Report 2014-107 All Recommendation Responses

Report 2014-107: Judicial Branch of California: 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 (Release Date: January 2015)

Recommendation #1 To: Judicial Council of California

To ensure that the compensation the AOC provides is reasonable, the Judicial Council should adopt procedures that require a regular and thorough review of the AOC's compensation practices including an analysis of the job duties of each position to ensure that the compensation aligns with the requirements of the position. This review should include comparable executive branch salaries, along with a justification when an AOC position is compensated at a higher level than a comparable executive branch position.

Annual Follow-Up Agency Response From November 2016

The Judicial Council of California (Judicial Council) has implemented the State Auditor's recommendation to the extent it deems advisable and will not be taking further action. The State Auditor's Office, based on its previous comments, seeks a commitment from the Judicial Council to regularly review compensation practices on a pre-established schedule as opposed to business need. The Judicial Council believes its executive management team are best placed to determine when further changes to compensation are necessary. The Judicial Council took the State Auditor's recommendation very seriously and, following the audit, hired an independent consultant to review our classification and compensation structure. The consultant's recommendations prompted the Judicial Council to change its compensation practices, effective January 2016, which resulted in salary reductions for many of our employees. To increase transparency, the Judicial Council has now posted on its website the salary ranges and job descriptions for each job classification, allowing the public to monitor the compensation levels for different job types. Finally, as noted in our previous response, the Judicial Council discussed its compensation review practices with CalHR and found that executive-branch agencies similarly evaluate changes to compensation based on business need. The Judicial Council will continue to follow the process used by executive-branch agencies.

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

1-Year Agency Response

The status reported for the six-month report has not changed.

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

As we noted in our assessment to the AOC's 60-day and 6-month responses, this recommendation is partially implemented because the AOC adopted procedures as we suggested. However, although the AOC's response indicates that it will perform a regular and thorough review of compensation practices, its adopted policy states that it will conduct reviews based on organizational needs as a result of recruitment/retention and modified organizational function. We will not consider this recommendation fully implemented until the AOC adopts a policy to regularly review its compensation practices.

6-Month Agency Response

An independent organization-wide classification and compensation study was initiated in 2014 based on recommendations of the Strategic Evaluation Committee appointed by the Chief Justice and a subsequent Judicial Council directive. Staff was provided their new classifications during the second quarter of 2015; the compensation portion of the study will be finalized by third quarter 2015.

In response to the Judicial Council 60-day response, the auditor indicated that they would not consider the recommendation to be fully implemented until a policy is adopted to regularly review its compensation practices rather than based on organizational needs. Council staff contacted CalHR to obtain their policy regarding classification and compensation review. CalHR does not have a periodic review system in place. We believe, therefore, that the Judicial Council's policy is consistent with the approach taken by CalHR for executive branch classification and compensation and consider this recommendation to be fully implemented.

(Judicial Council Personnel Policy 3.4, Classification and Compensation Management Program, is submitted as supporting documentation.)

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

As we noted in our assessment to the AOC's 60-day response, this recommendation is partially implemented because the AOC adopted procedures as we suggested. However, although the AOC's response indicates that it will perform a regular and thorough review of compensation practices, its adopted policy states that it will conduct reviews based on organizational needs as a result of recruitment/retention and modified organizational function. We will not consider this recommendation fully implemented until the AOC adopts a policy to regularly review its compensation practices.

60-Day Agency Response

An independent organization-wide classification and compensation study was initiated in 2014 based on recommendations of the Strategic Evaluation Committee appointed by the Chief Justice and a subsequent Judicial Council directive. The study will be completed in the second quarter of 2015.

Procedures requiring regular and thorough review of compensation practices were adopted and modified, effective February 19, 2015. The policy now outlines a process to establish a new classification and includes an annual reporting requirement to the Judicial Council governing body of changes to the classification and compensation structure.

The policy also requires that compensation levels remain appropriate and competitive with the executive branch as well as other comparable labor markets such as trial courts, cities, and counties.

(Judicial Council Personnel Policy 3.4, Classification and Compensation Management Program, is submitted as supporting documentation.)

California State Auditor's Assessment of 60-Day Status: Partially Implemented

This recommendation is partially implemented because the AOC adopted procedures as we suggested. However, although the AOC's response indicates that it will perform a regular and thorough review of compensation practices, its adopted policy states that it will conduct reviews based on organizational needs as a result of recruitment/retention and modified organizational function. We will not consider this recommendation fully implemented until the AOC adopts a policy to regularly review its compensation practices.

Recommendation #2 To: Administrative Office of the Courts

To ensure that its compensation structure is reasonable, the AOC should cease paying employees' share of retirement contributions.

60-Day Agency Response

This benefit was eliminated for 11 executive level employees identified by the CSA audit. We reported this to the Judicial Council on February 19, 2015. The benefit change will be processed effective July 1, 2015. (The Judicial Council ceased paying new executive level employees' share of retirement benefits back in October 2012.)

California State Auditor's Assessment of 60-Day Status: Fully Implemented

Recommendation #3 To: Administrative Office of the Courts

To ensure that its compensation structure is reasonable, the AOC should mirror the executive branch's practices for offering leave buyback programs in terms of frequency and amount.

Annual Follow-Up Agency Response From November 2016

In January 2016, the Judicial Council of California (Judicial Council) informed the State Auditor's Office that it had contacted executive branch agencies to better understand their policies on leave buyback programs. The Judicial Council learned there is no policy and that the decision to offer leave buyback for unrepresented employees is made by CalHR and the Department of Finance based on the availability of funds. Based on consultations with CalHR and the Department of Finance, the Judicial Council believes its existing policies are consistent with the executive branch and will not be taking further action on this recommendation. The Judicial Council's executive management team recognizes that the courts are underfunded and will continue to advocate for additional resources. The Judicial Council will evaluate the prudence of offering future leave buyback programs, if any, in the context of court funding levels and operational business need.

