February 2016

Investigations of Improper
Activities by State Agencies
and Employees
Misuse of State Resources, Forgery, False Time
Reporting, Financial Interests Disclosure Violations,
and Waste of State Funds
Report I2016‑1

COMMITMENT
INTEGRITY

LEADERSHIP

The first five copies of each California State Auditor report are free. Additional copies are $3 each, payable by check
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Sacramento, California 95814
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OR
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For complaints of state employee misconduct, contact the California State Auditor’s
Whistleblower Hotline: 1.800.952.5665.

Elaine M. Howle State Auditor
Doug Cordiner Chief Deputy

February 11, 2016	

Investigative Report I2016‑1

The Governor of California
President pro Tempore of the Senate
Speaker of the Assembly
State Capitol
Sacramento, California 95814
Dear Governor and Legislative Leaders:
Pursuant to the California Whistleblower Protection Act, the California State Auditor (state auditor)
presents this investigative report summarizing investigations that were completed between July 2015
and December 2015 concerning allegations of improper governmental activities.
This report details 10 substantiated allegations involving several state agencies. Through our
investigations, we found misuse of state resources, forgery, false time reporting, violations of
financial interests disclosure, and waste of state funds. In total, we identified $372,000 in wasted
funds, financial interests not disclosed, and misuse of state time and resources.
For example, four psychiatrists at Patton State Hospital failed to work sufficient hours when they
regularly averaged from 22 to 29 hours of work per week from July 2014 through June 2015 rather
than the 40‑hour per week average required by their collective bargaining agreement. In total,
these psychiatrists worked 2,254 fewer hours than necessary to average 40 hours per week at a total
cost to the State of $296,800. In another example during the same one‑year period, the Porterville
Developmental Center failed to charge 566 hours of leave to 12 employees who missed scheduled
nine‑hour or 10‑hour workdays but were only charged for eight hours of leave. These wasted funds
totaled $25,600.
At California Correctional Health Care Services a supervising nurse, who also serves in the United
State military reserve force, forged military documents and deceived Correctional Health Care
Services regarding the dates of his reservist duties. As a result of his dishonesty, the supervising
nurse received compensation and benefits totaling $6,000 to which he was not entitled.
State agencies must report to the state auditor any corrective or disciplinary action taken in response
to recommendations made by the state auditor. Their first report is due no later than 60 days after
we notify the agency or authority of the improper activity and monthly thereafter until corrective
action is completed.
Respectfully submitted,

ELAINE M. HOWLE, CPA
State Auditor

621 Capitol Mall, Suite 1200

S a c r a m e n t o, C A 9 5 8 1 4

916.445.0255

916.327.0019 fax

w w w. a u d i t o r. c a . g o v

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Contents
Summary	1
Chapter 1
Department of State Hospitals, Patton State Hospital: Four Psychiatrists
Failed to Work Sufficient Hours and Misused State Resources
Case I2014‑0948	

7

Chapter 2
California Correctional Health Care Services: A Supervising Nurse
Forged Military Documents and Falsely Reported His Time
Case I2015‑0084	

19

Chapter 3
Department of State Hospitals: An Acting Medical Director
Failed to Disclose His Financial Interests
Case I2014‑0430	

23

Chapter 4
Department of Water Resources: It Wasted State Funds on
Employee Training
Case I2014‑1576	

31

Chapter 5
California Department of Developmental Services, Porterville
Developmental Center: It Wasted State Funds By Undercharging
Employee Leave Balances
Case I2013‑1633	

39

Chapter 6
Department of General Services: It Did Not Revise Its State Rental
Car Policy, Which Led to the Waste of State Funds
Case I2014‑1285	

45

Chapter 7
Other Investigative Results	

49

Appendix
The Investigations Program	

55

Index	59

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Summary
Results in Brief
The California Whistleblower Protection Act (Whistleblower
Act) empowers the California State Auditor (state auditor) to
investigate and report on improper governmental activities by
agencies and employees of the State. Under the Whistleblower Act,
an improper governmental activity is any action by a state agency
or employee during the performance of official duties that violates
a law, is economically wasteful, or involves gross misconduct,
incompetence, or inefficiency.1
This report details the results of six particularly significant
investigations completed by the state auditor between July 1, 2015,
and December 31, 2015. This report also outlines the investigative
results from another four investigations that were best suited for
other state agencies to investigate on our behalf during the same
six‑month period. The following paragraphs briefly summarize the
investigations, which the individual chapters of this report discuss
more fully.
Department of State Hospitals, Patton State Hospital
Four psychiatrists at Patton State Hospital regularly worked
an average of 22 to 29 hours per week from July 2014 through
June 2015 rather than the average of 40 hours per week required by
their collective bargaining agreement. In total, these psychiatrists
worked 2,254 fewer hours than necessary to average 40 hours per
week. The portion of their salaries associated with these missed
work hours totaled $296,800. In addition, two of these psychiatrists
engaged in other employment during their regularly scheduled state
work hours. Further, the psychiatrists were dishonest regarding
their attendance and outside employment. We also learned that
psychiatrists and other staff at Patton may also regularly work less
than an average of 40 hours per week. Although supervisors and
executive management were generally aware of psychiatrists’ failure
to work a weekly average of 40 hours, they did not act to resolve
the situation.

1	

For more information about the California State Auditor’s investigations program, please refer to
the Appendix.

Investigative Highlights . . .
State employees and agencies engaged in
various improper governmental activities,
including the following:
»» Four psychiatrists worked significantly
fewer than 40 hours per week during a
one‑year period. The cost of their missed
work hours totaled $296,800.
»» A supervising nurse, who also served
as a military reservist, forged military
documents and falsely claimed he
performed reservist duties; as a result, he
received compensation and benefits of
$6,000 to which he was not entitled.
»» A psychiatrist violated the California
Political Reform Act of 1974 by failing
to disclose income of $29,800 that he
received from a pharmaceutical company.
»» A state agency wasted state funds when
it improperly reimbursed three employees
$4,500 in excess of the allowed amount
for training.
»» A state agency wasted $25,600 in state
funds during a one‑year period when
it charged only eight hours of leave for
12 employees who missed scheduled
nine‑hour or 10‑hour workdays.
»» A state agency failed to update an
outdated policy related to rental vehicle
use for state travel; as a result, another
state agency inadvertently wasted state
funds totaling $4,200 when it followed
the outdated policy.

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California Correctional Health Care Services
A supervising nurse at California Correctional Health Care Services
(Correctional Health Care), who also serves in the United States
military reserve force, forged multiple military documents and
deceived Correctional Health Care regarding the dates of his
reservist duties. He submitted the forged documents to his
supervisor at Correctional Health Care and claimed military leave
from work on the dates the documents specified, even though
he did not perform reservist duties on 10 of the 34 days. The
supervising nurse subsequently signed and submitted time sheets
to Correctional Health Care in which he falsely claimed that he
had performed reservist duties on those 10 days. In addition,
the supervising nurse falsely claimed that he was on active duty
for another four days; consequently, the State compensated him for
these days although he was actually on inactive duty and thus
should not have been compensated. As a result of the supervising
nurse’s dishonesty, he received compensation and benefits totaling
$6,000 to which he was not entitled.
Department of State Hospitals
A psychiatrist at one of California’s state hospitals (facility) violated
the financial disclosure requirements of the California Political
Reform Act of 1974 by failing to disclose his financial interests in
a pharmaceutical company. Specifically, the psychiatrist failed to
disclose income totaling at least $29,800 that he received from
a pharmaceutical company while he was acting as the facility’s
medical director from May 2013 to September 2014. In addition,
the filing officials at the facility responsible for the collection of the
required disclosure forms failed to ensure that the psychiatrist
submitted those forms.
Department of Water Resources
The Department of Water Resources (Water Resources) wasted
state funds when it improperly reimbursed three employees
$4,500 in excess of the allowed amount for training as a result
of its staff ’s inconsistent practices and failure to follow its
training policies and procedures. These same issues also led
its staff to questionably categorize training courses for another
seven employees. Water Resources potentially could have saved
$50,800 had its staff appropriately categorized courses for these
seven employees and had the staff followed its policy of limiting
certain training reimbursements to $2,000 per calendar year for
each full‑time employee.

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California Department of Developmental Services, Porterville
Developmental Center
The Porterville Developmental Center (Porterville) wasted state
funds when it charged only eight hours of leave to certain employees
who missed scheduled nine‑hour or 10‑hour workdays. When we
reviewed the time sheets and leave records for 12 employees from
July 2014 through June 2015, we found Porterville did not charge
566 hours of leave to them, which cost the State at least $25,600.
Because Porterville did not deduct the leave from the employees’
leave balances, the extra hours remain available for these employees
to use for additional paid time off from work or for conversion to a
cash payment when they leave state service.
Department of General Services
By following a state policy established by the Department of
General Services (General Services) related to rental vehicle use for
state travel, the Department of Resources Recycling and Recovery
(CalRecycle) inadvertently wasted state funds. The outdated policy
required CalRecycle and all other state agencies to use General
Services’ rental services for short‑term vehicle rentals in the
Sacramento area. However, we found that CalRecycle could have
saved $4,200 from July 2014 through June 2015 had its employees
rented vehicles from Enterprise Rent‑A‑Car, the private company
with which the State has a contract, instead of General Services on
86 occasions.
Other Investigative Results
In addition to the investigations described previously, the state
auditor referred numerous investigations to state agencies to
perform in response to Whistleblower Act complaints that
the agencies were best suited to investigate. The following
investigations that substantiated improper governmental activities
have particular significance.
California Department of Public Health
A supervisor at the California Department of Public Health
misused state time from January 2015 through July 2015 by leaving
for several hours during his shift almost every day without using
leave and without management approval. We estimated that the
supervisor did not account for 234 hours of his work time, valued
at $3,800.

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Department of Industrial Relations
From October 2013 through June 2014 an engineer at the
Department of Industrial Relations submitted travel claims
for more mileage than permitted by state law. The overcharges
allowed him to collect $1,300 more than he was due for his
travel reimbursements.
California Department of Fish and Wildlife
An employee of the California Department of Fish and Wildlife
received an improper reimbursement for $300 in expenses
related to a two‑day retirement planning seminar that he did not
attend. The employee deceived his supervisor about his failure to
attend the seminar and submitted a falsified time sheet that showed
his attendance.
California Department of Public Health
An associate governmental program analyst at the California
Department of Public Health misused her state computer and email
to operate her residential rental business for at least five years.
Table 1 summarizes the improper governmental activities appearing
in this report, the financial impact of the activities, and their status.
Table 1
Issues, Financial Impact, and Status of Recommendations for Cases Described in This Report
STATUS OF RECOMMENDATIONS

CHAPTER

1

2

3

4

DEPARTMENT

Department of State Hospitals,
Patton State Hospital
California Correctional Health
Care Services
Department of State Hospitals

Department of Water Resources

ISSUE

Failure to work sufficient
hours; misuse of
state resources
Forgery of military
documents; false
time reporting
Violations of the California
Political Reform Act
of 1974
Waste of state funds

COST TO THE STATE
AS OF
DECEMBER 31, 2015*

$296,790

FULLY
IMPLEMENTED

PARTIALLY
IMPLEMENTED




5,988

29,782
4,490

PENDING




NO ACTION
TAKEN

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STATUS OF RECOMMENDATIONS

CHAPTER

DEPARTMENT

5

California Department of
Developmental Services, Porterville
Developmental Center

Waste of state funds

6

Department of General Services

Waste of state funds

7

California Department of
Public Health

Misuse of state resources

Department of Industrial Relations

Inaccurate time sheet,
dishonesty, misuse of
state resources

7

7
7

ISSUE

COST TO THE STATE
AS OF
DECEMBER 31, 2015*

FULLY
IMPLEMENTED

California Department of Fish
and Wildlife

Misuse of state resources

California Department of Health
Care Services

Misuse of state resources

4,216



3,793



323
NA

PENDING

NO ACTION
TAKEN



25,634

1,322

PARTIALLY
IMPLEMENTED





Source:  California State Auditor.
NA:  Not applicable because the situation did not involve a dollar amount or because the finding did not allow us to quantify the financial impact.
*	 We estimated the costs to the State as noted in individual chapters of this report.

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Chapter 1
DEPARTMENT OF STATE HOSPITALS, PATTON STATE
HOSPITAL: FOUR PSYCHIATRISTS FAILED TO WORK
SUFFICIENT HOURS AND MISUSED STATE RESOURCES
CASE I2014‑0948
Results in Brief
About the Department

From July 2014 through June 2015, four psychiatrists
at Patton State Hospital (Patton) regularly worked
an average of 22 to 29 hours per week instead
of the average of 40 hours per week required by
their collective bargaining agreement. In total,
these psychiatrists worked 2,254 fewer hours than
necessary to average 40 hours per week, and the
portion of their salaries associated with these
missed hours totaled $296,790. In addition, two of
the psychiatrists engaged in other employment
during their regularly scheduled state work hours.
When interviewed, the psychiatrists were dishonest
regarding their attendance and outside employment
during their state work hours. Moreover, we learned
that other psychiatrists and staff members may also
regularly work less than an average of 40 hours
per week. Although supervisors and executive
management at Patton were generally aware of
psychiatrists’ failure to work an average of 40 hours,
they did not act to resolve the situation.
Background

The Department of State Hospitals serves mentally ill
patients who are mandated for treatment by a criminal
or civil court judge. It oversees five hospitals and
three psychiatric programs located in state prisons. In
addition, it employs more than 200 psychiatrists who
belong to Collective Bargaining Unit 16 (bargaining unit 16).

Relevant Criteria
The collective bargaining agreement between the State and
bargaining unit 16 states that employees will be scheduled
to work for an average of 40 hours per week and must
receive management approval for absences of any duration.
Government Code section 19851, subdivision (a), states
that it is the policy of the State that the workweek of
state employees is 40 hours.
Government Code section 8314 states that it is unlawful
for state employees to use public resources, including
state‑compensated time, for personal purposes. Personal
purposes include activities that are for private gain
or advantage or for outside endeavors not related to
state business.
Government Code section 19990 deems the use state time
for private gain as incompatible with state employment.

