,000 be disallowed and returned to the State because PPCC was not listed on the original contract. This is incorrect. In researching this issue Department records were found with references in both the Contract documents and the Board Order that$40,000 from Contract Number 9417-1173 was approved to fund a child care program operated by the Pittsburg Preschool Coordinating Council (see attachment number one ): The May 4, 1994 Board Order authorizing Contract Number 94F-1173 between the County and the State Department of Economic Opportunity states: "contract in the amount of$40,000 will be used to reimburse the Pittsburg Preschool Coordinating Council for child care services rendered in 1994 as part of the County's Head Start Family Day Care Research and Demonstration Project". A copy of this Board Order was sent to DEO as part of the contract package". Unfortunately, during the course of the DCSD audit review, a Department employee was not able to locate this information. 9 While DCSD correctly asserts that PPCC's auditor cited material findings in the agency's single agency wide audit for FY 93-94, it should be noted that the same audit does not list any questioned or disallowed costs in connection with this contract. DCSD also states that CCCCSD did not perform a contractor evaluation after receipt of the audit. The issue of financial concerns regarding PPCC as well as this audit was reviewed and discussed at length by the County Board of Supervisors. The Board directed the County Administrator, Auditor-Controller and all Departments who contracted with PPCC to work with the agency to resolve these matters in assisting the agency with reorganizing and improving its accounting system. The Departments of Health Services, Private Industry Council, Social Services and particularly CSD expended extensive time with PPCC over the past two and half years working with their staff and consultants on this specific issue. Recommendation 36: Ensure that all future subcontractors are approved by CSD before payment is being made using CSD funds. Response: The Department agrees with the recommendation. In the future, the Department will list all proposed Subcontractors in the Contract budget. If an instance occurs where a Subcontractor is needed, but is not listed in the approved budget, the Department will seek DCSD's written approval. Recommendation 37: Implement controls to verify that expenditures are not charged against contracts unless allowable under the contract terms. Response: The Department agrees with the recommendation. Recommendation 38: Monitor subcontractors on a routine basis to ensure that they are meeting their performance standards set by the subcontract, Subcontractors who do not meet minimum standards should not be reimbursed for expenditures made and/or not be funded in the following period. Response: The Department agrees with the recommendation and is now implementing a structured process that combines programmatic/fiscal monitoring reviews of all six CSBG subcontractors starting in July, 1997. Recommendation 39: Perform a contractor evaluation of all subcontractors to provide assurance that the services provided were consistent with the priorities and objectives of the subcontract, benefited the agency, and a report was received in a timely manner. Response: The Department agrees with the recommendation and will perform individual evaluations of all six CSBG subcontractors during its July review. 10 Recommendation 40: Provide documentation to substantiate sole source contractors. Policies for sole source contractors should be established. Response: The Department agrees with the recommendation. Documentation substantiating the issuance of sole source contracts will be maintained in accordance with Federal regulations. QUESTIONABLE PERSONAL SERVICES COSTS CHARGED TO CSD CONTRACTS Recommendation 41: Ensure that all funds charged ($47,876) to Contract No. 96F-1333 for Joan Spark's salary and benefits for the period of 4196 to 12196 are either repaid to CSD or adjusted out of the final contract close-out. Response: The Department agrees with the recommendation. The Department shall reverse all personnel charges for Ms. Sparks for the period of April 1, 1996, through her last day of employment with the County. The Department, shall only charge DCSD for CSBG's prorated share of Ms. Sparks' vacation payoff time. Recommendation 42: Remit to CSD, $81,941 in disallowed costs claimed for Darnell Turner under Contract Nos. 9517-1207 ($30,258) and 9617-1333 ($51,683); OR, CCCSD must substantiate the salary and benefits based upon allocations that represent this employee's actual level of effort for work performed on the above contracts. Response: The Department requests your reconsideration of this recommendation. We can document both the time and attendance of Turner for the period noted above that arguably meet the tests