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

1-Year Agency Response

The status submitted for the six-month report has not changed.

California State Auditor's Assessment of 1-Year Status: Will Not Implement

Our recommendation states that the AOC should mirror the executive branch's practices for offering leave buyback programs in terms of frequency and amount. Such a policy could state that the AOC will offer leave buyback programs only at the same frequency and amount offered by the executive branch. Our recommendation is intended to prevent the AOC from offering leave buyback programs to its employees during fiscal crises. As we noted in our report on page 25, the AOC continued to provide the leave buyback benefit to its employees at a time when it was reporting that many courthouses had to lay off their employees, reduce hours, and close courtrooms. Thus, we do not believe that the current policy regarding the AOC's leave buyback program will preclude it from again offering this benefit to its employees during a potential future fiscal crisis.

6-Month Agency Response

In response to the Judicial Council's 60-day report, the auditor indicated that without a specific policy that mirrors the executive branch policy this recommendation cannot be considered to be fully implemented. Council staff received an April 3, 2015, Personnel Management Liaisons (PML) memorandum from CalHR regarding the offer of up to 40 hours of buy-back for excluded employees effective May 1, 2015. Council staff contacted the executive branch to obtain their policy on buy-back and was informed that there is no policy. The decision to offer leave buy-back for unrepresented employees is made by CalHR and the Department of Finance based on available state funds. Further, a department's participation is subject to the availability of departmental funds. The decision to offer leave buy-back for represented employees is subject to Memoranda of Understanding and the availability of departmental funds. We believe our policy is consistent with the executive branch practice and, therefore, consider this recommendation to be fully implemented.

California State Auditor's Assessment of 6-Month Status: Will Not Implement

Our recommendation states that the AOC should mirror the executive branch's practices for offering leave buyback programs in terms of frequency and amount. Such a policy could state that the AOC will offer leave buyback programs only at the same frequency and amount offered by the executive branch. Our recommendation is intended to prevent the AOC from offering leave buyback programs to its employees during fiscal crises. As we noted in our report on page 25, the AOC continued to provide the leave buyback benefit to its employees at a time when it was reporting that many courthouses had to lay off their employees, reduce hours, and close courtrooms. Thus, we do not believe that the current policy regarding the AOC's leave buyback program will preclude it from again offering this benefit to its employees during a potential future fiscal crisis.

60-Day Agency Response

In fiscal year 2013-2014, leave buy back for Judicial Council staff was consistent with the executive branch's program. The executive branch's approach is routinely considered by the judicial branch, among other considerations, in evaluating a leave buy-back option.

Effective February 19, 2015, the Judicial Council suspended leave buy back for the 2014-2015 and 2015-2016 fiscal year budget cycles to allow for a full analysis of the council's operating budget and how leave buy back is used in relation to the overall budget. At the conclusion of this period, and on an ongoing basis, the council will continue to review buy-back programs being offered by the executive branch or trial courts in considering the value and benefit of a buy-back program to the organization and the branch.

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

Our recommendation stated that the AOC should mirror the executive branch's policy in terms of frequency and amount. The AOC's response notes that the AOC will review the buyback programs being offered by the executive branch in considering the value and benefit of the program. We acknowledge that the AOC suspended the buyback program; however, without a specific policy in place that mirrors the executive branch, we conclude this recommendation is not implemented.

Recommendation #4 To: Administrative Office of the Courts

To increase its efficiency and decrease its travel expenses, the AOC should require its directors and managers to work in the same locations as the majority of their staff unless business needs clearly require the staff to work in different locations than their managers.

Annual Follow-Up Agency Response From November 2016

In response to the State Auditor's recommendation, the Judicial Council of California (Judicial Council) revised its hiring policy requiring those who are newly hired into supervisory and management positions to have the same primary work location as their direct reports. In last year's assessment, the State Auditor acknowledged this new policy but believed the recommendation was still only partially implemented because six managers continue to work in locations that are different than the majority of their staff. The Judicial Council will be closing its Burbank Office (in the Spring of 2017), thus resolving one of the six manager positions cited in the State Auditor's latest evaluation. However, for two of the six manager positions, the State Auditor had previously indicated on pages 26 and 27 of its report that it was entirely appropriate for the two directors over the Capital Program and Real Estate Services to work in different locations from their staff given the nature of the work. For the remaining positions, the Judicial Council's executive management team has concluded these assignments are appropriate based on business need. As a result, the Judicial Council will not be taking further action on this recommendation.

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

1-Year Agency Response

The status submitted for the six-month report has not changed.

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

As we note on page 26 of the report, six current managers work in different locations as the majority of their staff. The policy that the AOC implemented in response to our recommendation will serve only to require future managers to work in the same location as the majority of their staff.

6-Month Agency Response

A review of existing work locations and associated travel costs for office managers and directors was conducted and it has been determined that current employees will remain at their present location.

To address the issue for future hires, Judicial Council Personnel Policy 3.1, Hiring, was modified to require that future hires into supervisory and management positions have the same primary work location as a majority of their direct reports, unless otherwise approved by the Executive Office based on office needs. (Judicial Council Personnel Policy 3.1, Hiring, is submitted as supporting documentation)

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

As we note on page 26 of the report, six current managers work in different locations as the majority of their staff. The policy that the AOC implemented in response to our recommendation will serve only to require future managers to work in the same location as the majority of their staff.