Government Code section 19572 cites dishonesty as a cause
The Department of State Hospitals (State Hospitals)
for disciplinary action.
treats patients who have committed crimes linked
to mental illness, who are often violent or unstable,
and who have been committed to one of its facilities
because they are a danger to themselves and others. Psychiatrists
who have extensive and specialized training in the treatment of
such patients naturally play a critically important role within the
facilities. Because they are the primary employees who can address
some of this population’s most important needs by prescribing
medication and recommending other treatments, it is crucial that
the psychiatrists be immediately available during the hours they are
scheduled to work.

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State Hospitals’ psychiatrists fall within a class of professional
employees that is exempt from the federal Fair Labor Standards
Act (FLSA). This means that they are not paid on an hourly basis
for each hour worked, do not earn overtime pay if they work more
than a 40‑hour work week, and are expected to work however
many hours necessary to perform their jobs. State law establishes
a 40‑hour work week policy for state employees. Consistent with
this law, the union representing State Hospitals’ psychiatrists
entered into a collective bargaining agreement with the State
requiring its members to be scheduled to work a 40‑hour week on
average during a 12‑month period. Accordingly, the psychiatrists
at Patton are scheduled to work 40 hours a week, with nearly all of
them scheduled to work four 10‑hour days rather than a standard
schedule of five eight‑hour days. Although the collective bargaining
agreement provides its member psychiatrists with some flexibility
to vary their work schedules, it requires the psychiatrists who are
the subject of this report to receive supervisory approval to alter
their work schedules.
Four Psychiatrists Failed to Work the Hours Required by Their
Collective Bargaining Agreement

Two of the psychiatrists we
investigated did not work a single
10-hour workday during the entire
year we reviewed, and the other
two worked 10-hour workdays only
two times and 14 times, respectively.

Our investigation of the period from July 2014 through June 2015
revealed that four psychiatrists at Patton failed to work an average
of 40 hours per week. These doctors often arrived late, left early,
and they sometimes left hospital grounds for long periods of
time during the middle of their workdays. Although their official
schedules required them to work 10‑hour shifts, they sometimes
worked five hours or less. In fact, two of the psychiatrists we
investigated did not work a single 10‑hour workday during the
entire year we reviewed. The other two psychiatrists worked
10‑hour workdays only two times and 14 times, respectively. The
average number of hours the psychiatrists worked per week ranged
from 22 to 29 hours, excluding days when they used vacation or
other leave.
To determine how many hours each psychiatrist worked,
we obtained from Patton electronic data that recorded the
psychiatrists’ activity on the hospital campus. Specifically, we used
data from Patton’s Personal Duress Alarm System (alarm system),
which tracks employees’ physical locations on the hospital campus.
Although Patton does not use the system as a timekeeping tool, it
provided useful data regarding the psychiatrists’ daily whereabouts.
We also used electronic data from the hospital’s security gates.
Before entering and exiting the hospital’s secured areas, employees
must scan their ID badges. Because the vast majority of the work
the psychiatrists perform occurs within the secured areas, this
data also provided valuable information regarding their arrival and

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February 2016

departure times. Finally, we spoke to witnesses to verify patterns
we saw, and we found their general observations coincided with
the data.
Table 2 summarizes the data we analyzed and illustrates the
monetary value of the psychiatrists’ missed hours. As displayed,
the psychiatrists’ average hours worked per day ranged from
5.5 to 7.2 hours, or between 2.8 and 4.5 hours short of the 10‑hour
expectation. Although Patton paid the full‑time psychiatrists their
entire salaries, as FLSA required, they were effectively working
part‑time schedules. Even though FLSA generally does not permit
a reduction in the salaries of professional employees who work
fewer than 40 hours per week, we calculated the loss to the State
as though the psychiatrists were hourly employees to determine
the value of the missed hours. We recognize that the State cannot
recoup this money because these employees were not hourly
employees. Nonetheless, we determined that the psychiatrists’
2,254 hours of missed work had a value of $296,790.
Table 2
Summary of Four Psychiatrists’ Average Hours Worked and the Value of
Those Missed Hours
EMPLOYEE

TOTAL WORKDAYS AVERAGE HOURS
AVERAGE HOURS TOTAL HOURS MONETARY VALUE
ANALYZED*
WORKED PER DAY† MISSED PER DAY†
MISSED
OF MISSED HOURS

Psychiatrist A

128

5.6

4.4

557

$73,392

Psychiatrist B

112

5.5

4.5

507

66,729

Psychiatrist C

181

6.0

4.0

716

94,314

Psychiatrist D

172

7.2

2.8

474

62,355

593

6.2

3.8

2,254

$296,790

Totals

Sources:  California State Auditor’s analysis of Patton State Hospital data and California State
Controller’s Office salary records.
*	 Data was not available for all dates within the period of our review; therefore, we only analyzed
the workdays for which data was available.
†	 The total average hours worked per day and the total average hours missed per day are weighted
averages that take into account the number of workdays we analyzed for each psychiatrist.

When interviewed, all four psychiatrists asserted that they nearly
always arrived and departed on time and maintained 40‑hour
per week averages. However, they were unable to provide reliable
witnesses who could corroborate their claims, and the evidence
we collected proved contrary to their assertions. Figure 1 on the
following page provides examples of the psychiatrists’ typical
workdays according to evidence we obtained, and it helps to
illustrate that they failed to follow their official schedules and did
not work average 40‑hour workweeks.

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Figure 1
Examples of the Four Psychiatrists’ Typical Workdays Compared to Their Scheduled Hours
6a.m.

7a.m.

8a.m.

9a.m.

10a.m. 11a.m.

A

12p.m.

1p.m.

2p.m.

4p.m.

5p.m.

6p.m.

7p.m.

10.5 hours
3.0 hours

B

2.75 hours
10.5 hours
5.5 hours
10.5 hours

C
2.75 hours
D

3p.m.

3.25 hours
10.5 hours
7.25 hours

Scheduled hours (includes a 30-minute lunch period)
Hours typically worked

Sources:  Patton State Hospital personnel records and California State Auditor’s analysis of Patton State Hospital electronic data.

For example, Psychiatrist B, who earned $274,900 during the
12‑month period of our review, claimed to stick to his regular
schedule of 8 a.m. to 5:30 p.m. or 6:30 p.m. (depending on whether he
took a lunch hour), but evidence supports that on an average day
he arrived around 10 a.m. and departed at roughly 3:30 p.m. In an
attempt to explain his whereabouts, Psychiatrist B maintained that
he worked in the staff library outside the secured area for two hours
every day. However, staff situated near the library refuted this claim
and estimated that he visited the library only about twice a month.
As illustrated in Figure 1, Psychiatrist D, who also earned $274,900
during the 12‑month period of our review, asserted that he regularly
arrived at 8 a.m. but actually typically arrived at 11:30 a.m., the
latest of the four psychiatrists. In addition to the alarm system
and security gate data we analyzed, we also obtained attendance
records for daily meetings held in each clinical unit. These critical
meetings, in which clinicians discussed important issues related to
patient care, occurred daily at 9 a.m. in Psychiatrist D’s unit. The
attendance records for the meetings revealed that Psychiatrist D
never attended the meetings. In fact, alarm system data supported
that he arrived at the hospital after 9 a.m. on 98 percent of his
workdays. He acknowledged that he did not attend the meetings,
but he claimed to be at the hospital doing other work because
his supervisor told him he did not have to attend the meetings.
However, his supervisor informed us this claim was not true.

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In addition, all four psychiatrists failed to inform their supervisors
of any changes to their normal schedules, as required by their
collective bargaining agreement. Although they all stated they
notified their supervisors when they needed to arrive late or
leave early, their supervisors attested that the psychiatrists only
occasionally notified them of late arrivals or early departures.
Two of the Psychiatrists Performed Work for Other Employers During
Their Scheduled State Work Hours
In addition to his state employment, Psychiatrist C worked as a
private psychiatrist at a different public health care facility, and his
work hours for that employment sometimes overlapped with
his scheduled state work hours. From July 2014 through June 2015
we identified 40 occasions during which his other work hours
overlapped with his state work hours. The overlap mostly occurred
in the mornings after Psychiatrist C worked a graveyard shift for
the other facility. His schedule at Patton required him to arrive at
7 a.m., but his shifts at the other facility did not end until 8 a.m.,
according to the other facility’s employment records. He told us
the travel time from the other facility to Patton is 30 minutes,
which explains why he arrived at Patton on these occasions around
8:30 a.m., even later than his overall average arrival time of 8:15 a.m.
Further, on one occasion, Psychiatrist C left Patton during the
middle of his workday to work a short shift at the other facility
and then returned to Patton a few hours later. When confronted
regarding his other employment, Psychiatrist C denied that his
work hours for the other facility ever overlapped with his scheduled
state work hours at Patton even though the evidence clearly
indicates otherwise.
In addition, Psychiatrist B worked as an independent contractor for
a private health care provider and provided some services for that
other employer during his regular state hours on three days during
May and June 2015. When we interviewed Psychiatrist B, he told
us he had not engaged in any secondary employment in more than
a year, including with the health care provider. However, after our
interview, we contacted the health care provider and discovered
that he had, in fact, performed contract work as recently as four
months before our interview.
The evidence makes clear that both Psychiatrists B and C misused
their state‑compensated time to engage in non‑state employment,
thereby violating Government Code sections 8314 and 19990, which
prohibit state employees from using state time for personal gain
and from engaging in activities that are incompatible with their
state employment. Further, when confronted regarding their other
employment, they were both dishonest. The other two psychiatrists

The evidence makes clear that both
Psychiatrists B and C misused their
state-compensated time to engage
in non-state employment.

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we investigated also held secondary employment during the
period we reviewed, but we found no evidence that their hours at
these other positions overlapped with their state work hours.
Misuse of State Time at Patton May Be Pervasive

Managers identified nearly
35 employees whom they
believe regularly arrived late,
left early, or worked fewer than
40 hours per week.

During our investigation we learned that the practice of failing to
work an average of 40 hours per week and misusing state resources
may not be isolated to the four psychiatrists we investigated.
The staff we interviewed, including supervisors, managers, and
officials, informed us that the majority of psychiatrists, as well as
some psychologists and social workers, average less than 40‑hour
workweeks. They based their comments on their own observations
and on information provided to them by other employees.
Managers were able to list nearly 35 employees whom they believe
regularly arrived late, left early, or worked fewer than 40 hours
per week.
A senior executive at Patton informed us that his observations
suggest that none of the psychiatrists at Patton work the 10‑hour
days for which they are scheduled and that the average is probably
closer to 6 hours per day. He also told us that officials at the other
state hospitals have shared with him that the attendance patterns
of their psychiatrists and other doctors is similar to, or even worse
than, those at Patton.
Almost universally, managers and supervisors told us that many
psychiatrists come and go as they please and do not inform their
supervisors of their whereabouts as required. They told us that
psychiatrists believe that being available by pager or phone is
sufficient. The four psychiatrists we interviewed confirmed this by
emphasizing that they were always available by pager or phone.
However, an official informed us that Patton expects psychiatrists
to be present during their scheduled work hours to address patient
needs and that simply being available by phone or pager is not
equivalent to being physically present at the hospital. For example,
when a patient has a psychiatric emergency, he or she may require
immediate intervention by a psychiatrist.
Managers also told us that the problem of psychiatrists failing
to work their required hours has existed since the 1990s and
that over the years it has become part of the culture at Patton that
psychiatrists can come and go as they please without accountability.
They stated that the psychiatrists have a sense of entitlement and do
not believe that the 40‑hour workweek applies to them.

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Perhaps the most disconcerting aspect of the psychiatrists’
attendance behavior is the negative impact it could have on
patient care and staff safety. Supervisors, managers, and hospital
officials pointed out that when psychiatrists work fewer hours,
it limits patient care. Although we found no specific examples of
patient neglect, the hospital could provide more robust care to
its patients if the psychiatrists worked the hours in their regularly
scheduled shifts. An official in charge of medical services explained
that when psychiatrists work fewer hours, they have limited
interactions with their patients. Conversely, if they were to work
their required number of hours, they could see more patients,
interact with them longer, and provide more therapeutic treatment.
The official also noted that the risk to staff and patients increases
when the most highly trained and skilled clinicians are not present.
Supervisors and staff also reported that the attendance abuse
reduces employee morale for support staff members who try to fill
in for the absent psychiatrists.
Supervisors and Management at Patton Did Little to Resolve the
Attendance Problem
Despite being aware of the attendance issues identified in this
investigation, supervisors at Patton did little to resolve the problem.
Discussions during our interviews revealed that supervisors
apparently accept that psychiatrists generally do not work 40 hours
per week and they do not believe they can take action to address
the issue. Most supervisors supervise 30 or more staff and find it
difficult to monitor attendance. Furthermore, the time‑reporting
process at Patton does not require the psychiatrists to list their
specific hours worked each day. Instead, the process requires that
the psychiatrists only list the days on which they did not report to
work. Thus, supervisors have no way to track how many hours the
psychiatrists actually work. More importantly, most supervisors
stated that they felt that executive management at Patton would
not support their efforts to hold the psychiatrists accountable based
on past incidents when executive management did not support
managers in such efforts.
Executive management at Patton likewise did little to address the
psychiatrists’ attendance issues. Although executive management
officials we interviewed stated they were concerned about the
psychiatrists’ attendance and were committed to supporting
supervisors’ efforts to hold them accountable, they were unable to
demonstrate that they had taken any significant action to address
the problem.

Most supervisors stated
that they felt that executive
management at Patton would not
support their efforts to hold the
psychiatrists accountable based
on past incidents when executive
management did not support
managers in such efforts.