of CBSG eligibility requirements. From a program standpoint, Turner appropriately used his CSBG funded position in 1995 and 1996 to provide needed administrative and program support for the Department's Community Action, Head Start and Housing & Energy Divisions. Turner was directed in February of 1995 by the former Director to take over the management of the Housing & Energy Division when former Division Manager Sharon Sidney was placed on administrative leave. In September of 1995, Turner was again directed by the former Director to also take over the management of the Grantee Operated Program West Head Start program when the existing manager was discharged. Turner assumed management responsibilities for both positions in addition to hit regular duties as the Community Services Program Coordinator. While it can be argued that Turner was directed to assume too many duties at the same time, these duties were nevertheless activities are that are eligible for CSBG support funding. The Federal Community Services Block Grant ( Public Law 97-35, Title Vl, Subtitle B, as 11 amended) and California Government Code Section 12745 authorize a broad range of eligible activities for which CSBG funds can be used. Additionally, the last four County Community Action Plans all indicate that CSBG funds will be used to provide support to the other poverty programs administered within the Department .For example, the current 1997 Community Action Plans reads as follows: "The proposed Community Services Block Grant delivery system will direct approximately 85% of its available CSBG grant funds to the following tasks: a. Continue to provide administrative and service staff support to the following County, State and Federally funded programs administered by the Community Services Department: Child &Adult Care Food Program Child Development/Title IV-A Community Development Block Grant Department of Energy Home Energy Assistance Program Head Start C.C.C. Keller Canyon Mitigation Funds Low Income Housing & Energy Assistance Program State Preschool C.C.C. Transportation Occupancy Tax Funds" The nature of Turner's services for both Head Start and Housing & Energy Division during this period certainly qualify under CSBG Regulations. In addition, it can be demonstrated that program related services under Turner's direction for the CSBG, DOE, Head Start and LIHEAP contracts.were provided. In hindsight, the decision of the former Department Director to have directed Turner to assume the job responsibilities for three different management positions at the same time was inappropriate, and is a contributing factor for some of the findings contained in DCSD's June 2, 1997 report. Nevertheless, CSBG funds were used to provide eligible program services to the poor. Reconsideration of this disallowance is requested. Recommendation 43: Use time distribution records to document/record employees working on more than one program. Response: The Department agrees with the recommendation. Personal Activity Worksheets (PARs) for each employee are now used as the sole source to document and record employee time and participation for all DCSD funded contracts. 12 Recommendation 44: Disallow$12,225 in costs claimed for James McEvoy under contract Nos. 95BD-7013 ($7,290) and 95C-8012 ($4,935). Response: The Department agrees with the recommendation. The Department shall remit all personnel charges for McEvoy for contract Nos. 95BD-7013 and 95C-8012. Recommendation 45: Disallow$21,747 in costs claimed for Sharon Sydney under contract Nos. 95BD-7013 ($17,926) and 95C-8012 ($3,821). Response: The Department agrees with the recommendation. The Department shall remit all personnel charges for Sidney under contract Nos. 95BD-7013 and 95C-8012 . Recommendation 46: Disallow$77,408 in costs claimed for Ron Fray under contract Nos. 9517-1207 ($37,823) and 9617-1333 ($39,585). Response: The Department agrees with the recommendation. The Department shall remit all personnel charges for Fray under contract Nos. 95F-1207 and 96F-1333. Recommendation 47: Disallow$37,135 in costs claimed for Bette Jones under contract Nos. 95F-1207 ($30,195) and 96F-1333 ($6,940). Response: The Department requests that DCSD reconsider this recommendation. Jones assisted clients for the ECIP program in West Contra Costa County in 1995, and provided the same services for our HEAP clients on a County wide basis in 1996. Her position was funded through the CSBG contract for both years. Jones has been part of the County's Community Action network for two decades, having worked with the CSBG program for a former Subcontractor since 1974. Jones was originally hired by the Department as a contract employee in 1989 to provide CSBG client intake and referral services for West County residents. When the volume and location of ECIP clients made it extremely difficult for the ECIP Coordinator to provide services