60-Day Agency Response

Council staff is reviewing existing work locations for managers and directors as compared to their staff to determine if there are opportunities for improved efficiencies relative to location and travel. Additionally, council staff will consider this issue with future hires. Council staff anticipates completing the analysis and response for the third quarter of 2015. A response may also be impacted by the results of the classification and compensation study and outcomes from the Auditor-recommended cost-benefit analysis of moving operations to Sacramento.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #5 To: Administrative Office of the Courts

To ensure that it pays its employees the appropriate salaries for the locations in which they spend the majority of their work hours, the AOC should follow its policy to periodically verify that salary differentials are based on an employee's actual work location.

60-Day Agency Response

Effective February 19, 2015, Judicial Council Personnel Policy 4.2, Geographic Salary Differentials, was modified to require Human Resources to conduct a quarterly reconciliation of each employee's primary work location. Additionally, at the beginning of each fiscal year, office leadership will be required to provide Human Resources with each employee's primary work location. A reconciliation of employees' work locations identified a total of five discrepancies. These data entries were corrected in September 2014. (Policy 4.2 and the Human Resources reconciliation procedure are submitted as supporting documentation.)

California State Auditor's Assessment of 60-Day Status: Fully Implemented

Recommendation #6 To: Administrative Office of the Courts

To justify maintaining its headquarters in San Francisco and its additional space in Burbank, the AOC should conduct a thorough cost-benefit analysis of moving its operations to Sacramento. If the analysis determines that the financial benefits of consolidating its operations in Sacramento outweigh the costs of such a move, the AOC should begin the process of relocating to Sacramento.

1-Year Agency Response

An independent cost-benefit analysis was conducted. The analysis provided comprehensive quantitative and qualitative data and identified potential risks and benefits on consolidating operations that were weighed from a financial perspective but also, necessarily, an operations and service delivery perspective.

A 10-year horizon was used to account for lease expirations and payoff of a lease revenue bond in 2021.

Impacts on workforce, budget, real estate, working relationships, business continuity, productivity, and long-term effectiveness and efficiency of staff operations in meeting customer needs and public service obligations also were presented as key considerations.

Decisions Summary

- Terminate at expiration, or earlier as appropriate, office leases for Burbank, Governmental Affairs, and eight real estate/facilities management field offices.

- Consolidate operations into two locations: Sacramento and San Francisco, and consolidate field office staff in courthouse hubs.

Considering fiscal data only, cost-savings of up to $18 million may be realized over the 10-years. The SF location will see the most rent savings when the lease revenue bond is paid off. However, final determinations were based on what would allow the judicial branch to:

- Maintain without disruption ongoing key statewide work on initiatives such as stable funding and self-help assistance.

- Keep staff attrition to manageable levels.

- Have sustainable fiscal savings, the bulk of which are not from potential one-time labor costs.

Impacted programs/employees were advised of closures/consolidations on November 6. Implementation is under way with efforts to mitigate service impacts and employee layoffs.

The report is posted on the California Courts public website.

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

6-Month Agency Response

To ensure objectivity, a consultant has been retained to oversee this analysis. The analysis will be completed in the third quarter of 2015.

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

60-Day Agency Response

Council staff is gathering pertinent facilities, lease, human resources and market data. This data collection* will be completed in the second quarter of 2015.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #7 To: Administrative Office of the Courts

To reduce its expenses, the AOC should implement a policy that requires it to conduct a cost-benefit analysis for using temporary workers, contractors, or consultants instead of state employees before employing temporary workers, contractors, or consultants to do the work of AOC employees.

Annual Follow-Up Agency Response From November 2016

In its 60-day response from March 2015, the Judicial Council of California (Judicial Council) indicated that it had revised its policies over temporary workers and contractors. Policy 3.3, section (E) requires a cost-benefit analysis prior to placing a temporary worker on assignment and describes what should be considered in this analysis. This policy also describes the circumstances when the Judicial Council may retain a contractor or consultant instead of hiring a new employee, such as when the work to be performed requires such specialized and technical skills that such skills are not available through the Judicial Council's current job classification and compensation system. The Judicial Council does not believe additional changes to this policy are necessary and considers this recommendation to be fully implemented.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

1-Year Agency Response

To ensure objectivity, a consultant has been retained to review existing contractor usage and provide recommendations for the Administrative Director's consideration. The report will be provided in the first quarter of 2016.

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

6-Month Agency Response

To ensure objectivity, a consultant has been retained to review existing contractors. The consultant will conduct a cost-benefit analysis and provide recommendations on how and when it is appropriate for the Judicial Council to utilize contractors. The analysis will be completed by fourth quarter 2015.

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

60-Day Agency Response

Judicial Council Personnel Policy 3.3-Job Categories was modified to include a requirement that prior to retaining a temporary worker council staff must conduct both a cost-benefit and critical-need analysis. "Temporary worker" includes temporary agency workers and independent contractors. The policy includes an annual reporting mechanism to the Judicial Council. Guidelines for conducting the cost benefit analysis are being developed and will be applied retroactively to existing temporary agency and independent contractors. (Policy 4.2 is submitted as supporting documentation.) We anticipate that this recommendation will be fully implemented in the third quarter of 2015.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #8 To: Administrative Office of the Courts

To reduce its expenses, the AOC should follow its policies and procedures limiting the period of time it can employ temporary workers, and develop a similar policy to limit the use of contractors to a reasonable period of time but no more than one year.

