2012 Legislative Audits

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1. Summary of Report 2012-01: A Performance Audit of the Utah Transit Authority

UTA is in the midst of a $2.3 billion expansion of its rail system. Unlike earlier rail projects, this expansion is mostly being paid through local funds. It remains uncertain whether UTA will have the revenue to satisfactorily operate the costly systems that it is building. UTA's revenue projections are optimistic, while expense projections may be understated. Financial constraints may affect future service levels and transit projects. In addition, we found that in recent years, UTA's cost-effectiveness has declined because costs grew while ridership remained level. UTA faces challenges as it seeks to implement a new fare structure and as it attempts to reduce subsidy levels while maintaining and increasing ridership. Because UTA is the expert at understanding the costs of continuing to expand transit service and the extent to which future operating costs will need to be subsidized, it is important that UTA communicates that message widely before new systems are built. Otherwise, taxpayers may face an unexpected tax increase.

Full Report - A Performance Audit of the Utah Transit Authority

2. Summary of Report 2012-02: A Review of School Community Council Election Practices

As required by statute, this report reviews school community council (SCC) election practices. We reviewed to see if schools were holding SCC elections, providing proper notice of elections, and fulfilling other statutory requirements. The purpose of SCCs is to allocate trust fund monies to select school programs through councils composed of parents/guardians and school representatives. We found that due to elections being uncontested, most SCCs are not required to hold elections. We question if one of the reasons elections are uncontested is that parents may not fully understand the direct impact they can have on their school's critical academic needs by being involved in an SCC. The audit also found that most sampled schools are not fully complying with election notification requirements. Although enough days' notice was provided, schools' notices were missing required elements. We found schools' election notices that did not list the election date, time, and/or positions up for election, which are all statutorily required. Utah law also prohibits a licensed educator from serving as a parent/guardian SCC member within the district of employment. We found principals and district representatives confused and frustrated about this requirement. We recommend the Legislature reexamine this law to ensure it fulfills the desired intent. Finally, principals must sign a principal assurance (PA) form testifying that election requirements have been fulfilled. We found PA forms with errors and a lack of a defined process for submitting the forms upon completion.

Full Report - A Review of School Community Council Election Practices

3. Summary of Report 2012-03: An In-Depth Follow-up of Utah Medicaid's Implementation of Audit Recommendations

This report presents an in-depth follow-up of 63 recommendations made in four previous Medicaid audits. We found that of those 63 recommendations, 41 (65 percent) have been implemented and the other 22 (35 percent) are in the process of being implemented. Substantial cost savings have been achieved by the Utah Medicaid program and the Office of Inspector General's implementation of the audit recommendations. We estimate that cost savings could reach a half-billion dollars or more over the next ten years.

Full Report - An In-Depth Follow-Up of Utah Medicaid’s Implementation of Audit Recommendations

4. Summary of Report 2012-04: A Performance Audit of DABC Oversight of Package Agencies

This report addresses the management of package agencies by the Department of Alcoholic Beverage Control (DABC). This audit was requested in response to the audit released in May, 2011 regarding a $300,000 loss from a closed package agency in Eden, Utah. We found that the problems associated with the Eden Package Agency were not isolated, but DABC has strengthened controls over package agencies since the Eden audit. DABC can further improve the oversight of package agencies by formalizing its new practices into written procedures and considering some other changes. Because of the risks associated with DABC operations, we recommend that an internal audit division be established at the department.

Full Report - A Performance Audit of DABC Oversight of Package Agencies

5. Summary of Report 2012-05: An In-Depth Follow-up Audit of PEHP's Business Practice

Our 2011 audit found that the Public Employees Health Program (PEHP) needed to make significant improvements in each area reviewed. This follow-up audit reviewed 19 recommendations given to PEHP in the 2011 audit. PEHP has implemented or is in the process of implementing 18 recommendations. One other recommendation has been partially implemented. First, we found that a new purchasing agent has established procurement practices that help foster competition when procuring vendors. However, PEHP still has three contracts that are perpetual. Second, PEHP has reduced medical reserve deficits by $4.1 million over the past year. Current deficits that need to be eliminated total $4.3 million. Also, excess reserves of $46 million need to be refunded to the state. Third, PEHP's pharmacy and therapeutics committee has adopted new policies and procedures to ensure members' needs are fairly addressed. Finally, PEHP has restructured its appeals process to include more clinical expertise.

