Report 2013-036 Recommendation 10 Responses

Report 2013-036: Indian Gaming Special Distribution Fund: Counties' Benefit Committees Did Not Always Comply With State Laws for Distribution Fund Grants (Release Date: March 2014)

Recommendation #10 To: San Diego, County of

If San Diego County's benefit committee believes that its processes for distributing grant funds are vital to its effective management of distribution fund grants, it should seek legislative authority to change its process. Otherwise, San Diego County's benefit committee should refrain from placing limits on the time available for grant recipients to spend the grant funds.

Annual Follow-Up Agency Response From October 2018

County of San Diego has incorporated revisions to the by-laws of the IGLCBC to reflect that the inclusion of a timeframe in the grant agreement is an administrative procedure for tracking purposes, based upon the time applicants request in initial applications. To continue having accounting controls on these grants, agreements will still include reporting time limits, but the revisions will allow Committee Staff to grant extensions requested by applicants. These by-laws were adopted by the IGLCBC on February 11, 2015 and the revisions were submitted on March 6, 2015. Therefore, the IGLCBC has implemented the State Auditor's recommendation by removing limits on the time available for grant recipients to spend the grant funds.

California State Auditor's Assessment of Annual Follow-Up Status: No Action Taken

As we indicate in our report, state law does not expressly give the benefit committee the authority to place time limits on the spending of grant funds because funds are supposed to be sent directly from the State to the grantee. Because San Diego's policy is to still set time limits, we assessed this recommendation as no action taken. However, it is also important to acknowledge that the Legislature has not appropriated any funding for mitigation grants since fiscal year 2013-14.

Annual Follow-Up Agency Response From October 2015

The County of San Diego has fully implemented an alternative solution as described in our previous response that we believe addresses the concern raised in the audit report and related recommendation. As such, the recommendation as issued in the report will not be implemented.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

1-Year Agency Response

County of San Diego has incorporated revisions to the by-laws of the IGLCBC to reflect that the inclusion of a timeframe in the grant agreement is an administrative procedure for tracking purposes, based upon the time grant applicants request in initial applications. To continue having accounting controls on these grants, agreements will still include time limits, but the revisions will allow Committee Staff to grant extensions requested by applicants. The San Diego IGLCBC still believes this is a narrow interpretation of the statue, and may consider recommendations to modify State Law in the future. These by-laws were adopted by the IGLCBC on February 11, 2015 and the revisions are attached in strikeout and underline format.

California State Auditor's Assessment of 1-Year Status: No Action Taken

As we indicate in our report, state law does not expressly give the benefit

committee the authority to place time limits on the expenditure of grant funds as funds are supposed to be sent directly from the State to the grantee. Because San Diego's policy is to still set time limits, we assessed this recommendation as no action taken.

6-Month Agency Response

This Audit Finding is listed that no action has been taken. We believe the auditor has given an unreasonably narrow interpretation of the statute. However, our practice has been to incorporate the grant agreement term the period of time requested by the grantee in the original application. This was not intended to require an unreasonable time limit for grant recipients, but merely an institutional control on the performance under the grant agreement. As indicated in the attached meeting minutes from April 9, 2014, the IGLCBC has a process established to extend agreements for grantees that have remaining funds, and will incorporate this process into future grant agreements. The IGLCBC will consider revisions to the bylaws prior to the one year response period for this audit, in response to the findings and to clarify this process. Those revisions will be provided to the California State Auditor when they are completed.

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

San Diego indicates it will consider revisions to the bylaws before the one year response and will provide those revisions when completed. Until we are able to assess any revisions provided we assess this as pending.

60-Day Agency Response

Additionally, the draft audit report finds that the IGLCBC should not place time limits on the time available for the grant funds. The County believes this is a narrow interpretation of the statute. The Countys practice has been to incorporate as the grant agreement term the period of time requested by the grantee in its application. This practice was not intended to require an unreasonable time limit for grant recipients, but is merely an institutional control on the performance under the grant agreement. However, the IGLCBC can revise the term section in the grant agreements to specify that the term of the agreement may be extended upon request.

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

San Diego states that it can revise its grant agreements to specify that the term of the grant agreement may be extended upon request. However, San Diego has not indicated that it has made this change and does not indicate that the recommendation is fully implemented.

All Recommendations in 2013-036

Agency responses received are posted verbatim.