Annual Follow-Up Agency Response From November 2016

In its 60-day response from March 2015, the Judicial Council of California (Judicial Council) indicated that it had revised its policies over temporary workers and contractors in response to this recommendation. Policy 3.3, section (E) states that appointments of temporary workers may not exceed six months in duration and independent contractors may not work more than one year unless pre-approved by the Chief Administrative Officer or Administrative Director. The Judicial Council does not believe additional changes to this policy are necessary and considers this recommendation to be fully implemented.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

1-Year Agency Response

Temporary Workers: In March of 2015 Judicial Council Personnel Policy 3.3 was amended to limit temporary agency worker assignments to six months without pre-approval by the Chief Administrative Officer or Administrative Director. A report on the duration of assignments for the 18 temporary staff assigned to the Judicial Council for 2015 is attached. Consistent with Policy 3.3, of the 18, pre-approval with required justification was requested and granted for the retention of three (3) temporary staff beyond the six-month timeframe.

Contractors: An independent review of existing contractors is being conducted to evaluate internal controls on contractor usage, and provide recommendations for the Administrative Director's consideration. The report will be provided in the first quarter of 2016.

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

The AOC's policy applies only to temporary workers. We will consider this recommendation to be partially implemented until the AOC develops a similar policy related to contractors.

6-Month Agency Response

The policy is in place and the Judicial Council will provide a status report in the one-year report.

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

60-Day Agency Response

Judicial Council Personnel Policy 3.3-Job Categories was amended to specify that temporary agency workers may not exceed six-months in duration, and independent contractors may not exceed one year in duration unless preapproved by the Chief Administrative Officer and/or Administrative Director. To ensure that the Judicial Council has adequate information, the policy includes an annual reporting mechanism to the governing body for any exceptions. (Policy 3.3 is submitted as supporting documentation.)

California State Auditor's Assessment of 60-Day Status: Partially Implemented

Although we agree that this recommendation is partially implemented because the AOC adopted a policy that includes an annual reporting mechanism, we cannot be sure that the AOC will adhere to this policy. As we note in our report, the AOC did not adhere to its policy to employ temporary workers for less than six months. Until the AOC demonstrates following its policy, we consider this recommendation partially implemented.

Recommendation #9 To: Administrative Office of the Courts

To reduce its expenses, the AOC should conduct a cost-benefit analysis for maintaining its pool of vehicles. If the analysis finds that the cost of maintaining the vehicles outweighs the costs of having its employees use other means of transportation, such as their personal vehicles, the AOC should reduce the number of vehicles it owns and leases. Also, the AOC should track and periodically inventory the vehicles in its fleet.

6-Month Agency Response

Utilizing the established policies and standards of the State of California's Department of General Services, council staff developed a Judicial Council Fleet Vehicle Policy that includes internal control guidelines on conducting a cost-benefit analysis prior to acquiring a vehicle as well as internal controls on the overall management of the fleet vehicles. The policy was used to conduct an analysis on the current fleet inventory of 46 vehicles and it was determined that based on the miles driven or utilization rate in 2014, the Judicial Council's fleet vehicle inventory should remain at 46 vehicles. These vehicles are used principally to support personnel responsible for statewide court facility maintenance in all 58 counties and court construction projects. An assessment of the fleet inventory will occur on a fiscal year basis.

(Judicial Council Fleet Vehicle Policy is submitted as supporting documentation)

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

60-Day Agency Response

Council staff identified 22 (one-third) of its 66 fleet vehicles to be eliminated based on an assessment drawing, in part, on Department of General Services policies on fleet vehicles as well as an assessment of vehicle mileage and the number of vehicles at each work location.

A fleet vehicle policy that will include internal control guidelines on conducting a cost-benefit analysis prior to acquiring a vehicle as well as an inventory tracking process is being developed. The guidelines will be used to analyze the remaining fleet inventory, (which is principally supporting personnel responsible for statewide court facility maintenance in all 58 counties and court construction projects), to determine if additional reductions are warranted. The analysis will be completed and any further changes implemented in the third quarter of 2015.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #10 To: Administrative Office of the Courts

To reduce its expenses, the AOC should cease reimbursing its office directors for parking at their headquarters by adopting the executive branch's parking reimbursement policies.

60-Day Agency Response

This benefit was eliminated and reported to the Judicial Council on February 19, 2015. The benefit change will be processed effective July 1, 2015.

California State Auditor's Assessment of 60-Day Status: Fully Implemented

Recommendation #11 To: Administrative Office of the Courts

To reduce its expenses, the AOC should cease its excessive reimbursements for meals by adopting the executive branch's meal and travel reimbursement policies.

Annual Follow-Up Agency Response From November 2016

The Judicial Council of California has no further information to share other than its previous response to the State Auditor in January 2016.

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

1-Year Agency Response

The status submitted on the six-month report has not changed.

California State Auditor's Assessment of 1-Year Status: Will Not Implement

Although we acknowledge that the AOC is taking steps to be more cost-effective by eliminating morning and afternoon breaks, the AOC's response does not address several items of concern that we identified in our report. In particular, the AOC provides reimbursements for certain meals at higher rates than the executive branch, as noted in Table 7 on page 24 of our report. Further, the AOC is providing meals for business meetings, which is not allowed under executive branch policy as we state on page 34 of our report. Moreover, the AOC does not address whether it will modify the existing catering contracts at the San Francisco and Sacramento work locations to ensure that these contracts conform to executive branch policies and reimbursement rates. Finally, the AOC's response ignores that trial court staff traveling to AOC-sponsored meetings can already receive reimbursement for travel costs from their own trial courts.

6-Month Agency Response

The Judicial Council carefully considered this recommendation with an emphasis on how the judicial branch conducts its business and decided to retain the practice of providing business meals, with some modifications.