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Supervisors and management also noted that they felt constrained
by union pressure. They expressed that some psychiatrists are
vehemently opposed to any efforts to hold them accountable for
their work hours and, when challenged, will cite a provision in the
bargaining agreement that limits the use of timekeeping devices.
Supervisors explained that some psychiatrists have filed grievances
when supervisors attempted to use security gate data to address
attendance issues or even to keep attendance records for mandatory
meetings. Although the bargaining agreement allows the State to
adequately assess the hours worked by employees, the union and
its members nevertheless have attempted to severely limit the State
from holding psychiatrists accountable.
Recommendations
To address the improper governmental activities identified in this
report, State Hospitals should take the following actions by July 1,
2016, or as otherwise specified:
•	 Take appropriate action to address the insufficient hours worked
by the four psychiatrists and their dishonesty by April 1, 2016.
•	 Determine whether other psychiatrists or other staff consistently
work less than an average of 40 hours and take appropriate
disciplinary and corrective action where needed.
•	 Ensure that by March 1, 2016, all exempt employees understand
the requirement to work an average of 40 hours per week
over the course of a year and to seek prior approval for arriving
late, leaving early, or taking an extended break.
•	 Create and implement a system that will allow supervisors to
adequately assess the hours worked by psychiatrists and other
exempt employees.
•	 Provide training and coaching to supervisors and management
regarding how to hold psychiatrists and other exempt employees
accountable for their hours worked and how to pursue
disciplinary action if necessary.
•	 Provide formal guidance about state laws and departmental
policies relevant to misuse of state resources and incompatible
activities to staff at Patton and at other State Hospitals facilities
by March 1, 2016.

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February 2016

•	 Seek to persuade the State to enter into collective bargaining
agreements that provide for time monitoring to ensure that
the State obtains full value from its employees exempt from
FLSA requirements.
Agency Response
In January 2016 State Hospitals reported that it agreed with the
results of our investigation and stated that it would implement
an aggressive corrective action plan to immediately address the
identified deficiencies and to ensure that psychiatrists and other
employees exempt from FLSA requirements adhere to their
established work schedules. State Hospitals provided the following
information in response to each recommendation:
•	 Regarding the recommendation that it take appropriate action
to address the insufficient hours worked by the psychiatrists as
well as their dishonesty, State Hospitals indicated that Patton
had already consulted with its legal, labor relations, and human
resources departments regarding the appropriate disciplinary
action. State Hospitals stated that by March 1, 2016, Patton
plans to request the data and records we relied upon to support
our findings against the psychiatrists and to commence with
appropriate disciplinary action.
•	 To determine whether other psychiatrists or other staff
consistently worked less than an average of 40 hours and take
appropriate disciplinary and corrective action where needed,
State Hospitals stated that by March 1, 2016, Patton plans to
initiate a review of data and records from the past calendar year
for the nearly 35 employees identified as potentially working
consistently fewer than 40 hours per week. State Hospitals stated
that Patton would consult with appropriate staff and commence
appropriate corrective or disciplinary action for employees who
it finds have consistently worked fewer than 40 hours per week.
•	 In response to the recommendation regarding the average
40‑hour workweek requirement and seeking approval for
departures from scheduled work hours, State Hospitals explained
that Patton has taken steps to ensure that its staff are aware of
the expectations and requirements regarding work schedules and
seeking approval for shift adjustments. However, it agreed that
Patton must reinforce these expectations for exempt employees.
In addition, State Hospitals reported that Patton has already
prepared a memorandum on absence and attendance reporting
that reinforces attendance expectations. The memorandum
will be signed by all employees and supervisors and will be
retained in each employee’s training records. It also stated that

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Patton had begun a formal training process that will occur in
phases to ensure that all employees are trained regarding the
attendance expectations. Patton expects to complete the training
process by March 31, 2016. Further, State Hospitals stated that
in February 2016, its director plans to issue an email to all
exempt employees and an administrative letter to all employees
regarding the expectation that exempt employees work an
average of 40 hours per week and that they seek supervisory
approval for work schedule adjustments, including arriving late,
leaving early, and taking extended breaks.
•	 To create and implement a system that will allow supervisors to
adequately assess the hours worked by psychiatrists and
other exempt employees, State Hospitals reported that by
March 1, 2016, Patton plans to review and assess the work
schedules of psychiatrists and all other exempt employees to
ensure that those schedules are consistent with workweek
schedule guidelines and that they meet its operational needs.
State Hospitals stated that Patton will consult with appropriate
staff to address recommended schedule changes and will notify
employees and unions of those changes, if required. State
Hospitals also stated that it will inform all exempt staff through
an email that they are required to write down the times of day
when they sign in and out of secured areas. State Hospitals
further stated that the email will inform supervisors that they
are required to periodically review the sign-in and sign‑out
records and perform random observations to ensure that their
subordinates are complying with their assigned schedules.
•	 To provide training and coaching to supervisors and
management regarding how to hold psychiatrists and other
exempt employees accountable for their hours worked
and how to pursue disciplinary action if necessary, State
Hospitals explained that the absence and attendance reporting
memorandum will be signed by supervisors at Patton and will
reinforce their responsibilities to ensure that employees comply
with the attendance expectations and to pursue corrective action,
if necessary. In addition, Patton will include the supervisors in
one of the phases of the training process described previously.
Further, Patton will confirm that its training module for
supervisors provides sufficient direction and guidance regarding
attendance issues.
•	 With regard to the recommendation that it provide formal
guidance about state laws and departmental policies relevant
to misuse of state resources and incompatible activities to
staff at Patton and at other State Hospitals facilities, State
Hospitals stated that it has revised and reposted an existing
administrative letter regarding incompatible activities. In addition,

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State Hospitals stated that by February 2016, its director will
issue an email to all employees that reinforces the expectations
of responsible stewardship and reiterates the relevant state laws
and departmental policies regarding the misuse of state
resources and incompatible activities.
•	 To seek to persuade the State to enter into collective bargaining
agreements that provide for time monitoring to ensure that
the State obtains full value from its employees exempt from
FLSA requirements, State Hospitals reported that it is working
collaboratively with the California Department of Human
Resources to enhance wording in the collective bargaining
agreement and thus improve time monitoring for exempt
state employees.
In response to our finding that supervisors and managers at Patton
did little to resolve the attendance problems, State Hospitals
provided additional information in support of management’s
actions. In particular, State Hospitals explained that Patton issued
an administrative directive in 1992 (updated in 2005) that requires
clinical staff to sign in and out each day; issued a memorandum in
2011 explaining that it would conduct random audits and reviews
of attendance documents and take disciplinary action as necessary;
and provided training to its management in 2014 regarding how
to identify and address attendance issues. Further, it informed us
that during the past few years, Patton has investigated a number
of instances of employees failing to adhere to their mandated
work times and has taken disciplinary action as necessary. State
Hospitals reported that Patton uncovered some of these instances
as the result of random audits and that it is currently investigating
attendance issues for several psychiatrists, including one identified
in our investigation. While we commend State Hospitals and Patton
for these efforts, they appear to have been insufficient to curb the
attendance problems identified by our investigation.

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Blank page inserted for reproduction purposes only.

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Chapter 2
CALIFORNIA CORRECTIONAL HEALTH CARE SERVICES:
A SUPERVISING NURSE FORGED MILITARY DOCUMENTS
AND FALSELY REPORTED HIS TIME
CASE I2015‑0084
Results in Brief
A supervising nurse at California Correctional
Health Care Services (Correctional Health Care),
who also serves as a reservist in the United States
military (military), forged multiple military
documents and deceived Correctional Health Care
regarding the dates of his reservist duties. The
supervising nurse submitted to his supervisor at
Correctional Health Care the forged documents
that showed he needed to perform reservist duties
on a total of 34 days, and he subsequently claimed
military leave from work on the specified dates.
However, he was not scheduled to perform reservist
duties on 10 of the 34 days. Upon returning to work,
the supervising nurse signed and submitted time
sheets to his state employer, falsely claiming that
he had performed reservist duties on those 10 days.
In addition, the supervising nurse falsely claimed
that he was on active duty for another four days;
as a result, the State compensated him for these
days, even though he had actually been on inactive
duty and thus should not have been compensated.
As a result of his dishonesty, the supervising nurse
received compensation and benefits totaling $5,988
to which he was not entitled.
Background

About the Department
California Correctional Health Care Services provides
medical care to inmates throughout California’s 34 adult
prisons. It employs more than 7,000 medical professionals
and administrative staff. It currently operates under the
direction of a federal court‑appointed receiver.

Revelant Criteria
United States Code, title 10, section 907, states that any
member of the military, including reservists, who, “with
intent to deceive, signs any false record, order, or other
official document, knowing it to be false, shall be punished
as a court‑martial may direct.”
Penal Code section 470, subdivision (a), states that a person
who, with intent to defraud, knowing that he or she has
no authority to do so, signs the name of another person is
guilty of forgery.
Government Code section 19775.1 states that when a state
employee is granted short‑term military leave for active
military duty, the employee is entitled to full pay for the
first thirty days of the absence.
Government Code section 19838 states that overpayments
made by the State to an employee shall be recouped,
provided that action taken by the State to recover the
overpayment is initiated within three years from the date
of overpayment.
Government Code section 19572, subdivision (f ), states that
dishonesty is a cause for disciplining a state employee.

State law grants paid, short‑term military leave
to state employees for active military duty. State
employees who are also reservists in the military
typically perform their reservist duties on two days each month and
on 14 additional days each year. Reservists are entitled to pay from
the State when they perform their 14 annual days of service, which
is considered active duty, but are not entitled to pay from the State
for their monthly service, which is considered inactive duty.

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Because of the important role members of the military play in
protecting and safeguarding the country, they are held to a high
standard of conduct. Related to this high standard, Congress
enacted specific laws that subject members of the military,
including reservists, to court martial if they make or sign a false
military document. Forgery is also a crime under California law.
Correctional Health Care policy requires its employees to submit
monthly time sheets indicating the days they actually worked. An
employee who misses a workday must indicate the type of leave he
or she has used to account for that day, e.g., annual leave, sick leave,
jury duty, etc. An employee who is a reservist with the military
can use a special leave category to indicate that he or she was
performing military duties.
A Supervising Nurse Forged Military Documents and Falsified
Time Sheets

Official military attendance records
show that the nurse did not work
for the military on 10 of the days
identified in the forged documents,
costing the State $4,277.

In 2014 a supervising nurse at Correctional Health Care forged
seven military documents. Specifically, the supervising nurse
changed dates on the documents and reused the printed names
or signature block names of military employees who coordinated
schedules for reservists. When we interviewed the military official
whose signature was on four of the seven documents and who
was the person ordinarily responsible for signing such documents,
the military official stated that he had not drafted or signed any
of them. The supervising nurse also changed dates and forged the
remaining three military documents, which included the printed
name of another military employee. Official military attendance
records show that the nurse did not work for the military on 10 of
the days identified in the forged documents. The cost to the State
for these 10 workdays totaled $4,277.
In addition, the forged documents inaccurately indicated that the
supervising nurse performed four additional days of active duty
services when he actually performed inactive duty services on those
days and should not have received compensation from the State.
The State paid him $1,711 to which he was not entitled for these
four days. Table 3 shows the months and number of days in each
month for which the supervising nurse made false claims of work
related to his reservist duties.
In our interview with the supervising nurse, he acknowledged that
he forged all of the documents and did not work for the State or
the military on at least 6 of the 10 workdays specified in the forged
military documents. For four of the 10 workdays, the supervising
nurse could not recall where he was or provide any evidence as to
his whereabouts. Because the military’s official records show that

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the supervising nurse did not perform reservist duties on those days
and he could not adequately confirm where he was, we concluded
that he missed all 10 workdays.
Table 3
Days on Which the Supervising Nurse Falsely Claimed He Performed
Military Duties
MONTH/YEAR

NUMBER OF DAYS FALSELY
CLAIMED AS WORKED

August 2014

1

September 2014

3

October 2014
December 2014
Totals

NUMBER OF DAYS FALSELY CLAIMED
AS BEING ON ACTIVE DUTY

1
3

6
10

4

Sources:  California State Auditor’s analysis of military documents and the supervising nurse’s
monthly time sheets.

In addition to forging military documents, the supervising nurse
submitted time sheets in which he falsely claimed that he had
performed reservist duties on these 10 workdays. Consequently, he
was able to avoid using his earned leave balances. The supervising
nurse should have used his vacation or another earned leave
category for these 10 days.
The supervising nurse acknowledged that he signed and delivered
false time sheets to his supervisor at Correctional Health Care.
In addition, he was aware that he had improperly received his full
pay from the State for the days he claimed to be on active duty as a
reservist but was not. He acknowledged that he should have used
his earned leave hours instead. Nevertheless, the supervising nurse
did nothing to correct his time sheets or return the improper pay
during the nearly 11 months that elapsed between his most recent
falsification and our interview with him.
Before the completion of our investigation, the supervising nurse
transferred to another state agency.

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Recommendations
To address the improper governmental activities identified in this
report, Correctional Health Care should take the following actions:
•	 Work, as necessary, with the state agency that currently employs
the supervising nurse to require him either to correct his 2014
time sheets by using earned leave for the 14 workdays when he
improperly claimed military leave or to pay the State $5,988 for
the leave he improperly claimed on the 14 workdays.
•	 Work with the state agency that currently employs the
supervising nurse to coordinate the appropriate disciplinary
action to address the supervising nurse’s improper activities,
including his forging of documents and his dishonesty.
•	 Notify the proper military officials regarding the supervising
nurse’s creation of falsified and forged military documents.
Agency Response
In January 2016 Correctional Health Care reported that it intends
to implement all of our recommendations. Specifically, it stated
that it will work with the state agency that currently employs the
supervising nurse and the California Department of Corrections
and Rehabilitation (Corrections), which processed time sheets and
payroll for the supervising nurse, to require either the correction of
time sheets and leave balances or the repayment for the improperly
claimed leave. Similarly, Correctional Health Care stated that it
would collaborate with Corrections and the other state agency
regarding the appropriate disciplinary action. Finally, Correctional
Health Care stated that it planned to notify military officials of the
results of this investigation.