County wide, Jones assumed responsibility for the West County portion of the program. When cost overruns forced the Department to lay off the ECIP Coordinator in August of 1995, Jones took over the responsibility for the ECIP cordract, and provided services for approximately 365 ECIP families for the period of September, 1995 through December, 1995. As with the case of Turner and others, Jones was utilized to provide programmatic support to other poverty programs within the Department, including both the ECIP and HEAP programs, both which benefited the poor in this County and therefore merits consideration. Recommendation 48: If CCCSD disagrees with the above personal services disallowances, the agency must research and provide documentation which substantiates the proper chargeslallocations made against each CSD contracts and submit the detailed results to CSD for review and evaluation. 13 Response: The Department does not dispute recommendations 41, 44 and 45 and 46, and will remit all outstanding costs for these items. We believe that our responses-to Recommendations 42 and 47 contain compelling programmatic reasons for why these charges should not be remitted, and therefore merits reconsideration. Recommendation 49: Remit$16,019 to CSD for costs claimed as public liability insurance and disallowed under Contract Nos. 96C-9003 ($2,515); 9613-8003 ($11,584), and 96F-1333 ($1,920). Response: The Department asks that DCSD reconsider this recommendation. Upon receipt of DCSD's 6/2/97 letter, the Department asked the County's Risk Management Department, who is responsible for the development of the County's public liability insurance policy-and process, to research and respond to DCSD's concerns. In a memorandum to the Department dated July 2, 1997, Risk Management indicated that they believed the insurance charges to be allowable and appropriate, and referenced a telephone conversation with a staff person from State's Office of the Controller regarding this matter (see attachment number two). TRAVEL COSTS Recommendation 50: Remit$20,563 to CSD for the disallowed amounts claimed as out- of-state travel on Contracts Nos. 94F-1107 ($11,923), 95F-1207 ($6,702), and 96F-1333 ($1,868). Response: The Department asks that DCSD reconsider this recommendation. Federal Regulations permit CAA's to use CSBG funds for out-of state travel in connection with CAA relevant activities. Without exception, all of the trips listed in DCSD's 6/2/97 audit letter involved allowable and appropriate travel by the Chairman of the Economic Opportunity Council and Department management staff to CAA affiliated conferences and training nation wide. Conferences attended included the Child Welfare League, National Community Action Foundation (NCAF) and the National Association for Community Action Agencies (NACAA). Further, it is our understanding that former management staff followed DCSD's staff specific guidance in listing proposed out-of-state travel costs in the proposed CSBG budget for both of 1994 and 1995. For 1995, $19,000, or approximately 4.8 % of the CSBG budget was approved by DCSD for Travel. For 1994, $20,257, or approximately 5 % of the CSBG budget was approved by DCSD for Travel. The 1994 CSBG Travel budget was initially $12,800, but this amount was increased an additional $7,457 to $20,257 in November of 1994 via a DCSD approved budget change that clearly indicates that the additional dollars would be used for travel related purposes (see attachment number three). CSBG funds should have not been used to pay for a NAACP related function. CSBG funds should also have not been used to pay for what appears to be excessive lunches by the former 14 CSBG Program Coordinator, along with what appears to be an inappropriate'claim for reimbursement. Finally, CSB.G claims for reimbursement for travel should not exceed State rates. The Department is in the process developing new guidelines that will resolve DCSD's issues and concerns, and has recently developed with your office an agreement for how we request and report out of state travel from this point forward. We believe, however, that consideration should be given with respect to the proposed disallowed out-of-state travel costs. Recommendation 51: Refrain from charging expenditures for unapproved line items. Response: The Department agrees with the recommendation. Recommendation 52: Develop and implement formal travel policies and guidelines that are in accordance with State and Federal regulations. Response: The Department agrees with the recommendation. Estimated completion date: September 30, 1997. Recommendation 53: Implement controls to assure conformance with existing rules, regulations, and procedures. Response: The Department is in agreement with this recommendation. Estimated completion date: December 31, 1997. Please call me at (510) 313-7361 if you have any questions regarding this