The council's advisory body structure--served by volunteer judicial officers, court staff, and other subject matter experts--informs Judicial Council policymaking on matters affecting the branch. To achieve efficiencies and cost savings, most advisory body meetings are conducted through conference calls. When in-person meetings do occur, members typically travel a significant distance to participate. Approximately 65% of onsite meetings/trainings are multi-day events, and meals provided onsite are consistent with executive branch rates. Participants already qualify for meal reimbursement through the travel expense claim process (again at rates consistent with those used by the executive branch), therefore, the elimination of centralized business meals at these events would not result in cost reductions. Where onsite meetings are not possible, reimbursement rates for offsite events are higher, however, the most cost effective option is selected with negotiated rates approximately $15/meal lower than market rates. Modifying reimbursement rates would not result in cost savings as hotels routinely transfer meal savings into meeting room rental rates.

The Judicial Council is, however, modifying existing policy to be more cost-effective by 1) eliminating morning and afternoon breaks for onsite as well as offsite meetings, and 2) requiring that for onsite catering, a majority of participants must have travelled 25 or more miles to the meeting location. (Policy already requires a business reason to keep the group together during the meal period.)

California State Auditor's Assessment of 6-Month Status: Will Not Implement

Although we acknowledge that the AOC is taking steps to be more cost-effective by eliminating morning and afternoon breaks, the AOC's response does not address several items of concern that we identified in our report. In particular, the AOC provides reimbursements for certain meals at higher rates than the executive branch, as noted in Table 7 on page 24 of our report. Further, the AOC is providing meals for business meetings, which is not allowed under executive branch policy as we state on page 34 of our report. Moreover, the AOC does not address whether it will modify the existing catering contracts at the San Francisco and Sacramento work locations to ensure that these contracts conform to executive branch policies and reimbursement rates. Finally, the ACO's response ignores that trial court staff traveling to AOC-sponsored meetings can already receive reimbursement for travel costs from their own trial courts.

60-Day Agency Response

Because travel reimbursement and reimbursement for meals held on-site at Judicial Council office locations is already consistent with executive branch reimbursement rates, staff is conducting an analysis confined to the different meal reimbursement rate for offsite events for judges and court staff attending meetings or educational/training programs and the potential impact any changes would have on hotel contracts that generally factor meeting room rental costs into meal costs. Council staff anticipates completing the analysis in the third quarter of 2015.

California State Auditor's Assessment of 60-Day Status: Pending

The AOC does not note in its response whether it will eliminate providing business meals. This benefit is not provided to the executive branch. In addition, the AOC provides reimbursements for certain meals at higher than the executive branch rate, as noted in Table 7 of our report. Finally, the AOC does not address what actions it will take to modify its existing catering contracts at the San Francisco and Sacramento work locations.

Recommendation for Legislative Action

Once the AOC has identified savings related to its compensation and business practices, the Legislature should consider ways to transfer this savings to the trial courts.

Description of Legislative Action

As of January 2020 the Legislature has not taken action to address this specific recommendation.

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

Description of Legislative Action

The Legislature has not taken action to address this specific recommendation.

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

Description of Legislative Action

Legislation has not been introduced to address this recommendation.

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

Description of Legislative Action

Legislation has not been introduced to address this recommendation.

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

Recommendation for Legislative Action

To determine the cost to the State of providing support to the trial courts, the Legislature should take steps to clearly define the difference between local assistance expenditures and state operations expenditures. One method of accomplishing this would be to make the necessary statutory changes to classify as local assistance only those appropriations that the AOC passes directly to the trial courts or that the AOC expends on behalf of the trial courts with their explicit authorization. All other appropriations would be classified as state operations.

Description of Legislative Action

As of January 2020 the Legislature has not taken action to address this specific recommendation.

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

Description of Legislative Action

The Legislature has not taken action to address this specific recommendation.

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

Description of Legislative Action

Legislation has not been introduced to address this recommendation.

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

Description of Legislative Action

Legislation has not been introduced to address this recommendation.

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

Recommendation #14 To: Administrative Office of the Courts

To ensure that it spends funds appropriately, the AOC should develop and implement controls to govern how its staff can spend judicial branch funds. These controls should include specific definitions of local assistance and support expenditures, written fiscal policies and procedures as the rules of court require, and a review process.

Annual Follow-Up Agency Response From October 2019

The Judicial Council believes its existing policies and practices reasonably ensure that spending from legislative appropriations—whether for "support" or "local assistance"—are compliant with state law and guidance from the Department of Finance. As noted on page 41 of the auditor's report, state law affords the Judicial Council a great deal of flexibility in determining how it spends local assistance funds, and the auditor did not conclude the Council had spent these funds unlawfully. Further, the Judicial Council's spending activities are audited biennially by the State Controller's Office, which concluded in June 2019 that the Council had complied with the governing statutes, rules, regulations, and policies relating to the revenues, expenditures and fund balances under its control. The Judicial Council is also transparent during the annual budget process by disclosing in the Governor's budget how trial court funding is spent on activities that benefit the trial courts. Examples of the Judicial Council's spending on behalf of the courts include payments made under the Temporary Assigned Judges Program and for court-appointed dependency council. Finally, in fiscal year 2019-20 the Judicial Council continued to work collaboratively with the Legislature to increase financial support for the trial courts through the State's General Fund, thus minimizing further spending pressure on the State Trial Court Improvement and Modernization Fund.

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

We are disappointed that the Judicial Council continues to disregard our recommendation. As we state on page 41 of our report: "State law affords the Judicial Council a great deal of flexibility in determining how it spends local assistance funds, and with that flexibility comes the responsibility to spend those funds in the most transparent and justified manner." Our concern was based on finding that the Judicial Council spent local assistance funds on activities that were more closely associated with state operations. Thus, we concluded that "the manner in which the Judicial Council spends state operations and local assistance appropriations leads to a lack of accountability over public funds." Therefore, we standby our original recommendation.