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Chapter 3
DEPARTMENT OF STATE HOSPITALS: AN
ACTING MEDICAL DIRECTOR FAILED TO
DISCLOSE HIS FINANCIAL INTERESTS
CASE I2014‑0430
Results in Brief
A psychiatrist at one of California’s state hospitals
(facility) violated the financial disclosure
requirements of the California Political Reform
Act of 1974 (Reform Act) by failing to disclose his
financial interest in a pharmaceutical company.
Specifically, the psychiatrist failed to disclose
at least $29,782 in income he received from a
pharmaceutical company while acting as the
facility’s medical director from May 2013 to
September 2014. In addition, the filing officials
at the facility responsible for the collection of the
required disclosure forms failed to ensure that
the psychiatrist submitted all of those forms.
Background
The Reform Act is the primary law that governs
conflicts of interests by public officials in
California. It requires certain state employees to
disclose personal financial interests that might be
affected when they perform official duties, such
as making governmental decisions. Disclosure
also helps inform the public about potential
conflicts of interest. According to the Fair Political
Practices Commission (FPPC), which enforces the
Reform Act, individuals in an acting capacity must
disclose their financial interests if holding their
positions on a permanent basis would require
them to do so.
Under the Reform Act, each agency must adopt
a conflict‑of‑interest code, which determines the
list of employees who must disclose their financial
interests—also known as designated filers—and
prescribes the types of financial interests they
must disclose. The Department of State Hospitals’
(State Hospitals) conflict‑of‑interest code requires
its medical directors to disclose their sources

About The Department
The Department of State Hospitals (State Hospitals) serves
patients who are mandated for psychological treatment by a
criminal or civil court judge.

Relevant Criteria
The California Political Reform Act of 1974, at Government
Code section 81000, et seq., requires that state agencies adopt
conflict‑of‑interest codes and that designated employees
disclose income that may materially affect their work on behalf
of the State.
Government Code section 82019 provides that a designated
employee is any officer, employee, member, or consultant of
any agency whose position with the agency is designated in a
conflict‑of‑interest code because he or she makes or participates
in the making of decisions that may foreseeably have a material
effect on any financial interest.
The California Code of Regulations, title 9, section 400, and State
Hospitals’ conflict‑of‑interest code indicate that medical directors
are designated employees and are therefore designated filers of
Form 700, on which they must disclose, among other things, all
sources of income, including loans, gifts, and travel payments.
Government Code section 87207 defines sources of income that
must be disclosed by a designated filer to include each source
of income aggregating $500 or more, and each source of gifts
aggregating $50 or more.
Government Code section 87302 requires each newly designated
filer to file a Form 700 within 30 days after assuming office,
disclosing relevant financial interests during the 12 months
before the designated filer assumed the position, and annually
thereafter until he or she leaves office, at which time the
designated filer is required to submit a final Form 700.
Government Code section 82028 defines gift to mean any
payment that confers a personal benefit on the recipient to the
extent that consideration of equal or greater value is not received.
Government Code section 89503 prohibits designated filers from
accepting gifts from a single source that exceeds an established
maximum value, which was $440 in 2013 and 2014.
Government Code section 89506, subdivision (d)(3), and
California Code of Regulations, title 2, sections 18950, subdivision
(a) and 18950.2, establish that payments for travel made
in connection with personal services rendered by officials
are reportable as income, rather than gifts, if the services are
provided in connection with a bona fide profession, including
medicine, and the services are customarily provided in
connection with the profession.

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of income amounting to $500 or more in a calendar year from
employment outside their public employment, including wages
and travel reimbursements received during the normal course of
employment, as well as other financial interests. Medical directors
are also required to disclose any gifts totaling $50 or more from
any one source during the calendar year if the filers did not provide
anything of equal or greater value. In addition to the requirement
to disclose any gifts with a value of $50 or more, medical directors
were also prohibited in 2013 and 2014 from accepting gifts from
a single source with an aggregated total value of $440 or more.
Figure 2 describes the relevant payments that State Hospitals’
medical directors are required to disclose.
Figure 2
Partial List of Payments Requiring Disclosure on a Medical Director’s Form 700

INCOME
Disclosure Threshold:
Wages earned
from non-public
employers.

$500
A travel payment for
which the recipient
provides services for
the non-public
employer that are
equal to or greater in
value than the
payments received.

GIFTS
Disclosure Threshold:

$50

A travel payment for which the recipient
does not provide services that are equal
to or greater in value than the payments
received. The employee can not receive
greater than an aggregate value of $440
in gifts from a single source.

Source:  Fair Political Practices Commission.

Those employees who are designated filers must file a Statement of
Economic Interests, commonly referred to as Form 700, to disclose
their interests within 30 days of assuming a designated position—
the “assuming office” form—and annually thereafter until they
leave the position, at which time they must fill out a “leaving office”
Form 700. When filling out the form, employees must disclose all
relevant financial interests from the prior 12‑month period. When
designated filers sign their Form 700s, they are asserting that
they have prepared the forms using reasonable diligence and are
certifying under penalty of perjury that the information in their
statements is true and correct.
State Hospitals annually provides to the facility’s filing official the
list of positions that are required to file a Form 700. The filing
official—who is part of the facility’s human resources division—

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is responsible for notifying and ensuring that designated filers
complete the Form 700 annually and upon assuming or leaving
a designated position. Each designated filer must complete the
form and return it to the filing official, who then retains a copy and
submits the form to State Hospitals.
While a Designated Filer, the Psychiatrist Failed to Disclose $16,315 in
Income on His Form 700 for 2013
When the facility’s former executive director asked this psychiatrist
to step in as the acting medical director at the facility in May 2013
and he accepted, the psychiatrist assumed a position that
required disclosure of his financial interests. At the same time,
the psychiatrist was also employed by a pharmaceutical company,
a position that required him to give speeches to other medical
professionals regarding its products. As the acting medical director,
the psychiatrist was required to disclose on his Form 700 within
30 days of assuming office any income that he accepted from
the pharmaceutical company, including the wages and travel
reimbursements he had received when he gave speeches over the
previous 12‑month period, as well as other financial interests.2
However, the psychiatrist did not file an “assuming office” Form 700
within 30 days of assuming the medical director position.
In March 2014 the psychiatrist filed an annual Form 700 in which
he should have disclosed his financial interests from 2013. Although
he earned income well in excess of the $500 disclosure threshold in
2013, he reported on his annual Form 700 that he had no financial
interests to report. Moreover, when he filed this Form 700, it only
covered the period from May 2013 through December 2013, and not
the full calendar year, as required by law.
To determine the payments that the psychiatrist received, we
used information from pharmaceutical companies and other
organizations that the federal Centers for Medicare & Medicaid
Services (CMS) collects and makes available to the public, which
shows the payments these entities make to doctors. Our review
of CMS’s data and other records indicated that the psychiatrist
received $16,315 in payments for speeches and associated travel
reimbursements from May 2013 through December 2013 from
the pharmaceutical company that employed him.3 Table 4 on the
following page shows the breakdown of the psychiatrist’s financial
interests that he failed to disclose.
2	

The position that the psychiatrist held before he assumed his acting position—and to which he
returned after ending his role as the acting medical director—is not a designated position in
State Hospitals’ conflict‑of‑interest code.

3	

We attempted to identify the payments received by the psychiatrist from May 2012 to May 2013;
however, CMS did not have any data for this time period.

The psychiatrist received
$16,315 in payments for
speeches and associated travel
reimbursements from May 2013
through December 2013 from the
pharmaceutical company that
employed him.

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Table 4
Income the Psychiatrist Failed to Report
From May 2013 Through December 2013
TYPE

Payment for speeches
Travel reimbursements
Total

AMOUNT

$15,500
815
$16,315

Sources:  California State Auditor’s analysis of Centers for Medicare & Medicaid Services data and the
psychiatrist’s records.
Note:  Because payment information for the period from May 2012 through April 2013 was
incomplete, it is not included in this table.

In addition to the income in Table 4, the psychiatrist received
$3,117 in payments for transportation, lodging, and food. However,
based on the evidence the psychiatrist provided to us, we could
not determine whether these payments were made in connection
with speeches that he gave as part of his employment for the
pharmaceutical company, or whether they were gifts. Thus,
although the psychiatrist failed to publicly disclose the $3,117,
we could not determine with sufficient certainty whether these
unreported payments should have been disclosed on his Form 700
as income or gifts. Any travel payment not associated with a speech
would have been subject to the 2013 established gift limit of no
more than an aggregate of $440 from a single source.
When we interviewed the psychiatrist regarding these payments, he
stated that he did not recall ever seeing or filling out the Form 700,
although he admitted that the document contained his signature.
Moreover, when we questioned him regarding his duty to file,
he appeared surprised and claimed that he was unaware of this
obligation even though he filed a Form 700 for 2013 in March 2014.
He also said he did not believe he needed to disclose his financial
interests since he did not consider there to be any potential conflict
of interest between his state employment and the work he did for
the pharmaceutical company.
Filing Officials Failed to Ensure That the Psychiatrist Submitted
Form 700 on Other Occasions, Resulting in His Failure to Disclose
Income of at Least $13,467 for 2014
The facility’s filing official, who is now retired, was responsible for
instructing the psychiatrist to fill out and submit a Form 700 when
he first assumed the acting medical director position in May 2013.
This Form 700 would have required that the psychiatrist disclose all
of his financial interests for the 12 months before he assumed the

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acting medical director position, or from May 2012 to May 2013.
However, as previously discussed, he did not submit this Form 700.
The psychiatrist did, however, submit an annual Form 700 in
March 2014, but it indicated that the psychiatrist had no financial
interests to disclose for May 2013 through December 2013. The
filing official was also required to obtain the psychiatrist’s Form 700
when he left the position in September 2014, but we were unable to
find any Form 700 submitted by the psychiatrist from this date.
Although the psychiatrist did not file a final Form 700 in
September 2014, the facility had another chance to obtain his
disclosures for 2014 when it began its preparations for the annual
submission of Form 700s in the spring of 2015. However, the facility
did not include the psychiatrist on the list of employees required to
file even though he had acted as the medical director for most of
2014. Figure 3 shows the instances in which the filing officials failed
to ensure that the psychiatrist submitted the necessary Form 700.
Figure 3
Dates on Which the Facility’s Filing Officials Failed to Ensure That the Psychiatrist Submitted His Form 700s
March 2014
Collected an incomplete annual Form 700 that
only covered May 2013 through December 2013.

May 2013
Failed to collect an initial
Form 700 disclosing financial
interests in previous
12-month period.

September 2014
Failed to collect a final Form 700
disclosing financial interests for
January 2014 to September 2014.
April 2015
Missed opportunity to collect a
Form 700 disclosing financial
interests for January 2014 to
September 2014.

May 2012

December 2013

Source: California State Auditor’s analysis of the Department of State Hospitals facility’s records.

According to State Hospitals, in early 2015 the facility’s human
resources director, who has since been promoted, maintained
the ultimate responsibility as its filing official for ensuring that
employees submitted the annual Form 700s for 2014. Nevertheless,
when we interviewed the human resources director, she stated
that she had delegated the task to the personnel officer, who had
been recently appointed to the position. However, the personnel
officer received no training from the human resources director
to ensure that all employees who held designated positions

December 2015

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throughout the year—even if they were no longer in the position
at the time—were included in the notification to file. Because the
personnel officer had no previous experience with the task, we
expected that the human resources director would have reviewed
the list of employees the personnel officer compiled to ensure its
completeness and accuracy, but that was not the case. As a result,
the human resources director failed to notify the psychiatrist that
he needed to submit a Form 700 disclosing his financial interests
for 2014 and to subsequently ensure that the psychiatrist did so.
As a consequence of this lack of appropriate oversight, the
psychiatrist did not disclose the outside income he earned while
he was the acting medical director in 2014. Our review of the
CMS data and other records we obtained determined that the
psychiatrist earned a total of $13,467 in income from sources other
than his state job from January 2014 to September 2014. However,
the psychiatrist did not disclose any of the outside income he
received from his secondary employer as required by the Reform
Act. Table 5 shows the breakdown of the psychiatrist’s income from
wages and travel reimbursements that he failed to disclose.
Table 5
Income the Psychiatrist Failed to Report
From January 2014 to September 2014
TYPE

Payment for speeches
Travel reimbursements
Total

AMOUNT

$13,000
467
$13,467

Sources:  California State Auditor’s analysis of Centers for Medicare & Medicaid Services data and the
psychiatrist’s records.