matter. Sincere! , Sc Ta y Director cc: Board of Supervisors Economic Opportunity Council 15 A REPORT BY THE 1996-97 CONTRA COSTA COUNTY GRAND JURY 1020 Ward Street Martinez,California 94553 (510) 646-2345 RECEIVED fi Report No. 9710 9 1997 CLERK BOARD OF SUP E- C NTRA COSTq CO.!SORS! _ COMMUNITY SERVICES STILL A TROUBLED DEPARTMENT APPROVED BY THE GRAND JURY: Q / Date: ���'"U ~ 7 A G JURY FOREMAN ACCEPTED FOR FILING:: - Date: �(�' 7 \ JOHN V DE POEL OF THE SUPERIOR COURT SECTION 933 (C) OF THE CALIFORNIA PENAL CODE §933. Comments and Reports on Grand Jury Recommendations (c)No later than 90 days after the grand jury submits a fi- nal re t .qp the operations of any public agency subject to its - reviewing"ority, the governing body of the public agency shall comment to the presiding judge of the superior court on the findings and recommendations pertaining to matters under the control of the governing body, and every elective county officer or agency head for which the grand jury has respon- sibility pursuant to Section 914.1 shall comment within 60 days to the presiding judge of the superior court, with an in- formation copy sent to the board of supervisors, on the find- ings and recommendations pertaining to matters under the control of that county officer or agency head and any agency or agencies which that officer or agency head supervises or controls. In any city and county, the mayor shall also com- ment on the findings and recommendations. All such com- ments and reports shall forthwith be submitted to the presid- ing judge of the superior court who impaneled the grand jury. A copy of all responses to grand jury reports shall be placed on file with the clerk of the public agency and the office of the county clerk, or the mayor when applicable, and shall re- main on file in those offices. One copy shall be placed on file with the.applicable grand jury final report by, and in the con- trol of the currently impaneled grand jury, where it shall be maintained for a minimum of five years. Leg.H. 1961 ch- 1284, h1284, 1963 ch. 674, 1974 chs. 393, 1396, 1977 chs. 107, 187, 1980 ch 543, 1981 ch 203, 1982 ch. 1408 §5, 1985 ch. 221 §1,effective July 12, 1985, 1987 ch. 690§1, 1988 ch. 1297. Cross-References Admissible evidence. Penal Code§936.6 "Grand Jury"defined. Penal Code§888. Grand Jury report to be based only on own investigation Pe- nal Code§939:9. COMMUNITY SERVICES STILL A TROUBLED DEPARTMENT BACKGROUND The Community Services Department's mission is to provide assistance to low-income families in Contra Costa County. This assistance is provided through four divisions: Child Development, Head Start, Community Services Block Grants and Weatherization. Services are funded primarily by federal and state grants. The department had 35 employees and a budget of$4.5 million in 1989 and has grown to ' include over 400 employees and an annual budget of$14.5 million in 1997. The director of this department is appointed by the Board of Supervisors. FINDINGS 5 I. From late 1994 until April 1996, the County Administrator's Office held weekly meetings with the senior management of the Community Services Department (the Department)in an effort to provide administrative oversight. 2. In April of.1996,the Director of the Community Services Department was placed on administrative leave. The Chief Assistant County Administrator was assigned as acting director of the Department. 3. The Department decentralized accounting in late 1994, leaving no effective fi- nancial oversight. The accounting function remains decentralized one year after the acting director took over management of the Department 4. There are few written desk procedures, manuals or job descriptions in .the de- partment. 5. The County is facing the potential loss of an estimated $900,000 through disal- lowed use of funds or lost revenue. Since April 1996, numerous errors in grant management have been discovered through state reviews, resulting in return of disallowed funding to the State in excess of$500,000 for program years 1994, 1995 and 1996. These disallowances are being paid out of the county general fund. Some losses have been identified in the following areas: l • A deficit situation in .the weatherization program was identified in late 1995, but no corrective action was taken. The deficit continued to grow through- out 1996 with no meaningful corrective action by the county until late 1996 when the program was suspended. At that time, the deficit in the program exceeded $200,000. • A deficit of more than $95,000 was discovered in the Child Development Division in fiscal year 1995-96. • Administrative charges totaling approximately $37,000 against the Stewart B. McKinney Grant, a state.funding source for homeless programs, were rejected by the state when the Department was unable to provide documentation for fiscal years 1995 and 1996 that any services had been provided. Potential disallowances of up to $400,000 for budget year 1996-97 have been identified by outside auditors. 