2009 Legislative Audits
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1. Summary of Report 2009-01 : A Performance Audit of the Public Lands Policy Coordinating Office
After it was created in 2007, PLPCO never adopted many of the management controls typically required of new state agencies. PLPCO is encouraged to adopt a strategic plan, policies and procedures, performance measures, a well-defined organizational structure, and improved financial reporting. Concerns are also raised about the quality of the oversight provided and the fact that PLPCO does not have statutory authority to oversee the state's R.S. 2477 project aimed at preserving access to public lands. To improve oversight and accountability, legislators could clarify PLPCO's mission, require that the Constitutional Defense Council start holding meetings once again, or create a new council to provide guidance on public lands policy issues. Finally, a former agency director incurred an excessive amount of in-state travel expenses mainly due to his weekly commute to Salt Lake City from his home in San Juan County. The Legislature is encouraged to define what travel benefits executive directors may receive if they work in Salt Lake City while residing at a distant location.
2. Summary of Report 2009-02 : A Performance Audit of the School Children's Trust Section
Our audit found that the School Children's Trust Section (the Section) of the Utah State Office of Education (USOE) needs retooling by the State Board of Education because its current practices surpass obligations outlined in Utah Code and State Board rule. The audit found that some of the Section's current responsibilities are misplaced, some are not the most efficient use of resources, and one of their responsibilities could be enhanced. The State Board has recently recognized this need for formal authority and has delegated to the State Superintendent, through board resolution, the responsibility to represent the board on school trust issues. Consequently, we believe future funding of the School Children's Trust Section needs to be reevaluated. In fact, the overall oversight provided by the Superintendent and State Board to the Section needs to improve.
3. Summary of Report 2009-03 : A Performance Audit of the Drug Offender Reform Act (DORA)
The evaluation of the Drug Offender Reform Act (DORA) examined the DORA Pilot Program Evaluation Report, potential cost savings, and some of the implementing practices of the participating state and local agencies. Expected DORA savings are based on the premise that DORA recipients are less likely to commit future crimes, saving future prison costs. The audit found that early indicators do not show that DORA recipients are less likely to engage in criminal behavior than non-DORA offenders that could lead to future cost savings. However, the DORA Pilot Evaluation Report stated that it is too soon to measure the program's impact. The average cost for treatment varies widely among local substance abuse authorities. Also, the Department of Corrections, who is responsible for supervising DORA offenders, does not clearly separate costs between DORA and non-DORA offenders.
4. Summary of Report 2009-04 : A Performance Audit of Elementary School Class Size
This audit evaluates the effect of class-size-reduction (CSR) funding, as appropriated by the Legislature, on class sizes in grades K-6 and shows our independent evaluation of three legislatively mandated class-size statistics: average class size, pupil-teacher ratio, and pupil-adult ratio. The audit found the CSR funds of $82.3 million in 2008 would have allowed schools to fund about 1,240 teachers and reduced class sizes in grades K-6 by 3.08 students, if they used all the funding to hire core-subject teachers. Without CSR funds, the average class size in K-6 would have been about 28.15 students. With CSR funds, the average class size reduces to 25.07 students. The audit also found that USOE needs to resolve some data integrity issues to improve class size reporting at the school, district and state level. We also found that USOE needs to improve how they calculate the legislatively mandated pupil-teacher ratio and pupil-adult ratio.
Full Report - A Performance Audit of Elementary School Class Size
5. Summary of Report 2009-05 : A Limited Review of Cities' Compliance With Impact Fee Statute
This limited review found that while the six survey cities collect all of the accounting information required in the 2006 impact fee legislation, they are not reporting it in their annual financial report as required. These cities state that they are unsure how the information is to be summarized and included. The State Auditor's Office plans to provide additional training on reporting requirements in the coming months. We also found no evidence that survey cities have been using impact fees inappropriately.
This audit determined that CEU administrators mostly followed sound principles in the sale of the president's home. They conducted an evaluation of the property and obtained a fair, reasonable price for the property. However, certain aspects of the sale could have been strengthened - administrators should have done more to advertise the availability of the home for sale and should also have extended the bid period.
7. Summary of Report 2009-07 : A Performance Audit of Utah Retirement Systems' Administrative Costs
This audit reviews and compares the Utah Retirement Systemsí administrative costs over time and with other public retirement systems. From 1999 to 2007, administrative and investment costs for the defined benefit (DB) plan increased 107 percent, primarily due to an increase in investment costs. Compared to other retirement systems, URSí administrative costs per member for the DB plan are lower but investment expense ratios are higher. Because of the many factors impacting costs, per our suggestion, URS has contracted with an independent company to complete and in-depth evaluation of URSí cost and performance that should be presented to the Legislature. Periodic reviews of defined contribution plan costs are also needed to ensure that costs are reasonable.