The psychiatrist also received other payments in 2014 totaling
$2,290 for transportation, lodging, and food. However, as discussed
previously, we do not have enough information to determine
whether these payments were made in connection with speeches
that he gave as part of his employment, which prevents us from
concluding whether he should have disclosed these transactions as
income or gifts. Just as with the payments we identified for 2013,
any payments not associated with a speech would be subject to the
aggregate $440 gift limit received from a single source.
When we questioned the psychiatrist regarding these payments, he
stated that he did not recall any filing officials notifying him of the
need to fill out a Form 700 and that he had not received any related
training. Although his failure to fulfill the responsibility of filing the

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appropriate Form 700 violated several government codes intended
to prevent conflicts of interest, we did not find any evidence
that he participated in a governmental decision that affected his
financial interests.
Recommendations
To remedy the effects of the improper governmental activities
described in this report and to prevent them from recurring, State
Hospitals should take the following actions:
•	 Create a policy requiring the facility’s filing official to be
appropriately trained in the collection of Form 700s. In
particular, this training should cover the identification of
designated individuals and the requirement to collect a Form 700
upon individuals assuming designated positions, annually
thereafter, and upon their leaving their designated positions.
•	 Conduct a review of the facility’s 2014 Form 700s by April 2016
to ensure that all designated filers submitted a Form 700.
•	 Require all designated filers—including those working in an
acting capacity in a designated position—to take the statutorily
mandated state ethics training online created by the Attorney
General’s Office, which includes information related to the
Form 700 and its disclosure and filing requirements.
•	 Ensure that the psychiatrist discloses past financial interests to
the FPPC for the time he acted as the medical director that he
did not disclose previously.
Agency Response
State Hospitals reported in January 2016 that it agreed with our
recommendations and stated that it intended to implement an
aggressive corrective action plan for each recommendation.
With regard to our first recommendation, State Hospitals reported
that it had contacted the FPPC to request focused training
for its filing officers. In addition, State Hospitals stated that it
committed to developing a filing official’s training memorandum
by January 31, 2016, that would include time frames for completion
of Form 700s as well as continued training requirements for
current and future filing officials. State Hospitals also stated
that before March 2016, it plans to coordinate department‑wide
training for all of its filing officials to ensure that they understand
their responsibilities. In February 2016 State Hospitals provided

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us with the filing official's training memorandum it sent out in
January 2016. However, the memorandum failed to specify when
employees were expected to complete the FPPC's training nor did it
appear to have a control in place to ensure the training is completed
by its filing officers. Lastly, other than the date State Hospitals
intends to notify its filing officers of the need to file, no other time
frames for completion were established.
Regarding the second recommendation, State Hospitals reported
that the facility would complete its review of 2014 Form 700s
and identify any filers who failed to submit a Form 700 by
January 31, 2016. State Hospitals later reported to us that it
completed its review of 2014 Form 700s and found 13 additional
employees who had failed to file 19 Form 700s. State Hospitals has
notified all the filers and requested that the missing Form 700s
be submitted by mid-February 2016. State Hospitals stated that it
would subsequently notify the FPPC of any individuals who failed
to comply.
In response to our third recommendation, State Hospitals indicated
that by February 29, 2016, it would notify and require all designated
filers to take the online ethics training course offered by the
Attorney General’s Office. In addition, it committed to maintaining
the training records of all filers who complete the training. Further,
State Hospitals stated that by February 29, 2016, the director plans
to issue an administrative letter to all State Hospital employees
regarding the Reform Act’s filing requirements.
For the fourth recommendation, State Hospitals reported that by
January 15, 2016, the facility would notify the psychiatrist to disclose
his past financial interests and file the additional Form 700s.
In February 2016 it provided evidence to us that it notified
the psychiatrist in January 2016 and requested that he submit the
missing Form 700s by January 22, 2016. Although the psychiatrist
stated that he fully intends to submit the missing Form 700s,
State Hospitals did not provide us with the forms proving that the
psychiatrist had done so. State Hospitals also stated that the facility
would review and maintain the psychiatrist’s Form 700s and that
it would follow FPPC guidelines to report noncompliance with
completion of the Form 700s.

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Chapter 4
DEPARTMENT OF WATER RESOURCES: IT WASTED STATE
FUNDS ON EMPLOYEE TRAINING
CASE I2014‑1576
Results in Brief
About the Department

The Department of Water Resources (Water
Resources) wasted state funds when it improperly
reimbursed three employees $4,490 in excess of
the allowed amount for training as a result of its
staff ’s inconsistent practices and failure to follow its
training policies and procedures. These same issues
also led its staff to questionably categorize training
courses for another seven employees. Water
Resources potentially could have saved $50,780 had
its staff appropriately categorized courses for these
seven employees and followed its policy of capping
the reimbursements at $2,000 per calendar year for
each full‑time employee.
Background

The Department of Water Resources protects, conserves,
develops, and manages much of California’s water supply
including the State Water Project which provides water for
25 million residents, farms, and businesses.

Relevant Criteria
California Code of Regulations, title 2, sections 599.817
through 599.819, establish the following:
•	 The definition of training and each training category:
job‑required, job‑related, career‑related, and
upward‑mobility.
•	 The requirement that state agencies establish training
policies and specify the amount of payment allowed for
each training category.
•	 The provision of minimum reimbursement criteria for
training expenses.

State employees are encouraged to receive training
Government Code section 8547.2, subdivision (c), provides
that will help them to develop knowledge and skills
that any activity by a state agency or employee that is
relevant to their current or future job performance.
economically wasteful of state resources is an improper
State laws require that each state agency establish
governmental activity.
a training policy that includes all categories of
Government Code section 19995.1 provides that the
training (job‑required, job‑related, career‑related,
California Department of Human Resources may prescribe
and upward‑mobility) in which an employee
training regulations and conditions to meet the needs of the
can participate. The policy must also specify
State for continuing educational development, upgrading
reimbursement amounts allowed for training
employee skills, and improving productivity and quality
expenses incurred for each training category. In
service. The training must be cost effective, of value to the
accordance with this requirement, Water Resources
State, and relevant to the employee’s career development in
established an appropriate training and expense
state service.
policy. For job‑required training, Water Resources
provides full reimbursement to employees for
tuition and associated necessary expenses, including
travel costs and time to attend training. For job‑related training,
Water Resources reimburses up to $2,000 per year and, with a
division chief's approval, it can provide reimbursements beyond
that amount. For career‑related and upward‑mobility training costs,
Water Resources’ policy allows for reimbursement of 50 percent of
the expenses with the annual total not to exceed $2,000. Figure 4
on the following page describes the important elements of each
training category.

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Figure 4
Description of Department of Water Resources Training Categories

JOB-REQUIRED

JOB-RELATED

CAREER-RELATED/
UPWARD-MOBILITY

Training and related expenses
as required by an employee’s
supervisor to meet or maintain
present job standards.

Training and related expenses as
requested by the employee or
suggested by the supervisor to
help the employee increase
efficiency or effectiveness and
improve job performance.

Career-related: Training and related
expenses that help an employee develop
career-advancement potential and provide
an opportunity for self-development.

100 percent
reimbursement

Reimbursement up to
$2,000 per year
Reimbursement in excess must be
approved by a division chief.

Upward-mobility: Training and related
expenses that provide increased
opportunities for career movement within
specific classifications designated by
the Department of Water Resources.

Reimbursement up to 50 percent,
not to exceed $2,000 per year

Source:  Department of Water Resources administrative manual.

Water Resources’ policy requires each employee to complete an
annual training plan that details anticipated training course titles,
costs, and categories; this plan requires his or her supervisor’s
approval. After the supervisor approves the training plan and
before the employee enrolls in any training courses, the employee
must submit a training request for each training course in which
he or she wishes to participate, as previously identified in the plan.
Departmental training coordinators are required to track and
monitor each employee’s training costs by category and indicate
on the training request whether any costs exceed the limits for the
calendar year in which the training will be completed. The employee,
supervisor, training coordinator, and the cost center manager must
each sign the training request, which lists the training course title,
estimated and actual costs, and training category. Finally, when the
employee has completed the training, he or she submits a travel
expense claim (expense claim) with supporting documentation to
receive the appropriate amount of reimbursement.
Water Resources Wasted State Funds by Reimbursing
Three Employees for Job‑Related and Career‑Related Training
Beyond the Amounts Allowed
From June 2013 through January 2015 Water Resources paid a total
of $11,832 in job‑related and career‑related training reimbursements
to three employees for courses they took from 2012 through 2014.

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Of this total, $4,490 represents funds reimbursed either in excess
of 50 percent of the career‑related training expenses up to a yearly
maximum of $2,000 or in excess of the $2,000 annual maximum
allowed for job‑related training expenses per employee each year.
Table 6 shows the improper training reimbursements for the
three employees.
Table 6
Improper Job‑Related and Career‑Related Training Expense Reimbursements Paid
From June 2013 Through January 2015
EMPLOYEE

JOB CLASSIFICATION

DEGREE PURSUED

YEAR COURSES
COMPLETED

AMOUNT
REIMBURSED

AMOUNT EXCEEDING
REIMBURSEMENT ALLOWED

Employee A

Senior Hydroelectric Power
Utility Engineer Supervisor

Master of Mechanical
Engineering

2014

$2,673

$673

Employee B

Engineer, Water Resources

Master of Civil
Engineering

2012

2,698

698

Employee C

Engineer, Water Resources

Master of Civil
Engineering

2013
2014

6,461

3,119*

Total costs

$11,832

$4,490

Source:  California State Auditor’s analysis of employee expense claims.
*	 This amount includes a $1,777 overpayment for 2013 and a $1,342 overpayment for 2014 based on the reimbursement limit of 50 percent of the
expenses for career‑related training.

Water Resources staff ’s inconsistent practices and lack of
understanding of its policies and procedures contributed to $4,490
in improper training expense reimbursements. In particular,
Employees A, B, and C were not aware of Water Resources’ training
reimbursement limitations and believed they had followed the
proper procedures for getting their training requests approved
and for requesting reimbursement. In addition, despite annual
training provided by Water Resources’ training division, none
of the training coordinators we interviewed were aware of the
reimbursement limitations. Also, none of the training coordinators
understood that they were responsible for tracking each employee’s
calendar year reimbursements for job‑related, career‑related, and
upward‑mobility training expenses to ensure that they did not
exceed the $2,000 limit for each category.
Further, we found no consistency in the approval signatures on
employees’ training requests, with approval signatures ranging
from just the employee and his or her team leader to some that
were signed by the employee, supervisor, training coordinator,
branch chief, and division chief. For example, Employee B’s training
request was not signed by a training coordinator or anyone else
at a level above his supervisor. Moreover, none of the three initial
approving officials were familiar with Water Resources’ training

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reimbursement limitations; therefore, they did not realize that
they had approved training request reimbursements beyond the
amounts allowed by Water Resources’ policy.
Finally, Water Resources staff incorrectly categorized training
courses for Employee C. Specifically, Employee C’s supervisor
approved her graduate classes as career‑related on her training
plans, but she listed three of the four courses she took in 2013
and 2014 as job‑related on her training requests. Water Resources
subsequently reimbursed her for 100 percent of the expenses
even though the cost of two of the courses exceeded the $2,000
maximum allowed in 2013. If Water Resources had categorized all
these courses appropriately as career‑related, its reimbursement to
her would have been limited to 50 percent of the course expenses
up to $2,000 annually, as stated in Water Resources’ policy. Thus,
Water Resources could have saved $3,119.
Had Water Resources Ensured It Appropriately Categorized
Training Courses for an Additional Seven Employees, It Could Have
Saved $50,780

Water Resources may have wasted
as much as $50,780 in reimbursed
funds to which seven employees
were not entitled.

From September 2012 through October 2014 Water Resources
reimbursed an additional seven employees a total of $76,931 for
training expenses. Based on employee job descriptions, course
descriptions, and statements made to us during interviews, we
question Water Resources’ accuracy in categorizing some, if not all,
of these courses as job‑required or job‑related. As a result, Water
Resources may have wasted as much as $50,780 in reimbursed
funds to which these employees were not entitled. For example, if
Water Resources had categorized some of the training courses for
employees D through J as career‑related, the reimbursements would
have been capped at 50 percent of their costs, up to a maximum
of $2,000 each year, as previously shown in Figure 4. Table 7
shows the amounts that Water Resources would have avoided
reimbursing these seven employees had it appropriately categorized
their training.
As an example, Employee D, a water resource engineering associate
specialist, categorized Introduction to Sociology I and Introduction
to Sociology II as job‑required training on his training requests
and Water Resources subsequently reimbursed 100 percent of
the expenses. After reviewing Water Resources’ training category
definitions with us, the supervisor and the current field division
chief agreed that some of Employee D’s courses could have been
categorized differently. If Water Resources had categorized
Employee D’s Sociology courses as career‑related and reimbursed
him for only 50 percent of the expenses, it could have saved
$795. The remaining $11,370 for Employee D represents other

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questionable training reimbursements. Similarly, Water Resources
reimbursed Employee G, a chief construction supervisor, for 100
percent of the expenses for a history course titled Images of America
that he listed as job‑related training on his training request.
Water Resources could have saved $656 if it had categorized
this class as career‑related and only reimbursed Employee G for
50 percent of the cost as required by its policy. The remaining
$2,212 for Employee G represents other questionable training
reimbursements.
Table 7
Questionable Reimbursements From September 2012 to October 2014 for Training Expenses the Department of
Water Resources Categorized as Job‑Required or Job‑Related Instead of Career‑Related
EMPLOYEE

Employee D

Employee E

YEAR COURSES
COMPLETED

AMOUNT
REIMBURSED

Bachelor of Science in
Electronic Engineering

2012
2013
2014

$18,020

Associate of Science
in Information
Technology

2012
2013

JOB CLASSIFICATION

DEGREE PURSUED

Water Resource Engineering
Associate Specialist
Control System Technician II

AMOUNT EXCEEDING
REIMBURSEMENT ALLOWED

$12,165*

8,450

4,450

Employee F

Associate Governmental
Program Analyst

Not applicable

2013
2014

7,841

3,841

Employee G

Chief Construction
Supervisor

Bachelor of Science in
Engineering

2012
2013

5,525

2,868*

Employee H

Supervising Engineer,
Water Resources

Master of Business
Administration

2013
2014

26,816

Employee I

Senior Environmental
Scientist Specialist

Undetermined

2013
2014

7,106

3,553*

Employee J

Environmental Scientist

Master of Public
Administration

2012
2013

3,173

1,087*

Total costs

$76,931

22,816

$50,780

Source:  California State Auditor’s analysis of employee expense claims.
*	 The Department of Water Resources paid $19,673 of the $50,780 to four employees whose training should have been categorized as career‑related
and thus should have been subject to the 50 percent reimbursement limit on training expenses.