6. The costs of the salary and expenses of the Department Director and the.salary of two other employees were improperly charged against various state grants and contracts while those individuals were on extended administrative leave. These costs were rejected by the state in 1997 and were then charged to the county gen- eral fund. 7. In 1995, Paradigm Innovations was hired as a consultant to.explore alternative funding sources for.the acquisition of a school site for Head Start and Child De- velopment in Richmond. At that time, the Department had no budget to pay this .contract. An attempt was made to charge costs to federal Head Start grants; these costs were disallowed. Subsequently, an attempt was made to charge this cost to Community Service Block Grants which the state auditors disallowed. The total cost-of this contract($36,000)has now been charged to the county general fund S. The Department staff has not submitted appropriate reports, budgets and interim reports on time, resulting in the return of moneys to funding sources. These costs then are covered by the`county general fund. 9. Lack of timely submission of grant proposals has resulted in loss of potential revenue. 10. Each county is required by the State of California to prepare an annual Commu- nity Action Plan (the Plan) to receive Community Block Grant funding. The pri- mary goal of the Plan is to assist low-income families toward self-sufficiency. The Contra Costa. County Plan did not include defined performance measure- ments as required by county guidelines._ 2 11. When the Department signed subcontractors to provide services in the 1996 Plan, the Department failed to amend the Plan with the State (as per State guidelines) and, as a result, the charges were disallowed by state auditors. 12. After inquiries from the State Department of Community Services, the 1997 Community Action Plan was produced and submitted on short notice without substantial changes from the 1996 Plan. Staff did not allow sufficient time for consideration of any new community-based providers or for proper evaluation of the outcomes of past providers. CONCLUSIONS 1. After 2112 years of intense involvement by the County Administrator's Office in its administration,Community Services is still a troubled department. 2. Decentralized accounting and lack of oversight has contributed to the financial deficits in this department. There is no indication that any formal reorganization of accounting functions was made in a timely manner. 3. From April 1996 to April 1997, large deficits and disallowances were identified by State auditors in the. Community Services Block Grant and Weatherization programs. There have been few meaningful changes in organization or staff in these divisions. 4. After 12 months under current management, little measurable improvement is evident within the Community Services Department. 5. Senior management continues to tolerate unsatisfactory performance without ob- servable consequence. 6. The Department has failed to determine the scope and depth of existing problems until identified by outside auditors. 7. The Community Action Plan has not been given appropriate attention by staff and does not reflect evaluation of past performance. Development and evaluation of the Plan should be a continuous process. 8. Unbudgeted charges of$900,000 to the county general fund are unacceptable. 3 r l RECOMMENDATIONS The 1996-97 Contra Costa County Grand Jury recommends that: 1. the Board of Supervisors direct the acting Director of the Community Services Department to identify and address problems within the Department with a spe- cific time line for corrective action. 2. the acting Director of the Community Services Department implement an over- sight system for all financial decisions. 3. the acting Director of the Community Services Department require all employees to meet written performance standards,including those for preparation of timely, accurate reports,properly supported by documentation. 4. the acting Director of the Community Services Department develop written guidelines for ongoing review and evaluation of the Community Action Plan to ensure that updated information is submitted to the State. 5. the acting Director of the Community Services Department utilize a rigorous employee evaluation process to identify employees with marginal or unsatisfac- tory performance and take appropriate action. 6. the Board of Supervisors select a permanent director who has demonstrated strong business management skills. COMMENTS The 1996-97 Contra Costa County Grand Jury is troubled that a county department with a large budget and numerous employees is allowed to drift without the leadership neces- sary to meet its goals and objectives of serving low-income families. 4