8. Summary of Report 2009-08 : A Performance Audit of Public Education Employees' Criminal Background Check Procedures
This audit found that the current practices for identifying and detecting criminal activities of current employees is flawed and ineffective. Specifically, we found from a small sample of 1,200 employees that 17 current employees have concerning criminal convictions. We also found that some educators with suspended licenses were able to retain their educator licenses longer than they likely would have in other states due to their criminal convictions. We found that a current statutory requirement enacted in 1999 requiring the development of a fingerprint database file of all education employees has never been developed. We also found that most public education employees hired before 1994 have never had a criminal background check and current rules governing criminal convictions that should preclude an individual from working in public schools needs to be strengthened.
9. Summary of Report 2009-09 : A Performance Audit of the Insurance Fraud Division
The Insurance Fraud Division (IFD) within the Department of Insurance (DOI) needs to improve deficiencies in its operations. Of particular concern is the ineffectiveness or lack of basic management controls-for example, policies and procedures-that have the potential to expose the state to unnecessary risk. While we were reviewing the allegations, the insurance commissioner asked us to provide our opinion on whether IFD investigators should be changed from special function officers to law enforcement officers. In our opinion, this change is not necessary.
Full Report - A Performance Audit of the Insurance Fraud Division
10. Summary of Report 2009-10 : A Performance Audit of the Office of Services Review (OSR)
This audit found that the Office of Services Review (OSR) is accurate and unbiased in their review of the Division of Child and Family Services (DCFS). We found that OSR was correct 97.5 percent of the time and there was no apparent bias in the type of errors the OSR reviewers made. Beginning in December 2010, OSR will be able to make changes to the questions included in their review. We found that OSR should evaluate their practices now so they are ready to make appropriate improvements when allowed.
11. Summary of Report 2009-11 : A Follow-Up Audit of Higher Education Personnel Budgeting Practices
While the Board of Regents has implemented some of the recommendations made in the 2007 Performance Audit of Higher Education Personnel Budgeting Practices, more improvements can still be made. This audit found that for higher education, the reporting of carryforward balances has become more transparent, but what constitutes carryforward funds still needs to be clarified. The audit also found that since the 2007 audit, position vacancies are better tracked, however, the application of turnover savings lacks accuracy and large variances between budgeted employees and actual employees still exists at some of the institutions of higher education. Budgets are still not reflective of actual expenditures and the State Board of Regents has yet to define acceptable variances for actual expenditures compared to budgeted amounts. Also, the State Board of Regents has not developed a formal review process to ensure that submitted budgets are more closely aligned with anticipated expenditures.
12. Summary of Report 2009-12 : A Performance Audit of Fraud, Waste, and Abuse Controls in Utah's Medicaid Program
This audit reviewed the Bureau of Program Integrity (BPI) within Utah's Medicaid program. Significant improvement in BPI's operations can, over time, generate annual savings of over $20 million in federal and state Medicaid funds. These savings can be achieved by BPI improving efficiencies and implementing better management controls over operations. Specifically, we found that BPI is not adequately controlling recipient access and utilization of Medicaid programs through its prior authorization process. Also, the Medicaid program does not have adequate controls over its provider enrollment process. This lack of controls can lead to the enrollment of providers who are a risk for Medicaid fraud, waste, and abuse. Further, we found sustained inefficiencies and ineffectiveness of BPI's cost recovery efforts. BPI has unreliable data, is not effectively using staff, and is only reviewing about 5 percent of Medicaid spending. Lastly, several oversight functions responsible for reviewing Medicaid dollars do not have sufficient independence. The lack of independence by these oversight functions has limited internal review of the Medicaid agency.
13. Summary of Report 2009-13 : A Performance Audit of the Department of Technology Services
This audit found that DTS has been slow to consolidate IT resources and has done little to reduce IT redundancy with in state agencies. Also, DTS has not provided adequate oversight of newly acquired IT assets. Specifically, DTS did not require business case analyses as called for in the Utah Code and has yet to track IT assets owned by user agencies. Additionally, agency IT plans, which are required to be submitted annually by state agencies, are not compliant with Utah Code. The audit also found that the statewide IT strategic plan lacked adequate guidance on how major agency objectives outlined in H.B. 109 would be implemented. Finally, the audit evaluated executive and legislative oversight of DTS accountability.
14. Summary of Report 2009-14 : A Performance Audit of the Conversion of Justice Courts to CORIS
We believe the currently in-process project to convert all justice courts to the Court Records Information System (CORIS) will improve Utah's court records. Benefits include better justice court data quality and the ability to search all court records statewide. The project was well-planned, with most courts scheduled to convert by the statutory deadline. We note that the conversion timeline is tight and eight justice courts are not currently scheduled to convert. About 80 percent of the $1.6 million in project costs to date came from surcharge funds, with the rest from general funds. Ninety-five percent of justice court clerks now using CORIS report being pleased with it. However, many clerks in yet to be converted courts have concerns. The audit discusses these and other issues we were unable to audit because the project is still in process.