Division chiefs and higher level executives are responsible for
ensuring reimbursement requests are reasonable and in accordance
with established policies and procedures. Although employees F
through J received approval from a division chief or higher‑level
executive for their reimbursements in excess of the $2,000 annual
limit, we still question whether these reimbursements were
reasonable. For example, when we interviewed the deputy director
who approved Employee H’s training forms and expense claims, he
stated that Employee H’s pursuit of a master’s degree was related
to his job because the State Water Project was in a financial crisis
in 2014, and Employee H needed to be able to manage finances at

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a high level. We did not find this to be a reasonable explanation
because Water Resources approved Employee H to take courses
as early as September 2013, before the State Water Project’s
financial crisis. If Water Resources’ staff had properly categorized
Employee H’s courses as career‑related and tracked his training
expenses, his reimbursements would not have exceeded the
annual reimbursement cap of $2,000, and the State could have
saved $22,816.
Several Other Failures and Insufficiencies Contributed to Water
Resources’ Excessive Reimbursements
We also found several additional factors that contributed to
the $50,780 in questionable reimbursements. Specifically, as we
previously identified as the cause of the improper reimbursements,
the officials who approved training requests were unfamiliar
with Water Resources’ annual training reimbursement limits. In
addition, the approving officials did not have a clear understanding
of the differences between the training categories. Moreover, we
found that Water Resources’ policy does not require that training
requests include justifications for selected training categories nor
does it require that a division chief or higher level executive justify
his or her approval for any reimbursements beyond the specified
limits. Further, field divisions issue reimbursement checks for
job‑required training expenses without a separate review by either
the training division or the division of fiscal services. Finally, some
expense claims lacked the required supporting documentation—
such as receipts, a course syllabus, and a grade report—that would
provide evidence that an employee had actually paid for and
attended training courses.
Recommendations
To remedy the effects of the improper governmental activity
identified by this investigation and to prevent it from recurring,
Water Resources should take the following actions:
•	 Provide training to all officials who approve training requests
regarding the difference between training categories, the
maximum calendar year reimbursement limitations for each
category, and the required documentation to support expense
claims, including proof of attendance.
•	 Amend the training request form and the training plan form to
require that approving officials include written justification for
the selected training category.

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•	 Amend the training request form to require that division chiefs
or higher level executives provide written justification for their
approval of reimbursements beyond the maximum $2,000 per
year amount allowed for job‑related training.
•	 Provide training to all training coordinators regarding
their responsibility to track each employee’s total calendar
year reimbursements for each training category other than
job‑required training.
•	 Require division chiefs and the training chief to review
and approve training requests for all job‑required and
job‑related training.
•	 Require the last official who approves an employee’s expense
claim for job‑required and job‑related training to forward that
claim to the training division, the division of fiscal services, or
both, for a separate review of the employee’s training forms
and supporting documents before Water Resources reimburses
the employee.
Agency Response
In January 2016 Water Resources responded that, due to the
complexity and volume of data that it would need to review, it
could not perform a thorough analysis of the information contained
in this report to validate or disprove its content. Although we
provided Water Resources with two extensions to respond, it did
not contact us to request any information or documentation to
assist in its analysis. Regardless, Water Resources stated that it
intends to continue its analysis.

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Blank page inserted for reproduction purposes only.

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Chapter 5
CALIFORNIA DEPARTMENT OF DEVELOPMENTAL
SERVICES, PORTERVILLE DEVELOPMENTAL CENTER:
IT WASTED STATE FUNDS BY UNDERCHARGING
EMPLOYEE LEAVE BALANCES
CASE I2013‑1633
Results in Brief
About the Department

The Porterville Developmental Center (Porterville)
wasted state funds when it charged only eight hours
of leave to certain employees who missed scheduled
nine‑hour or 10‑hour workdays. When we reviewed
the time sheets and leave records from July 2014
through June 2015 for 12 employees, we determined
that Porterville did not charge 566 hours of leave
to the employees, which cost the State at least
$25,634. Because Porterville did not deduct the
leave from the employees’ leave balances, the extra
hours remain available for these employees to
use for additional paid time off from work or for
conversion to a cash payment when they leave
state service.
Background

The California Department of Developmental Services
provides services and support to individuals with
developmental disabilities. Porterville Developmental
Center, one of its three state developmental centers,
provides 24‑hour habilitation and treatment services for
residents with developmental disabilities.

Relevant Criteria
The collective bargaining agreement between the State
and Collective Bargaining Unit 19 states that employees
exempt from the Fair Labor Standards Act will not be
charged paid leave or docked for absences in less than
whole‑day increments.
Government Code section 8547 provides that any activity by
a state employee that wastes state resources constitutes an
improper governmental activity.

Some Developmental Services employees are
exempt from the federal Fair Labor Standards Act (FLSA).
These exempt employees do not receive an hourly wage, but
instead receive a salary based on performing their jobs regardless
of the number of hours they actually work. Exempt employees
are expected to work whatever number of hours is necessary to
fulfill their duties, even if that means working more than a typical
40‑hour workweek. Exempt employees do not receive overtime if
they work more than eight hours in one day or more than 40 hours
in one week.
Developmental Services psychologists and social workers, who
are exempt from FLSA, are represented by Collective Bargaining
Unit 19 (unit 19) through a collective bargaining agreement
(bargaining agreement) that delineates various aspects of their
employment with the State. These employees can work an
alternative workweek schedule (alternative schedule) such as four
10‑hour days.  The bargaining agreement requires these employees
to use leave in whole day increments when they miss an entire
day of work. The bargaining agreement, however, does not define
whole day. 

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In the absence of a clear definition in the bargaining agreement,
the California Department of Human Resources (CalHR) states
that the employing department should define whole day in
accordance with departmental practice, local agreement, or another
enforceable term of employment with its employees. Porterville’s
current practice is to allow exempt represented employees to claim
eight hours of leave when they are absent for a full day from work
despite the fact that the employees working an alternative schedule
would normally be scheduled to work more than eight hours a day.
No provisions exist in the applicable bargaining agreement that
prevent Porterville from changing its current practice.
Porterville Wasted State Funds When It Failed to Charge
Leave Accurately

Porterville did not charge 12 exempt
represented employees working
alternate workweek schedules a
total of 566 hours of leave at an
estimated cost of $25,634.

Our investigation revealed that from July 2014 through June 2015,
Porterville did not charge 12 exempt represented employees
working alternate workweek schedules a total of 566 hours of leave
at an estimated cost of $25,634 when it required these employees
to charge only eight hours of leave for each full day of work they
missed. The waste of state funds resulting from allowing each
employee to charge only eight hours for a missed nine‑hour or
10‑hour workday can add up quickly. Because Porterville did not
deduct the correct number of hours from the employees’ leave
balances, the extra hours remain available for employees to use
for additional paid time off from work or for conversion to a cash
payment when they leave state service. Moreover, employees’
rates of compensation tend to increase over time as their careers
in state service advance. Consequently, when state agencies pay
employees for accumulated leave upon their departure from state
service, they generally must pay the employees at a higher rate than
they were earning at the time they accrued the leave, resulting in
additional waste.
As an example, Employee A was regularly scheduled to work
four 10‑hour days each week. In July 2014 he took five days off over
the course of three weeks. Although the employee was scheduled
to work 10 hours on each of those days, Porterville required him to
charge only eight hours of leave for each missed day. As a result,
only 40 hours were deducted from his leave instead of the 50 hours
he was scheduled to work. Based on the employee’s salary, the value
of those missed work hours totaled $523 in wasted state funds.
For the 12 months we reviewed, the value of Employee A’s
undercharged leave cost the State at least $4,706. Table 8 shows
the value of the leave hours Porterville failed to deduct from all
12 employees’ leave balances.

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Table 8
The Value of the Leave Hours Porterville Developmental Center Failed to
Deduct During Fiscal Year 2014–15
EMPLOYEE

HOURS OF LEAVE
NOT DEDUCTED

VALUE OF LEAVE

Employee A

90

Employee B

12

476

Employee C

46

1,826

Employee D

12

634

Employee E

26

1,375

Employee F

74

3,912

Employee G

46

2,432

Employee H

32

1,351

Employee I

68

2,814

Employee J

42

1,667

Employee K

90

3,387

Employee L
Totals

$4,706

28

1,054

566

$25,634

Sources:  California State Auditor’s analysis of accounting records from Porterville Developmental
Center and leave records from the California State Controller’s Office.

When trying to determine why Porterville followed this practice,
we found that Porterville’s human resources director had relied on
an inapplicable policy document that the Department of Personnel
Administration (now known as CalHR) issued more than 20 years
ago. In this document CalHR indicated that a full day of work for
exempt represented employees in specific bargaining units should
be considered eight hours. However, the document specified that
it applied only to six bargaining units, which did not include the
bargaining unit to which Porterville’s employees belong. Because
Porterville’s practice was wasteful and was not required by any state
policy, Porterville’s human resources director should have changed
its practice and charged leave to these employees according to the
number of hours they were scheduled to work.

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Recommendations
To remedy the effects of the improper governmental activity
described in this report and to prevent it from recurring,
Developmental Services should take the following actions:
•	 Immediately conduct an audit of the leave accounting system
from July 2015 through December 2015 to identify instances
in which Porterville charged exempt represented employees
working alternative schedules the incorrect number of leave
hours for missed days of work.
•	 Adjust current employees’ leave balances in the leave accounting
system to correct any leave not properly charged as identified by
this report and by the audit it conducts.
•	 By March 1, 2016, take steps to work with unit 19 to change
Developmental Services’ current practice and require exempt
represented employees to charge leave in accordance with the
number of hours they are regularly scheduled to work.
•	 Revise its established timekeeping audit procedures to ensure
that exempt represented employees correctly charge leave
according to the number of hours they are regularly scheduled
to work.
•	 Train its personnel staff at headquarters and all developmental
centers regarding the new policy and accompanying procedures.
Agency Response
In December 2015 Developmental Services reported that it
disagreed with our findings and identified three points of
concern. First, it stated that its current practice of charging
only eight hours of leave for whole day absences for exempt
represented employees working alternate workweek schedules at
Porterville is not improper. We disagree with this statement. The
Whistleblower Protection Act, which is contained in Government
Code section 8547 et seq., defines an “improper governmental
activity” to include any action that is economically wasteful. As
Developmental Services currently charges a whole day’s leave
for these employees in eight‑hour increments rather than the
nine hours or 10 hours the employees are scheduled to work, its
practice is economically wasteful.
Related to this concern, Developmental Services took issue with our
statement that the guidance Porterville relied upon was inapplicable
for the employees we reviewed. During the investigation, the

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human resources director at Porterville stated that she relied on
guidance from CalHR management memo 1995‑023, which we
determined was specifically addressed to employees in bargaining
units 1, 3, 7, 11, 20, and 21. The management memo did not include
employees in unit 19 to which the employees in our investigation
belong; therefore, we stand by our statement that Porterville
relied upon inapplicable guidance. In its response, Developmental
Services stated that it relied upon different management memos
than the one Porterville identified, specifically management memos
1994‑08 and 1994‑32. However, neither of these management
memos supports its concern. Management memo 1994‑08 requires
departments to charge leave in “whole day” increments only, and
does not define the term “whole day” to mean a specific number of
hours. Management memo 1994‑32 applies only to unrepresented
exempt employees and employees represented by the California
State Employees Association, neither of which applies to the
exempt Porterville employees represented by unit 19 whose leave
balances are the subject of this investigation.
Developmental Services also asserted that its practice was not
improper because leave for holiday credits, jury duty, professional
developmental days, and bereavement are credited or deducted
as eight‑hour workdays, and thus all other leave credits and
deductions should be charged as eight hours for a whole day for
exempt represented employees. However, this assertion is incorrect.
State laws, bargaining agreements, and other controlling language
require Developmental Services to credit and deduct eight hours of
leave for holiday credit, jury duty, professional development days,
and bereavement. This same eight‑hour restriction does not apply
to vacation leave, sick leave, or annual leave, which are the types of
leave addressed in this report.
Second, Developmental Services contends that our conclusion
that it wasted state funds was false. Specifically, it stated that we
did not provide factual proof that a waste of state funds occurred
because we did not review the average number of hours the
12 employees actually worked. As noted in the Background, exempt
employees are expected to work whatever number of hours is
required to fulfill their duties, even if that means working more
than a typical 40‑hour workweek. Our investigation was not
focused on whether these employees fulfilled their duties, but
rather whether their leave was appropriately deducted when taking
a whole day off. Regardless of whether these employees worked an
average of 40, 50, or even 60 hours in a workweek, the bargaining
agreement specifies that their leave should be deducted in whole
day increments. This requirement is independent of the number
of hours an employee has already worked and does not require
Developmental Services to maintain or track the number of hours
its exempt employees worked.

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Third, Developmental Services expressed concern that following
our recommendation of changing its practice of charging eight
hours of leave for exempt employees working alternative workweek
schedules for whole day absences would jeopardize the FLSA
categorization of its exempt represented employees and could
result in the requirement that it pay these employees overtime
compensation for any hours they worked over 40 hours in a
workweek. According to the FLSA, to be considered exempt
an employee must be paid a set salary of at least $455 per week,
perform exempt job duties, and be paid on a salary basis. Deducting
leave in any increment more than eight hours would not affect
the first two conditions. The third condition is the only one that
could be affected by such a change. The U.S. Department of Labor,
California Department of Industrial Relations, as well as California
case law, have all stated that it is permissible to make deductions
from an exempt represented employee’s leave balance for the time
the employee is absent from work, in accordance with a bona fide
benefits plan, as long as the employee still receives payment of
his or her guaranteed salary. Therefore, Developmental Services’
concern is unfounded.
As further proof that following our recommendation would not
jeopardize the FLSA categorization of these exempt employees,
we turned to the practice employed in other bargaining units.
Since 2005 the State has deducted the leave balances of exempt
employees in seven bargaining units according to their work
schedules. The State has followed this practice for more than
10 years and, to the best of our knowledge, no one has contended
that the State has jeopardized the exempt status of the employees
in these seven bargaining units by deducting more than eight hours
of leave from the employees’ accrued leave balances for whole‑day
absences. Moreover, no legal authority exists for treating exempt
employees who are unrepresented differently for FLSA purposes
than exempt employees who are not represented by a bargaining
unit. To the contrary, the Code of Federal Regulations, title 29,
section 541.4, declares that FLSA standards cannot be waived or
reduced by a collective bargaining agreement.
Finally, in January 2016 Developmental Services reported that
CalHR had informed it that CalHR planned to issue statewide
guidance in the "near future" regarding how exempt represented
employees should report time worked. Developmental Services
stated that it would then work with unit 19 and CalHR to address
the timekeeping issues of exempt represented employees working
alternate schedules at Porterville.