Annual Follow-Up Agency Response From October 2018

The Judicial Council of California (Judicial Council) believes it has adequate internal controls to reasonably ensure that its spending from legislative appropriations—whether for "support" or "local assistance"—are compliant with state law and guidance from the Department of Finance. The Judicial Council is required to have the State Controller's Office (SCO) audit the revenues, expenditures and fund balances that are under the Judicial Council's control every other year. The previous SCO audit covering fiscal year 2015-16 concluded that the Judicial Council had complied with state rules, and the next audit covering fiscal year 2017-18 is expected to begin in November 2018. Finally, the Judicial Council fully discloses in the Governor's annual budget how it uses certain trial court funding—which is not distributed to the trial courts—for activities that benefit the trial courts. Spending under the Assigned Judges Program and payments made for court-appointed dependency council are examples.

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

We followed up with the Judicial Council and it provided the following response. Based on its response, it is unclear to us what steps the Judicial Council has taken to develop and implement controls to govern how its staff can spend judicial branch funds. Although we agree that the Judicial Council has flexibility on how its staff can spend judicial branch funds, internal controls will ensure that the Judicial Council's flexibility is reasonable.

"The Judicial Council of California believes it has provided the level of transparency in its spending activities as required by law. The State Controller's recurring audits of the Judicial Council—as well as the Judicial Council's ongoing discussions with the Department of Finance concerning the judicial branch's annual budget—help to ensure the Judicial Council's spending activities are both accountable and transparent to external stakeholders. From an internal operational standpoint, leadership from the Judicial Council's various offices are required to have recurring monthly meetings with internal budget staff, and topics include: (1) office spending relative to the approved budget; (2) the office's anticipated needs for additional funding; and (3) authorized versus filled staffing levels. Further, these monthly discussions are fund and appropriation specific, given that each office has different budgets assigned for each Project Cost Center (PCC) in our Oracle financial system, and each PCC can be further traced to a specific fund and appropriation. Discussions between Judicial Council management and budget staff are often verbal as the spending activity recorded in the accounting system is jointly reviewed and discussed. With the Judicial Council's transition to Fi$Cal earlier this year, monthly budget discussions focusing on office spending relative to legislative spending authority have and will continue. The Judicial Council appreciates the State Auditor's conclusion in its report that state law affords the Judicial Council a great deal of flexibility in determining how it spends local assistance funds, and Judicial Council staff take that responsibility seriously and will continue to respond to any further requests for additional information from either the Department of Finance or the Legislature."

Annual Follow-Up Agency Response From December 2017

Every other year, the State Controller's Office performs financial compliance audits of all revenues, expenditures and fund balances under the operational control of the Judicial Council of California (Judicial Council) per Government Code, section 77206(i). The last audit was issued in October 2017 for fiscal year 2015-16 and included a review of 235 expenditure transactions from 17 different funds. The objective of the review, among other things, was to evaluate whether spending was properly documented and consistent with state law and regulations. The State Controller's audit concluded the Judicial Council had "complied with governing statutes, rules, regulations and policies relating to revenues, expenditures and fund balance." Going forward, the Judicial Council will re-evaluate the need to further develop additional policies based on the State Controller's audit findings, if any. In addition to the normal GASB/GAAP accounting standards JCC has in place with respect to branch wide expenditures (supreme court, appellate, trial courts), the JCC budget staff are currently implementing a process of monthly reviews of JCC staff expenditures and that report will go directly to the Chief of Administration on staff expenditure patterns.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Our recommendation was that the Judicial Council develop and implement controls over the spending of judicial branch funds. An annual audit by the State Controller's Office (SCO) does not sufficiently implement our recommendation, but we agree that this annual audit will identify controls that the Judicial Council needs to strengthen.

Annual Follow-Up Agency Response From November 2016

All judicial branch funds have been appropriately categorized as either state operations or local assistance and the details of the budget can be found on the California Court's website (www.courts.ca.gov/finance.htm). The Judicial Council of California continues to work on further developing policies and procedures to improve controls over spending from these two different types of appropriations.

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented

1-Year Agency Response

The Judicial Council has worked with the Department of Finance to align Operations and Local Assistance expenditures. These adjustments will be reflected in the 2016-2017 Governor's Budget. It is anticipated that a defined set of controls will be ready for submittal to the Judicial Council by the second quarter of 2016.

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

6-Month Agency Response

The Judicial Council staff, in consultation with Judicial Council advisory bodies, will develop internal controls on expenditures of all judicial branch funds. Council staff anticipates completing this recommendation in the fourth quarter of 2015.

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

60-Day Agency Response

In consultation with the Trial Court Budget Advisory Committee, council staff is updating staff guidelines regarding appropriate uses for Trial Court Trust Fund and Trial Court Improvement and Modernization Fund monies consistent with the audit recommendations. This will include an annual training requirement for staff on use of the guidelines. Council staff anticipates completing the initial guidelines in the third quarter of 2015.

California State Auditor's Assessment of 60-Day Status: Pending

The AOC's response only notes that it will implement guidelines. We expect a clear policy that established internal controls over the spending of judicial branch funds, not just guidelines.

Recommendation #15 To: Judicial Council of California

The Judicial Council should develop rules of court that create a separate advisory body, or amend the current advisory committee's responsibilities and composition, that reports directly to the Judicial Council to review the AOC's state operations and local assistance expenditures in detail to ensure they are justified and prudent. This advisory body should be composed of subject matter experts with experience in public and judicial branch finance.