Full Report - An In-Depth Follow-Up of PEHP’s Business Practices

6. Summary of Report 2012-06: A Performance Audit of the Division of Housing and Community Development

The Division of Housing and Community Development (HCD) performs a number of functions focusing on the development of low-income housing.  This report presents the results of an examination of some of those functions and activities.  One such activity, the purchase of property in South Salt Lake, appears to have been within HCD’s authority, but lacked guidance from internal policies.  Another function, the use of Neighborhood Stabilization Program funds, appears to have been performed appropriately and efficiently.  Bridges Out of Poverty, a training program, cost the state negligible amounts.

Full Report - A Performance Audit of the Division of Housing and Community Development

7. Summary of Report 2012-07: A Performance Audit of Medicaid Eligibility

This report found that most recipients were accurately assessed for eligibility. Five percent of 245 sampled cases contained procedural errors. Eligibility was incorrect for one case, affecting five recipients’ benefits. Of greater concern, about 2,300 recipients of public assistance programs, including Medicaid, have been issued multiple unique identification numbers, called PIDs.  The departments of Workforce Services and Technology Services have implemented a new application process to help reduce the creation of new multiple PIDs. Agency errors represent a sizable portion of medical overpayments. The claims and premiums paid to ineligible recipients as a result of agency error accounted for nearly $1 million for fiscal year 2011. To help reduce agency error overpayments, the Eligibility Services Division began conducting case reviews prior to benefit issuance, which allows errors to be corrected before resulting in an overpayment. Finally, Utah is the only state in its region that provides a monthly, eligibility identification paper card to Medicaid recipients. By implementing a one-time card process, the state could save about $1.27 to $1.39 million per year.

Full Report - A Performance Audit of Medicaid Eligibility

8. Summary of Report 2012-08: A Performance Audit of the Utah Telecommunications Open Infrastructure Agency (UTOPIA)

Due to a number of unforeseen challenges, the Utah Telecommunication Open Infrastructure Agency (UTOPIA) has been unable to complete its advanced fiber optic network as quickly as planned. As a result, revenues have not been sufficient to cover agency costs and the agency has found itself in a difficult financial situation. The report concludes that poor planning, mismanagement and unreliable business partners have contributed to the agency's financial difficulties. A lack of subscribers is also contributing to the agency's poor financial condition. Eight UTOPIA member cities have developed a new construction plan aimed at addressing past mistakes and completing the network. In order to increase the likelihood of success, the report suggests the UTOPIA board and management team adopt a number of management and financial controls aimed at strengthening their oversight of the agency and holding people accountable for results.

Full Report - A Performance Audit of the Utah Telecommunications Open Infrastructure Agency (UTOPIA)

9. Summary of Report 2012-09: A Performance Audit of Utah's Radioactive Waste Facility Tax

The Legislature requested that we review Utah's Radioactive Waste Facility Tax for accuracy and sufficiency of payment, as well as for alternatives to the current tax structure. The report concludes that there are concerns with the tax structure. Specifically, EnergySolutions has the ability to control portions of the tax through vertical integration. This means EnergySolutions can accept waste and earn revenue outside the state for disposal of waste inside the state. This practice can affect taxes paid in Utah. While EnergySolutions has not violated the law or acted with the intent to avoid taxes, we believe the Legislature should consider a new tax structure that is more straightforward and reduces the risk to the state that some tax dollars may not be collected. Specifically, we recommend that the Legislature consider moving away from a tax based on gross receipts to a tax structure based on the radioactive intensity of the waste (millicurie) or a combination of radioactive intensity and volume (cubic feet). This recommendation is designed so it can be revenue neutral. We also recommend that the Legislature examine the revenue other states receive from taxing radioactive waste to determine if the revenue Utah is receiving is at the level desired by the Legislature.

Full Report - A Performance Audit of Utah's Radioactive Waste Facility Tax

10. Summary of Report 2012-10: A Performance Audit of The Division of Radiation Control

This audit reviewed the oversight role of the Division of Radiation Control (DRC) regarding the receipt and disposal of radioactive waste at the Clive, Utah facility, which is privately owned and operated by EnergySolutions. The report concludes that the DRC is not providing adequate independent oversight of incoming waste. The DRC is charged with protecting Utah citizens and the environment from sources of radiation that constitute a significant health hazard. It is the responsibility of the DRC to monitor the activities of EnergySolutions and waste generators to ensure that only approved waste enters the state. The DRC's position is that they work under a common and recognized regulatory framework that relies on the regulated entity to self-police compliance and report any violations. They reported that this framework is widely used in environmental regulation. However, Utah has unique waste prohibitions and is the only state with a business privately owning a radioactive waste disposal site. Consequently, we are concerned that the DRC is not providing adequate independent oversight of incoming waste because of the self-policing model.