15. Summary of Report 2009-15 : A Performance Audit of Career and Technical Education Costs
The audit found that the cost per hour of classroom instruction at Applied Technology Colleges was lower than at two-year colleges. The ATCs achieved lower costs mainly because of the lower compensation paid to instructors and heavier instructor workloads. These results differ from the information reported in a 2007 study by the Utah System of Higher Education because the USHE study overstated the number of hours of instruction offered in college-based career and technical education courses. We also found that two ATCs have developed partnerships with private businesses that allow them to increase their membership hours and their funding, while bearing only a portion of the cost of instruction. Last year, one such partnership earned the Southwest ATC $521,000 in appropriations although the cost to the ATC was only $67,000. The audit also raises the policy questions of whether school districts should continue to receive full funding ($5 million per year) for their secondary students enrolled in ATC programs even though the districts provide no instruction.
16. Summary of Report 2009-16 : A Performance Audit of the 9-1-1 System in Salt Lake County
Current uses of the local 911 surcharge revenue are outside those identified in the Utah Code. While the statute refers only to emergency telecommunications, both Valley Emergency Communications Center (VECC) and the Salt Lake County Sheriff's Dispatch use surcharge funds to cover non-emergency calls. Also, VECC uses excess 911 surcharge revenue to subsidize dispatching costs. In addition to these code concerns, the existing organization of the 911 system in Salt Lake County is inefficient. Emergencies handled by the Sheriff's Office are transferred from VECC to the Sherriff's Dispatch, which create duplication of effort and slower emergency response times. Further, we found that VECC overstates call-taking costs (covered by the 911 surcharge) and understates dispatching costs (not covered by the 911 surcharge). Shifting expenses to call-taking allows jurisdictions in VECC's service area to pay lower dispatching assessments to VECC. Finally, the amount of 911 surcharge revenue that Salt Lake County retains does not cover all of the estimated call-taking costs for unincorporated areas of the county.
17. Summary of Report 2009-17 : A Performance Audit of the Cost of Benefits for Reemployed Retirees and Part-Time Employees
Benefits to reemployed retirees and part-time employees pose significant costs to the state. Current statute provides incentive for employees to retire and then return to work. Utah Retirement Systems (URS)-covered retirees who become reemployed may draw a pension and a salary simultaneously. Statute also requires employers to make generous contributions to rehired retirees' 401(k) accounts. At least 4,311 retirees have returned to work since 1995. At our request, URS' actuary estimates the impact of post-retirement reemployment at $401 million for the retirees who returned to work between 2000 and 2008. We estimate future additional liabilities of $897 million to be incurred over the next 10 years if the Legislature does not make statutory changes to eliminate the current post-retirement reemployment provisions and to suspend the pension for those who return to work full-time. The report also addresses how current statutory provisions facilitate part-time employees inflating their monthly retirement benefits by simply going full-time shortly before retirement. Employees who work part-time, but go full-time shortly before retirement receive the same benefits at retirement as if they worked full-time their entire careers. Lastly, prorating health care premiums is a common practice in both public and higher education. The state does not currently prorate health care premiums for part-time employees. If health care premiums were prorated for part-time employees, we estimate that annual savings could range between $2.2 and $2.6 million dollars.
18. Summary of Report 2009-18 : A Performance Audit of Eligibility for Public Safety Retirement
This audit found that a statutory exception to the eligibility for Public Safety Retirement (PSR) allows employees who are promoted or transferred to administrative positions within the same department to stay on the PSR plan. This exception allows employees to move from an eligible public safety position to an ineligible position, but retain the enhanced retirement benefits that accompany public safety jobs. Because of the enhanced benefits, the state pays more for employees on PSR when compared to public employee retirement plans. Also, this exception makes Utah unique to many other western states. Looking only at state employees, the audit found that because of this exception, thirty-seven current employees from the Department of Corrections and the Department of Natural Resources are on the PSR plan even though their jobs do not meet the eligibility requirements. We therefore recommend that the Legislature consider modifying current PSR plan provisions by addressing this exception.
19. Summary of Report 2009-19 : A Performance Audit of DWS Eligibility Determination Services
Department of Workforce Services (DWS) management should do more to increase cost allocation accuracy. DWS' cost allocation plan, which includes a random moment time sample (RMTS), allocates $125 million used to determine eligibility for 14 public assistance programs. One-third of eligibility workers do not believe their RMTS responses accurately reflect how they spend their time and thus imply the RMTS is not accurate. Thirty-five percent of RMTS inquiries did not receive a response within one hour and 15 percent of inquiries did not receive a response within one business day. An increased emphasis on timely responses will improve cost allocation accuracy and could have saved the state over $500,000 in fiscal year 2009. This savings was possible if DWS would have excluded 57 eligibility workers from the RMTS system. Additionally, DWS recently freed up $16.1 million in state funds by using third-party in-kind contributions as part of its Temporary Assistance for Needy Families obligation. DWS plans to use these freed up state funds to address its fiscal year 2009 deficit, and pre-pay fiscal year 2010 obligations. We believe the Legislature should determine how these funds should be used. DWS could also save the state over $530,000 by eliminating four underutilized buildings.