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Katy Grimes

State Auditor Issues Scorching Report to Admin Authority of CA Courts System

A scorching report from California State Auditor Elaine Howle, found that the Administrative Office of the Courts, now called the Judicial Council, spent $386 million over four years on statewide services that nearly half of California’s 58 trial courts don’t use – including $186 million on contractors and consultants.

Now, the Administrative Office of the Courts is trying take away the authority for decision making of trial court funds from the independent Trial Court Budget Advisory Committee, and give it to the Judicial Council’s Committee on Accountability and Efficiency — the same committee that approved big raises for top AOC officials as its first official action under its then-chair, Justice Cantil-Sakauye.

It’s akin to City Councils voting for their own raises.

According to the Alliances of California Judges, “That committee is currently chaired by longtime Judicial Council insider, Justice Richard Huffman, and its meetings are for the most part ‘conducted electronically’ and closed to the public.”

State Auditor Elaine Howle recently issued the stinging rebuke of the AOC, and took particular note of the failings of the Judicial Council’s Advisory Committee on Financial Accountability and Efficiency for the Judicial Branch.  “It is unclear how the financial advisory committee can ensure accountability of the AOC when it does not exist independently of the AOC, it does not review the AOC’s expenditures, and the AOC can override the financial advisory committee’s recommendations to the Judicial Council,” Howle wrote.

“The Accountability Committee, contrary to its name and its charge, has served as nothing more than a fig leaf for AOC pay spikes and the diversion of trial court funds to the disastrous CCMS project,” according to the Alliance of California Judges.

You’ll recall that the Alliance of California Judges formed in Sept. 2009 in response to the unprecedented financial crisis and budget cuts facing the judicial branch, at the same time the $2 billion California courts computer system mismanagement debacle was discovered, paid for with money allotted for state trial court operations. This unbelievably high cost on a faulty computer system came at the same time courtrooms were closing, courthouse employees were furloughed, and criminal and civil cases were (and still are) taking record time to come to trial.

The Alliance was born out of a concern that the Administrative Office of the Courts does not have the best interests of the Judiciary at heart, and formed to challenge the operations of the AOC. It appears not much has changed – other than the recent damning audit by the state’s Auditor.

The Audit

The State Auditor used a subtitle: “Because of Questionable Fiscal and Operational Decisions, the Judicial Council and the Administrative Office of the Courts Have Not Maximized the Funds Available for the Courts.”

The auditor’s review of the funds administered by the judicial branch and the Administrative Office of the Courts (AOC), highlighted the following:

The Judicial Council did not adequately oversee the AOC in managing the judicial branch budget, which allowed the AOC to engage in questionable compensation and business practices. The AOC:

  • Provides its staff with generous salaries and benefits—the AOC pays eight of its nine office directors more than the governor and many other high-ranking executive branch officials receive.
  • Employs over 70 contractors and temporary employees and could save about $7.2 million per year by using state employees in comparable positions.
  • Maintains a fleet of 66 vehicles without requiring its offices to justify the need.
  • Made about $386 million in payments over the last four years on behalf of trial courts using funds appropriated to them but could have paid a portion of those payments from its own funds.
  • The AOC has sole autonomy in deciding how to spend certain judicial branch funds due to the lack of Judicial Council’s involvement in the budgeting process.
  • The AOC has few policies, procedures, or controls in place to ensure funds are appropriately used and spent and, unlike the executive branch, is not required to undergo an annual independent financial audit.
  • Although it provides services to the courts, the AOC has never comprehensively surveyed the courts to identify the needs of the courts and ensure that services it provides are useful.

“The AOC has also made questionable business decisions to the potential financial detriment of the rest of the judicial branch,” the audit said. “Moreover, had the Judicial Council reviewed the AOC’s financial information in detail, it might have identified that the AOC spent certain judicial branch funds in a questionable manner.”

The auditor had more to say: “The lack of Judicial Council involvement in the budgeting process resulted, in some cases, in the AOC having sole autonomy in deciding how to spend certain judicial branch funds. This practice is of particular concern as it relates to the AOC’s compensation practices and business decisions. Of equal concern is the fact that the AOC has few policies, procedures, or controls in place to ensure that its employees expend funds appropriately, or for how they should charge expenditures to appropriations.”

“Because the AOC’s primary function is to provide services to the courts, we expected it to have taken steps to identify the needs of the courts in a comprehensive manner,” the auditor said. “For example, it could periodically survey them to determine how often they have used the services that it offers. However, we found that the AOC has never surveyed the courts in this manner. Therefore, we surveyed the trial courts, courts of appeal, and the Supreme Court to determine whether they have used each of the services that the AOC asserted that it provides. The results illustrate the importance of periodically determining the courts’ needs. In response to our survey, courts indicated that they have used some services more than others, but that each trial court has used an average of 55 percent of the services that the AOC provides. The results also demonstrate that the needs of the courts change over time—especially during a fiscal crisis—which further supports the importance of regular surveys.”

Of those services, Fresno Superior Court Judge Kent Hamlin said the AOC would be far more efficient if it went to a fee for service operation. “Tiny little courts can’t afford to have in-house experts for everything,” Hamlin explained. “So they (AOC) have services to offer some courts.” But the way it’s currently done, Hamlin said is duplicative, and not useful for many of the larger courts.

The State Auditor concluded: “Given the lapses in the Judicial Council’s oversight and the AOC’s decision making that we identify in this report, we believe significant change is necessary to ensure that the State’s courts receive the critical funding they require to provide access to justice to all Californians.”

KEY FINDINGS of the State Auditor’s Report

During our review of the funds administered by the judicial branch and the AOC, we noted the following:

  • While courtrooms have had to close or reduce their hours and dismiss thousands of court employees, the AOC continued to offer its employees excessive salaries and generous benefits and made other costly decisions.
    •   The salaries of 88 AOC employees are higher than those of the executive branch’s highest paid executives and for 22, their salaries exceed comparable executive branch salaries by more than $1 million annually.
    •   The AOC provided its staff with certain benefits that exceeded those in the executive branch and amounted to $5.4 million over a four-year period.
    •   Maintaining three work locations—San Francisco, Sacramento, and Burbank—is costly and inefficient. The AOC could save over $5 million each year by consolidating offices in Sacramento where the property lease rates are lower.
    •   The AOC spent $13.5 million on 55 contractors during fiscal year 2013–14. We estimate that the AOC could have saved about $7 million per year if it had used state employees in comparable positions.
    •   It has not justified its decision to maintain a fleet of at least 66 owned or leased vehicles.

The California State Auditor’s report can be found HERE.

Next: Changing the rules midstream

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