Full Report - A Performance Audit of The Division of Radiation Control

11. Summary of Report 2012-11: A Performance Audit of Inmate High School Education

This audit compares the efficiency and effectiveness of inmate high school education programs in Utah's jails, prisons, and traditional adult education programs. In 2011, school districts provided educational services to 5,268 inmate students at a cost of about $5.4 Million. Because school districts with prison programs received significantly more funds than districts with jail programs, USOE needs to remedy funding inequities, which includes providing funds for inmate students on jail contract. Our audit also shows that while inmates are achieving academic benefits, the impact of high school education on employment is unclear and should be addressed jointly by USOE and the Department of Corrections. Finally, some inmate high school education programs used an excessive amount of contact hours to educate inmates, which included providing services for many inmate students who already have diplomas. USOE should establish guidelines for the number of contact hours, and consider placing contact hour limits on inmate students who already have a diploma.

Full Report - A Performance Audit of Inmate High School Education

12. Summary of Report 2012-12: A Performance Audit of State Printing Costs & Practices

This audit was prompted by concerns about the amount and expense of printing in state government given advances in electronic communications. This concern was validated by a survey conducted of all legislators. Printing functions within the state of Utah are overseen primarily by three organizations, State Print Services, Utah Correctional Industries Printing, and the Legislative Printing Office. In the past five fiscal years (since 2007) statewide printing volumes have declined about 23 percent, with accompanying cost reductions of about 43 percent. This reduction includes all three branches of government, and follows national trends. In order to continue and further this reduction in costs, state agencies and institutions of higher education should implement printing policy based on best practices outlined in this report. Printing costs for higher education have also declined, but at the slower rate of 5 percent over the last three fiscal years.

Full Report - A Performance Audit of State Printing Costs & Practices

13. Summary of Report 2012-13: A Performance Audit of the Medicaid Fraud Control Unit

The Utah Medicaid Fraud Control Unit's (MFCU's) overall recoveries of inappropriately paid out Medicaid funds are comparatively strong. These fraud recoveries are primarily due to successful litigation involving drug manufacturers. However, outcomes of criminal fraud cases involving local providers-which include restitution, incarceration, fines, and exclusion from Medicaid-appear comparatively less substantial. These less substantial outcomes may be indicative of historically insubstantial Utah Medicaid case referrals that likely reduced the MFCU's effect on provider fraud. Related to the need for improved and increased referrals is a need to strengthen MFCU's case management system. Case files show significant gaps of time between basic case activities and that some cases that were not completed within the statute of limitations timeframe.

Full Report - A Performance Audit of the Medicaid Fraud Control Unit

14. Summary of Report 2012-14: A Performance Audit of the DABC Operations

The Department of Alcoholic Beverage Control (DABC) needs to improve their accounting of inventory and oversight of warehouse and store operations. Specifically, DABC has been relying on inaccurate reports to enter physical inventory adjustments and DABC needs to continue to address system problems to ensure inventory accuracy. In the warehouse and state liquor stores, DABC needs to improve controls over inventory and enhance policies and procedures. We also found that state resources have not been protected as a result of poor oversight of a service contract and that DABC needs to enhance employee ethics training. Finally, we found that DABC has been self-appropriating for years by covering operating expenses with unappropriated monies from the liquor control fund.

Full Report - A Performance Audit of the DABC Operations

15. Summary of Report 2012-15: A Performance Audit of the Division of Occupational and Professional Licensing (DOPL)

This report reviews the efficiency and effectiveness of the Division of Occupational and Professional Licensing (DOPL). Specifically, we reviewed DOPL’s process for issuing occupational and professional licenses, how investigations and citations are managed and issued, and how DOPL monitors licensees with restricted licenses (whether restricted by probation or DOPL’s diversion program) and takes action upon noncompliance. We found that DOPL appears to process license applications timely and consistently. However, DOPL should improve data management policies and training to ensure staff’s consistent use of the agency’s electronic case management and monitoring systems. In reviewing DOPL’s investigations unit, we found that most cases close within policy time limits, while others lack approved extensions. A sample of investigations and citations we reviewed appears to lack adequate supervisor review. Our review of probation found that first, some probationers are allowed to accumulate numerous violations before DOPL responds and second, DOPL should clarify policies for imposing sanctions on probation violations. With probation staff, DOPL should review and clarify decision-making responsibilities and needs a clear process for monitoring probation and reporting violations. Finally, DOPL should improve the diversion program’s entrance process, as well as diversion agreement monitoring and enforcement processes.

Full Report - A Performance Audit of the Division of the Division of Occupational and Professional Licensing