Report 2012-603 Recommendation 3 Responses

Report 2012-603: High Risk Update: State Agencies Credited Their Employees With Millions of Dollars Worth of Unearned Leave (Release Date: August 2014)

Recommendation #3 To: University, California State

To correct the erroneous leave hours we identified in our analysis of the leave accounting system related to the CSU, CSU's Office of the Chancellor should work with the CSU campuses to review and take the appropriate action to correct the errors by January 2015.

1-Year Agency Response

The data we received from the California State Auditor that listed the erroneous leave hours included 797 potentially affected employees. Once we determined that many items were not actually erroneous and after applying other factors such as statute of limitations timelines and cost/benefit parameters, ultimately, we concluded that leave balances for only 35 employees (four percent of those initially identified) required adjustment. Further, eight of those employees have since retired. The total dollar value of all the adjustments was $39,517.68. The collective bargaining agents whose respective members were affected were notified and an official (technical letter) communication was distributed by our systemwide Human Resources office on May 22, 2015 to all campuses. The technical letter contained instructions for the relevant campuses to notify the affected employees and make the necessary adjustments for the validated erroneous leave hours.

While we did not track the staff time that was required to review the data, establish validation procedures, and implement adjustment protocols, it should be noted that it took considerable time and effort, at both the Chancellor's Office and the five affected campuses, to accomplish this effort.

California State Auditor's Assessment of 1-Year Status: Fully Implemented

After applying factors such as statute of limitations, the California State University stated that it was able to recoup nearly $40,000 in erroneous leave hours. This amount does not include the value of erroneous sick leave hours which the California State University reported to the California Public Employees Retirement System for adjustment. Because the State converts unused sick leave to state service credit upon an employee's retirement, these errors might have improperly increased the State's pension payments to the employees. Further, the California State University notes that it took considerable time and effort to correct the errors we identified. It is the California State University's responsibility to accurately account for its employees' leave.

6-Month Agency Response

We have provided the list of erroneous leave hours to each of the affected campuses and they have begun verifying the information. In addition, our Office of General Counsel is finalizing its review of the proposed guidelines for resolving the identified errors. The proposed guidelines address statute of limitations and other recoupment considerations, including cost/benefit parameters. We anticipate resolution of the identified errors to be completed by the end of March 2015. However, many of the affected employees are represented by unions and therefore, the planned approach may have collective bargaining implications that need to be resolved prior to initiating reconciliation of the validated erroneous leave hours.

California State Auditor's Assessment of 6-Month Status: Partially Implemented

60-Day Agency Response

We received the list of erroneous leave hours and we are reviewing the data. As noted in the audit report, some of the transactions date back to 2008. In addition, some of the individual transaction errors are as small as .001 hours and total less than one hour per person. We are conferring with our Office of General Counsel and others in an effort to determine any statute of limitations or other recoupment considerations, including cost/benefit parameters for resolving the identified errors.

California State Auditor's Assessment of 60-Day Status: No Action Taken

All Recommendations in 2012-603

Agency responses received are posted verbatim.