Annual Follow-Up Agency Response From December 2017

The Judicial Council of California (Judicial Council) continues to believe this recommendation has been fully implemented. In its evaluation of our response from last year, the State Auditor disagreed by raising questions as to whether the Judicial Branch Budget Committee contained subject matter experts in finance and voiced concerns over whether the Judicial Council will go through recurring financial audits. The Judicial Branch Budget Committee is comprised of superior court judges, an appellate court justice, and a Court Executive Officer from a large superior court. However, to further respond to the auditor's concerns, the Judicial Council notes that it has also created an Advisory Committee on Audits and Financial Accountability that serves as a clearinghouse for hearing all audit-related issues affecting the judicial branch. The audit committee's first meeting was held in October 2017 and one of the items discussed was the State Controller's financial compliance audit of the Judicial Council's spending activities.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

The Judicial Council provided evidence of the existence and membership of its new Advisory Committee on Audits and Financial Accountability. We believe this additional step fully implements the intent of our recommendation.

Annual Follow-Up Agency Response From November 2016

The Judicial Council of California (Judicial Council) has created a Judicial Branch Budget Committee, comprised of judges from different superior courts and justices from the courts of appeal, to assist the Judicial Council in exercising its duties under rule 10.101 of the Rules of Court pertaining to the judicial branch's budget, including planned spending by the Judicial Council. The committee's scope of work includes reviewing budget change proposals and making recommendations on the use of statewide emergency funding for the judicial branch. The recommendations from this committee, and the Judicial Council's actions on those recommendations, are made in open session where the public may comment on proposed budget allocations and spending. This committee has already met twice and its meeting materials (including agendas and audio recordings of the meetings) are posted at www.courts.ca.gov/jbbc.htm.

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

The AOC's response does not address whether the new committee is composed of subject matter experts with experience in public and judicial branch finance, who directly report to the Judicial Council. Further, in its previous response, the AOC indicated considering various approaches to implement this recommendation, including contracting for an annual financial audit of its operations. However, the AOC did not provide information on the status of the approaches it was considering.

1-Year Agency Response

Various approaches are being explored for consideration. This may include contracting with a firm/agency to conduct an annual financial audit of Judicial Council state operations and local assistance expenditures.

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

6-Month Agency Response

Judicial Council staff is working with Judicial Council advisory bodies to determine the most prudent course of action to undertake for the council to review its expenditures and ensure full compliance with policies and procedures.

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

60-Day Agency Response

Rules of Court are being reviewed to ascertain if changes are needed to assign oversight responsibility for Trial Court Trust Fund and Trial Court Improvement and Modernization Fund expenditures to the Trial Court Budget Advisory Committee and for the council's Executive and Planning Committee to assume oversight for all other Judicial Council expenditures. If rule amendments are required, changes will be made consistent with the council's rulemaking process and timeframes.

California State Auditor's Assessment of 60-Day Status: Pending

The AOC notes that it will determine whether the rules of court require a change. We expect that the AOC will implement this recommendation regardless of whether changes to the rules of court are required.

Recommendation for Legislative Action

To bring more transparency to the AOC's spending activities and to ensure that the AOC spends funds in a fiscally and legally prudent manner, the Legislature should require an annual independent financial audit of the AOC. This audit should examine the appropriateness of the AOC's spending of any local assistance funds.

Description of Legislative Action

As of January 2020 the Legislature has not taken action to address this specific recommendation.

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

Description of Legislative Action

The Legislature has not taken action to address this specific recommendation.

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

Description of Legislative Action

Legislation has not been introduced to address this recommendation.

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

Description of Legislative Action

Legislation has not been introduced to address this recommendation.

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

Recommendation #17 To: Judicial Council of California

To increase transparency, the Judicial Council should conduct a more thorough review of the AOC's implementation of the evaluation committee's recommendations by more closely scrutinizing the actions the AOC asserts it has taken to complete directives.

6-Month Agency Response

The Judicial Council's Executive and Planning (E&P) Committee held a public meeting on March 12-13, 2015, to review all completed Strategic Evaluation Committee recommendations/Judicial Council directives. E&P requested a new format for reporting on the status of implementation efforts and identified new categories to better reflect the implementation activities. A revised status report and webpage on the organizational restructuring of the council's staff has been developed. (See web page at: www.courts.ca.gov/19334.htm)

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

60-Day Agency Response

An open meeting of the Judicial Council Executive and Planning Committee is scheduled for March 12-13, 2015, to review all completed Strategic Evaluation Committee recommendations/Judicial Council directives. We expect to have fully implemented this recommendation in the third quarter of 2015.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #18 To: Judicial Council of California

To make the AOC's budget more understandable, the Judicial Council should require the AOC to report its budget in a more understandable and transparent manner, and in a manner that readily allows stakeholders and the public to know the full amount of the AOC's spending. Further, the Judicial Council should require the AOC to prepare and make public a high-level summary of how the judicial branch's budget relates to the appropriations from the State's budget.

Annual Follow-Up Agency Response From November 2016

The Governor's 2016-17 budget included detailed spending displays for both trial court spending, including funding not distributed to the courts, as well as spending by the various offices of the Judicial Council of California (Judicial Council). Further, the Judicial Council's public website (www.courts.ca.gov/finance) also contains similar information so interested parties need not search the Governor's budget for this information.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

1-Year Agency Response

As part of the 2016-2017 Governor's Budget, a special display of expenditures for the Judicial Council broken out by office, fund, and positions will provide greater clarity and transparency for stakeholders and the public. This display will complement an update to the existing special display in the Governor's Budget to further clarify Local Assistance expenditures for the trial courts. It will more clearly distinguish those expenditures made directly by trial courts from those made on behalf of trial courts or other entities.