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Chapter 6
DEPARTMENT OF GENERAL SERVICES: IT DID NOT REVISE
ITS STATE RENTAL CAR POLICY, WHICH LED TO THE WASTE
OF STATE FUNDS
CASE I2014‑1285
Results in Brief
By following a state policy established by the
Department of General Services (General Services)
related to rental vehicle usage for state travel, the
Department of Resources Recycling and Recovery
(CalRecycle) inadvertently spent $4,216 more
than necessary from July 2014 through June 2015.
The outdated policy requires CalRecycle and
all other state agencies to use General Services’
rental services for short‑term vehicle rentals in the
Sacramento area. We found that CalRecycle could
have saved $4,216 from July 2014 through June 2015
had its employees rented vehicles for trips of
more than 41 miles from Enterprise Rent‑A‑Car
(Enterprise), the private company with which
the State has a contract, instead of from General
Services on 86 occasions. The total waste resulting
from General Services’ policy may have been
much greater, given that other state agencies in the
Sacramento area are also subject to this policy and
that CalRecycle’s rentals represented only 2 percent
of the vehicles rented from General Services in the
one‑year period we reviewed.

About the Department
The Department of General Services (General Services)
serves as a business manager for the State. Its offices and
divisions provide a wide variety of services to state agencies,
including the following:
•	 The Office of Fleet and Asset Management oversees
the State’s vehicle fleet, rental vehicles, parking
facilities, and surplus equipment auctions.
•	 The Procurement Division oversees the State’s
procurement policies and practices.

Relevant Criteria
Government Code section 8547.2, subdivision (c), provides
that any activity by a state agency or employee that is
economically wasteful of state resources is an improper
governmental activity.
State Administrative Manual section 4100 requires state
agencies’ employees to use General Services’ vehicle rental
services unless it does not have rental vehicles available.

Background
General Services’ Office of Fleet and Asset Management (Fleet
Management) oversees the State’s vehicle fleet, rental vehicles,
parking facilities, and statewide travel contracts. Since 2012 General
Services has rented vehicles from just one location near the State
Capitol building in Sacramento. State employees in the Sacramento
area often rent vehicles from Fleet Management when they need a
vehicle to conduct state business.
General Services established a statewide policy several years ago
that requires state agencies to use its vehicle rental services. The
policy, which is found in State Administrative Manual (SAM)
section 4100, specifies that state employees must use Fleet
Management’s vehicle rental services unless it does not have rental

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vehicles available. CalRecycle, the state agency that deals with waste
reduction, recycling, and reuse, created a departmental policy in
2012 that mirrored the statewide policy.
In 2011 General Services negotiated a contract with Enterprise
whereby Enterprise would make rental vehicles available to state
agencies at numerous locations across the State. The contract
includes the specific prices that state agencies pay for various types
of vehicles.
Although General Services’ statewide policy clearly requires
state agencies to use its vehicle rental services overseen by Fleet
Management, General Services’ website seems to indicate that state
agencies and their employees may use either an Enterprise rental
vehicle or a vehicle from Fleet Management. In fact, the website’s
Quick Guide for renting vehicles does not identify any restrictions
as to when an employee may rent from Enterprise. However, the
website also directs state agencies in the Sacramento area only to
information about Fleet Management’s location in Sacramento and
makes no mention of the Enterprise rental option.
Renting Vehicles From General Services Can Lead to Waste

We calculated that at $3 per gallon
of gasoline, renting a vehicle
from General Services during
the period we reviewed was less
expensive until a state employee
drove 41 miles. For distances
greater than 41 miles, renting from
Enterprise was less expensive.

Clear, consistent state policy guidance for the rental of vehicles for
state travel is essential for state agencies to use resources efficiently.
More specifically, such a policy should provide agencies and their
employees with specific factors to consider when deciding which
vehicles will result in the greatest economy and efficiency for state
travel. Depending on the distance the state employees traveled and
the price of gasoline, state agencies in the Sacramento area could
have saved money by renting vehicles from Enterprise instead
of General Services. As Table 9 indicates, vehicles rented from
General Services from July 2014 through June 2015 were generally
more cost effective when traveling shorter distances, while vehicles
rented from Enterprise were more cost effective when traveling
longer distances. Specifically, we calculated that at $3 per gallon
of gasoline, renting a vehicle from General Services during the
period was less expensive until a state employee drove 41 miles. For
distances greater than 41 miles, renting from Enterprise was less
expensive. Forty‑one miles is about half the distance between the
State Capitol in Sacramento and San Francisco.
State agencies and employees should be able to consider factors
other than the rental rates when deciding whether to rent a
vehicle from General Services or Enterprise. These factors may
include the proximity of the rental locations, availability of various
types of vehicles, and business hours. According to General
Services’ current policy in SAM section 4100, state agencies in

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the Sacramento area are unable to consider any of these factors.
Instead, they are required to use General Services’ rental vehicles,
even if they are more expensive or less convenient than Enterprise’s.
Table 9
Comparison of the Costs for Daily Rentals Depending on Miles Driven
From January 2015 Through June 2015
20 MILES
VEHICLE TYPE*

DEPARTMENT OF
GENERAL SERVICES

50 MILES
ENTERPRISE
RENT‑A CAR

DEPARTMENT OF
GENERAL SERVICES

100 MILES
ENTERPRISE
RENT‑A CAR

DEPARTMENT OF
GENERAL SERVICES

200 MILES
ENTERPRISE
RENT‑A CAR

DEPARTMENT OF
GENERAL SERVICES

ENTERPRISE
RENT‑A CAR

Compact vehicle

$30.20

$34.54

$39.50

$38.45

$55.00

$44.97

$86.00

$58.02

Mid‑Size vehicle

32.20

34.54

41.50

38.45

57.00

44.97

88.00

58.02

Full‑Size vehicle

33.20

37.73

42.50

41.64

58.00

48.16

89.00

61.21

Source:  California State Auditor’s analysis of rental rates published by the Department of General Services (General Services).
Note:  To perform the calculations in this table, we assumed that the cost of gasoline was $3 per gallon and that the fuel efficiency of the cars was
23 miles per gallon.
*	 We did not compare the costs for other types of vehicles (e.g., vans, mini vans, pickup trucks, or hybrid vehicles) because we found that they were
either rarely used or not available for rent from both Enterprise Rent‑A‑Car and General Services.

General Services Has Failed to Update Its Policy
General Services has not updated its statewide policy since forming
the contract with Enterprise, although it acknowledged the policy
could lead to waste. During our investigation, Fleet Management
committed to revising the policy and any related information. Fleet
Management stated that it wanted state agencies to be aware that
their employees may choose between its vehicle rental services and
Enterprise’s. However, at the time of our investigation, General
Services had neither revised its policy nor notified CalRecycle and
other state agencies that they no longer needed to follow the policy.
CalRecycle Wasted $4,216 as a Consequence of the Statewide Policy
That General Services Established and Failed to Update
By appropriately making its policies and practices consistent with
the statewide policy that General Services established, CalRecycle
unnecessarily spent $4,216 from July 2014 through June 2015. Over
the course of 86 rentals, it would have saved the $4,216 had it rented
vehicles from Enterprise instead of General Services. When we
discussed the potential savings with CalRecycle’s chief operating
officer, she stated CalRecycle would have used Enterprise instead of
General Services for the 86 vehicle rentals had SAM allowed it.

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The total cost of General Services’ failure to update its policy may
be much larger than what we found at CalRecycle. CalRecycle is a
relatively small state agency, employing only 0.3 percent of all state
employees. Further, CalRecycle’s rentals represented only 2 percent
of all short‑term rentals from General Services by state agencies in
the Sacramento area from July 2014 through June 2015.
Recommendations
To remedy the effects of the improper governmental activity
substantiated in this report and to prevent it from recurring,
General Services should take the following actions:
•	 Immediately revise the statewide policy contained in SAM
Section 4100 so that state agencies are no longer required to use
only General Services’ vehicle rental services.
•	 Notify CalRecycle and all other state agencies that it has revised
the requirement in SAM Section 4100.
Agency response
General Services fully implemented our recommendations
in January 2016. Specifically, General Services revised SAM
Section 4100 and other relevant SAM sections to allow state
agencies to choose between its rental services and Enterprise when
renting vehicles. General Services also sent a memorandum to all
state agencies notifying them of the revisions to its policies.

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Chapter 7
OTHER INVESTIGATIVE RESULTS
During the period from July 1, 2015, through December 31, 2015,
the California State Auditor (state auditor) referred numerous
investigations to state agencies to perform in response to
Whistleblower Protection Act complaints that those agencies
appeared best suited to investigate on our behalf. Our evaluation
found that four of the agencies’ investigations substantiated the
occurrence of improper governmental activities by one or more
state employees. The following summaries identify the improper
governmental activities substantiated through these investigations.
California Department of Public Health
Case I2015‑0478
From January 2015 through the end of July 2015 a
supervisor misused state time by leaving for several
hours during his shift nearly every day without using
leave and without approval. With the investigative
assistance of the California Department of Public
Health (Public Health), we estimated that the
supervisor did not account for 234 hours of his work
time, valued at $3,793, during this seven‑month
period. By leaving his work site without receiving
approval and without using leave, the supervisor
violated a state law that prohibits state employees
from engaging in incompatible activities.

About the Department
The California Department of Public Health protects the
public from unhealthy and unsafe environments, prepares
for and responds to public health emergencies, and
promotes healthy lifestyles.

Relevant Criteria
Government Code section 19990, subdivision (g), prohibits
state employees from engaging in activities that are
incompatible with their state employment, such as failing
to devote their full time, attention, and effort to state
employment during work hours.

Public Health concluded that the supervisor likely left work in
the middle of his shift without approval and, in so doing, failed to
supervise his subordinates. The supervisor’s main responsibility
was to supervise a team of employees as they worked in specific
areas within a state building complex in Northern California. The
complex is monitored and secured by an electronic system (system)
that controls and records entry at numerous controlled‑entry doors;
therefore, the system records when an employee on the team uses
his or her card to enter an area. The team’s supervisor is expected
to evaluate the areas worked in to ensure the team has sufficiently
performed its work. Thus, the supervisor’s card record should show
that he accessed the same general areas as the team. For example,
during one day in May 2015 from about 4 p.m. to 6 p.m., the
supervisor scanned his card nine times as he entered and moved
around the building complex indicating that he accessed the same
areas as his staff.

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Electronic records indicate that the supervisor regularly left work in the
middle of his shift for several hours before returning toward the end
of his shift. Specifically, the supervisor’s card record from January 2015
through the end of July 2015 shows that he regularly scanned his card
to enter the main building complex at the beginning of his shift and
to access various locations within the complex during his work days.
However, after a few hours of card activity consistent with a supervisor
managing a team, the supervisor’s card record shows several hours of
inactivity. For instance, on one day in February 2015, the supervisor
used his card six times from about 4 p.m. to 4:30 p.m. to enter and
move around the building complex. After a scan at 4:30 p.m. the card
record shows no activity until 9:40 p.m. when the supervisor used it at
the front entry of the complex. This pattern was repeated almost daily,
and Public Health concluded that it indicated that the supervisor likely
reported for work for several hours, left work during his shift, and then
returned through the main entry toward the end of his shift; thus, he
did not follow his team as they moved through the complex. In addition
to the electronic records, at least three Public Health employees stated
that they observed the supervisor leave work during his shift instead
of supervising his team. Based on the information provided by Public
Health, we estimated that the supervisor’s pattern of behavior showed
that he failed to account for 234 hours of leave at a cost of $3,793 during
the seven‑month period.
When confronted by Public Health, the supervisor admitted to leaving
work for several hours during his shift but disputed the frequency.
Public Health continued to monitor the supervisor’s card record
pattern and determined that the supervisor’s card record shows
activity consistent with supervising his team throughout his complete
work shift.
We recommended that, to ensure the supervisor does not misuse state
time, Public Health should take appropriate corrective or disciplinary
action against him for leaving during the middle of his
shift without approval. In January 2016 Public Health
reported that in October 2015 it issued a counseling
About the Department
memorandum to the supervisor.
The Department of Industrial Relations works to protect
and improve the health, safety, and economic well‑being
of wage earners. It administers and enforces laws governing
wages, workplace safety and health, and benefits for injured
workers, as well as other issues.

Relevant Criteria
California Code of Regulations, title 2, section 599.626,
subdivision (d), limits the amount of mileage that can be
reimbursed to the distance driven from either an employee’s
home or headquarters, whichever is less.

Department of Industrial Relations
Case I2014‑0928
We received a complaint that an associate safety
engineer was overcharging the Department of
Industrial Relations (Industrial Relations) for
business travel mileage reimbursements, and we
asked Industrial Relations to assist us in investigating
the complaint. The investigation showed that from
October 2013 through June 2014 the engineer

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submitted travel reimbursement claims for more mileage than
permitted by state law. These overcharges allowed him to collect
$1,322 more than he was due.
From January 2014 through May 2014 Industrial Relations assigned
the engineer, who was headquartered in San Bernardino, to work
in Santa Ana. During this time, the engineer made 51 trips to
Santa Ana and submitted travel reimbursements for each trip. State
regulations limit the amount of mileage that can be reimbursed to
the lesser distance from either an employee’s home or headquarters.
The roundtrip distance between the engineer’s headquarters in
San Bernardino and Santa Ana is 100 miles, while the round trip
distance from the employee’s home, which is south of headquarters, to
Santa Ana is about 125 miles. Thus, state law permitted the engineer
to be reimbursed only 100 miles for each trip to Santa Ana. However,
the engineer routinely submitted reimbursement claims for 140‑mile
roundtrips from San Bernardino to Santa Ana. Industrial Relations
also identified another eight trips that occurred outside of the period
during which the engineer was temporarily assigned to Santa Ana and
for which the engineer similarly overcharged Industrial Relations for
mileage reimbursement.
When interviewed by Industrial Relations, the engineer initially
claimed that the additional 40 miles for each trip resulted from his
taking alternate routes from San Bernardino to Santa Ana due to
traffic conditions. However, the engineer admitted upon further
inquiry that he had, in fact, started his trips from his home; thus, his
explanation about driving alternate routes is
not credible.
Industrial Relations reported that it recovered the
$1,322 from the engineer in September 2015. In
addition, in August 2015 it issued a memorandum
about the rules regarding correct mileage calculations
for employees seeking travel reimbursement.
California Department of Fish and Wildlife
Case I2014‑0970
We received a complaint alleging that an employee
received an improper reimbursement for expenses
incurred for attending a two‑day retirement planning
fair hosted by the California Public Employees’
Retirement System (CalPERS) that he did not
attend. We asked the California Department of Fish
and Wildlife (Fish and Wildlife) to investigate this
complaint on our behalf and report its findings to us.

About the Department

The California Department of Fish and Wildlife (Fish and
Wildlife) manages and protects California’s diverse wildlife
and the habitats on which they depend.

Relevant Criteria
California Code of Regulations, title 2, section 599.665,
provides that state agencies must keep complete
and accurate time and attendance records for all of
their employees. To fulfill this duty, Fish and Wildlife requires
employees to submit complete and accurate time sheets
reflecting their time worked and to charge leave balances
appropriately when they are absent.
Government Code section 19572 states that an employee
may be disciplined for acts of dishonesty.
Government Code section 8314 prohibits state employees
from using state resources for personal purposes or other
purposes that are not authorized by law.

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Fish and Wildlife determined that the employee received approval
from his supervisor to attend the August 2013 Sacramento retirement
planning fair as a work‑related trip and that the employee did, in fact,
drive a state vehicle from Modoc County to Sacramento County,
where the retirement fair was held. However, the investigation revealed
that the employee did not actually attend the event even though he
submitted a travel expense reimbursement request, daily activity
reports, and a time sheet, all of which falsely indicated that he had
been in attendance. When eventually confronted by a Fish and Wildlife
investigator, the employee admitted that he “ended up staying up late
that night drinking … [a]nd … had a hangover and didn’t really feel like
going anywhere” on the first day of the retirement planning fair. Further,
he failed to attend the second day, stating that he was still not feeling
very well.
The investigation results show that the employee began making
misleading statements about his attendance immediately upon his
return to work after his trip. When the employee’s supervisor asked
him about the retirement planning fair, the employee stated that he
“got the information he needed,” but did not explain that he had not
actually attended. The employee then submitted daily activity reports
that falsely indicated that he attended both days of the retirement
planning fair. Additionally, he submitted a falsified time sheet, claiming
that he worked 14 hours over two days by attending the event.
The employee continued to make dishonest statements about his
attendance at the retirement planning fair during this investigation.
When the employee was interviewed, he acknowledged that he had
not actually attended the event, but told the investigator that he instead
watched the live‑stream interactive webinars during those two days
and again stated that he received the information he needed. However,
Fish and Wildlife determined that the employee did not watch the
live‑stream webinars. Doing so would have required the employee
to register his name and email address with CalPERS, and CalPERS
has no record of the employee registering the information required
to access the live‑stream webinars. When confronted a second
time by the investigator, the employee stated that he may have been
mistaken about watching the live‑stream webinars but asserted that he
researched information and watched some other videos on CalPERS’
website and therefore attended the retirement planning fair “in spirit.”
The employee’s actions regarding
not actually attending the event
are all willful acts of dishonesty by
the employee toward his employer.

The employee’s actions—first leading his supervisor to believe that he
had actually attended the event, then submitting falsified daily activity
reports and a time sheet indicating his attendance, and finally, when
confronted by the department investigator, claiming to have watched
the event live on CalPERS’ website—are all willful acts of dishonesty
by the employee toward his employer. Given the evidence described
here, Fish and Wildlife concluded that the employee was dishonest,
which is a cause for discipline under Government Code section 19572.

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In addition, the employee submitted a travel expense claim requesting
reimbursement for travel expenses he incurred for the retirement
planning fair. Based on his claim, the State paid for the employee’s
personal expenses, including $148 for meals and incidentals and
$175 charged on a state credit card for fuel. However, based on its
investigation, Fish and Wildlife concluded that because the employee
never attended the retirement planning fair, his use of a state vehicle and
state time, as well as the reimbursement of travel expenses, constituted
a misuse of state resources.
We recommended that Fish and Wildlife take appropriate corrective
or disciplinary action against the employee for his improper
governmental activities, including reducing the employee’s leave
balance by 14 hours to account for the two days he did not work and
did not attend the retirement fair. In addition, we recommended that
it recover $323 related to the employee’s inappropriate reimbursement
and misuse of state resources. Finally, we recommended that in the
future, Fish and Wildlife should require its employees to provide proof
of their presence when attending trainings or business‑related events
on state time.
In January 2016 Fish and Wildlife reported that the employee retired
from state service in December 2015, before it could serve him with
disciplinary action. In addition, Fish and Wildlife reported that it
would invoice the employee to recover the $323 related to the misuse
of state resources. Finally, Fish and Wildlife reported that it requires
employees to complete a training form before attending most types
of training. Employees also must complete the form after attending
the training and attach any supporting certificates of completion. Due
to the nature of the retirement planning fair, Fish and Wildlife stated
that no training form had been necessary. However, it stated that the
employee’s supervisor appropriately checked with the employee upon
the employee’s return to work, but the employee was not forthcoming
with the details of his lack of attendance at the retirement planning fair.
California Department of Health Care Services
Case I2014‑0078
We received a complaint that an associate
governmental program analyst with the California
Department of Health Care Services (Health Care
Services) used her state computer and email to operate
her residential rental business, and we asked Health
Care Services for its assistance in investigating the
allegation. Health Care Services found that from
March 2010 through April 2015 the analyst exchanged
2,589 emails that were personal in nature, representing

About the Department
The California Department of Health Care Services
funds health care for millions of low‑income and
disabled Californians.

Relevant Criteria
Government Code section 8314 prohibits state employees
from using state resources for personal purposes or other
purposes that are not authorized by law.

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37 percent of her total emails. Of these emails, 480 related to operating
her residential rental business and 170 related to her personal
financial activities.
The analyst also used her state computer to store and edit personal files
related to her being a property manager for at least four properties.
Specifically, Health Care Services performed a forensic analysis of
the analyst’s hard drive and found 274 unique personal documents
on the analyst’s work computer related to the properties. The analyst
acknowledged that she began performing some property management
starting in 2007, but denied spending more than incidental time and
resources on her personal matters. However, based on Health Care
Services’ investigation, we concluded that the analyst’s use of her state
computer to exchange more than 2,500 personal emails and store
nearly 300 personal documents violated the prohibition against a state
employee using state resources for personal purposes.
We recommended that to ensure the analyst does not continue to
misuse state resources, Health Care Services should take appropriate
corrective or disciplinary action for her misuse of her state computer
and email for personal purposes. In January 2016 Health Care Services
reported that it agreed with the recommendation and stated that it
is committed to taking appropriate action against the analyst. Health
Care Services stated that its human resources branch is reviewing
information to determine the appropriate action to take.
Respectfully submitted,

ELAINE M. HOWLE, CPA
State Auditor
Date:			

February 11, 2016

Investigative Staff:	
Russ Hayden, CGFM, Manager of Investigations
			Johnny Barajas
			Siu‑Henh Canimo, CFE
			
Beka Clement, MPA, CFE
			Lane Hendricks, CFE
			
Wesley Opp, JD, CFE
			Nicole Ricks, CFE
			
Michael A. Urso, CFE
Legal Counsel:		

Julie Jacob, Staff Counsel

For questions regarding the contents of this report, please contact
Margarita Fernández, Chief of Public Affairs, at 916.445.0255.

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Appendix
THE INVESTIGATIONS PROGRAM
The California Whistleblower Protection Act (Whistleblower Act)
authorizes the California State Auditor (state auditor) to investigate
allegations of improper governmental activities by state agencies
and employees. Contained in the Government Code, beginning
with section 8547, the Whistleblower Act defines an improper
governmental activity as any action by a state agency or employee
during the performance of official duties that violates any state or
federal law, is economically wasteful, or involves gross misconduct,
incompetence, or inefficiency.
To enable state employees and the public to report suspected
improper governmental activities, the state auditor maintains
a toll‑free Whistleblower Hotline (hotline) at (800) 952‑5665.
The state auditor also accepts reports of improper governmental
activities by mail and over the Internet at www.auditor.ca.gov.
The Whistleblower Act provides that the state auditor may
independently investigate allegations of improper governmental
activities. In addition, the Whistleblower Act specifies that the state
auditor may request the assistance of any state entity in conducting
an investigation. After a state agency completes its investigation
and reports its results to the state auditor, the state auditor’s
investigative staff analyzes the agency’s investigative report and
supporting evidence and determines whether it agrees with the
agency’s conclusions or whether additional work must be done.
Although the state auditor conducts investigations, it does not
have enforcement powers. When it substantiates an improper
governmental activity, the state auditor confidentially reports the
details to the head of the state agency or to the appointing authority
responsible for taking corrective action. The Whistleblower Act
requires the agency or appointing authority to notify the state
auditor of any corrective action taken, including disciplinary
action, no later than 60 days after transmittal of the confidential
investigative report and monthly thereafter until the corrective
action concludes.
The Whistleblower Act authorizes the state auditor to report
publicly on substantiated allegations of improper governmental
activities as necessary to serve the State’s interests. The state
auditor may also report improper governmental activities to other
authorities, such as law enforcement agencies, when appropriate.

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Improper Governmental Activities Identified by the State Auditor
Since the state auditor activated the hotline in 1993, it has identified
improper governmental activities totaling $575.8 million. These
improper activities include theft of state property, conflicts of
interest, and personal use of state resources. For example, the
state auditor reported in March 2014 that the Employment
Development Department failed to participate in a key aspect
of a federal program that would have allowed it to collect an
estimated $516 million owed to the State in unemployment benefit
overpayments between February 2011 and September 2014.
The investigations have also substantiated improper activities
that cannot be quantified in dollars but have had negative social
impacts. Examples include violations of fiduciary trust, failure to
perform mandated duties, and abuse of authority.
Corrective Actions Taken in Response to Investigations
The chapters of this report have described the specific corrective
actions that the relevant agencies implemented on individual cases
that the state auditor completed from July 2015 through December
2015. Table A summarizes all of the corrective actions that agencies
took in response to investigations between the time that the state
auditor opened the hotline in July 1993 until December 2015. In
addition to the corrective actions listed, these investigations have
resulted in many agencies modifying or reiterating their policies
and procedures to prevent future improper activities.
Table A
Corrective Actions
July 1993 Through December 2015
TYPE OF CORRECTIVE ACTION

TOTALS

Convictions

12

Demotions

22

Job terminations

87

Resignations or retirements while under investigation

18*

Pay reductions
Reprimands
Suspensions without pay
Total

55
327
28
549

Source:  California State Auditor.
*	 The number of resignations or retirements reflects those that occurred during investigations
that the California State Auditor has completed since 2007.

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The State Auditor’s Investigative Work From July 2015 Through
December 2015
The state auditor receives allegations of improper governmental
activities in several ways. From July 1, 2015, through
December 31, 2015, the state auditor received 668 calls or inquiries.
Of these, 117 came through the hotline, 228 through the mail,
318 through the state auditor’s website, and 5 were generated
internally. When the state auditor determined that allegations were
outside its jurisdiction, it referred the callers and inquirers to the
appropriate federal, local, or state agencies, when possible.
During this six‑month period, the state auditor conducted
investigative work on 669 cases that it opened either in previous
periods or in the current period. As Figure A shows, after
conducting a preliminary review of these allegations, the state
auditor’s staff determined that 431 of the 669 cases lacked
sufficient information for investigation. For another 175 cases, the
staff conducted work—such as analyzing available evidence and
contacting witnesses—to assess the allegations. In addition, the
staff requested that state agencies gather information for 19 cases to
assist in assessing the validity of the allegations. The state auditor’s
staff investigated 23 cases independently and investigated 21 cases
with assistance from other state agencies.
Figure A
Status of 669 Cases
From July 2015 Through December 2015
Requested information from
another state agency—19 (3%)
Investigated with the assistance
of another state agency—21 (3%)
Independently investigated
by the state auditor—23 (4%)

Conducted
work to assess
allegations—
175 (26%)
Conducted preliminary
review—431 (64%)

Source:  California State Auditor.

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Of the 23 cases the state auditor independently investigated, it
substantiated improper governmental activities in seven of the
investigations it completed during the period. In addition,
the state auditor conducted analyses of the 21 investigations that
state agencies conducted under its direction, and it substantiated
improper governmental activities in nine of the investigations
completed. The results of 10 investigations with substantiated
improper governmental activities appear in this report.

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Index
DEPARTMENT/AGENCY

California Correctional Health Care Services

CASE NUMBER

I2015-0084

ALLEGATION

Forgery of military documents; false time reporting

PAGE NUMBER

19

Developmental Services, California Department I2013-1633
of, Porterville Developmental Center

Waste of state funds

General Services, Department of

I2014-1285

Waste of state funds

45

Fish and Wildlife, California Department of

I2014-0970

Inaccurate time sheet, dishonesty, misuse of state resources

51

Health Care Services, California Department of

I2014-0078

Misuse of state resources

53

Industrial Relations, Department of

I2014-0928

Misuse of state resources

50

Public Health, California Department of

I2015-0478

Misuse of state resources

49

State Hospitals, Department of

I2014-0430

Violations of the California Political Reform Act

23

State Hospitals, Department of,
Patton State Hospital

I2014-0948

Failure to work sufficient hours, misuse of state resources

Water Resources, Department of

I2014-1576

Waste of state funds

39

7
31

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