In addition, following adoption of the 2016 Budget Act, the California Courts public website will display a chart identifying how the appropriations in the State Budget are broken down by branch entity. The chart will be updated annually when the Governor's Proposed Budget is released and again after a budget is enacted.

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

6-Month Agency Response

Working with the Judicial Council's Trial Court Budget Advisory Committee, and in consultation with the Department of Finance, council staff is evaluating options to more clearly display the council's budget to stakeholders and the public, and to prepare a high-level summary of how the budget relates to the appropriations from the State budget. We anticipate that this recommendation will be fully implemented in the first quarter of 2016.

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

60-Day Agency Response

Working with the Trial Court Budget Advisory Committee, and in consultation with the Department of Finance, council staff is evaluating options to more clearly display the council's budget to stakeholders and the public, and to prepare a high-level summary of how the budget relates to the appropriations from the State budget. We anticipate that this recommendation will be fully implemented in the first quarter of 2016.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #19 To: Administrative Office of the Courts

The AOC should conduct a comprehensive survey of the courts on a regular schedule—at least every five years—to ensure that the services it provides align with their responses. The AOC should re-evaluate any services that the courts identify as being of limited value or need.

Annual Follow-Up Agency Response From October 2019

The Judicial Council's voting members are the constitutional policy-making body for the judicial branch, thus they are best positioned to guide how administrative staff prioritize their work and ultimately deliver services to the courts. Trial court participation in the policy-making process is evidenced by the Council's more than 20 different advisory committees, many of which include judicial officers and managers from superior courts across the State. Important advisory committees such as the: Trial Court Budget Advisory Committee; Court Executives Advisory Committee; and Trial Court Presiding Judges Advisory Committee each provide the trial courts with multiple opportunities to influence and debate key policies. Importantly, the Judicial Council's policy decisions focus on the entire judiciary, which may result in specific policy decisions or priorities that are unpopular with certain courts or individual stakeholders. Regardless, the Judicial Council will continue to seek input from all trial courts when prioritizing work for the Judicial Council's staff and when determining how best to further the goals of the judicial branch.

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

We are disappointed that the Judicial Council continues to disregard our recommendation. We standby our original recommendation as we believe that a comprehensive survey of all courts on a regular basis will better align the services that the Judicial Council provides to the courts.

Annual Follow-Up Agency Response From October 2018

The Judicial Council of California (Judicial Council) has developed a survey tool to solicit input from court customers to measure the utilization and effectiveness of the Judicial Council's services. This tool allows the Judicial Council to utilize survey results to determine where there is a need to increase customer utilization or satisfaction with specific services. Over the last year, the survey tool has been refined for use by the Judicial Council's various offices and is available for use at their request.

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

We followed up with the Judicial Council and it provided the following response. Based on this response, we do not believe that the Judicial Council has made a good faith effort to ensure that it provides services that align with the needs of the courts.

"The Judicial Council has implemented this recommendation to the extent it deems advisable. We refer the State Auditor to our response to recommendation #20. In that response, we discuss how our administrative staff are needed most to effectuate the Judicial Council's policy decisions—which at times may be unpopular with certain courts or individual stakeholders. The Judicial Council's voting members are the constitutional policy-making body for the judicial branch and thus they—and not court-specific needs assessments—are best positioned to guide how administrative staff perform their work. Judicial Council staff intend to periodically use the court surveys developed during our Operational Planning and Alignment (OPA) activities to ensure we can continue to identify opportunities for continued growth and improvement."

Annual Follow-Up Agency Response From December 2017

The Judicial Council of California (Judicial Council) expects to periodically survey judicial branch entities as a component of its Operational Planning and Alignment (OPA) activities. A pilot survey was sent to trial and appellate courts for select services in May 2016, and the results are being evaluated to inform the design of future surveys. However, progress on OPA has been temporarily delayed as the Judicial Council's staff have been focused on disbursing and administering roughly $25 million in grants—as directed by the Legislature—through the highly detailed and competitive Court Innovations Grant Program. Regardless, the Judicial Council remains committed to the OPA evaluation process, which will be a continuing effort that does not have a formalized end date.

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

Annual Follow-Up Agency Response From November 2016

The Judicial Council of California (Judicial Council) has adopted a structured methodology for operational planning and alignment that includes a structure for regular surveying of council customers. In May of 2016, the Judicial Council conducted its first survey of trial and appellate courts for select services. The survey design will serve as the model for all future surveys.

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

Information that the AOC provided in response to our follow-up questions showed that its survey was intended to be the start of a process to fully survey the service it provides to the trial courts. Resolution of our recommendation will involve a comprehensive survey of all services the AOC provides as well as adoption of policy to perform that survey on a regular schedule.

1-Year Agency Response

The approach and timeframe outlined in the six-month response are on track.

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

In response to our inquiry of when it would complete its actions, the AOC provided us with the following timeline:

2015: 3rd—4th Quarter

- Operational planning and alignment—planning and initiation

- Customer Input: 4 in-person listening sessions convened with trial and appellate leadership of small, medium, and large courts on current services and future needs

- Analysis initiated to inform planned survey

2016: 1st—2nd Quarter

- Customer input

o Listening sessions with Supreme Court and Judicial Council members

o Follow-up with statewide survey to customers/clients

- Survey analysis on customer and staff operations needs

- Operational plan and performance measures development building on Judicial Council strategic plan foundation

2016: 3rd Quarter—2017: 2nd Quarter

- Develop structure for obtaining ongoing customer input

- Develop methodology to implement organization-wide workload analysis and evaluate future staffing needs

2017: 2nd Quarter/Ongoing

- Organizational effectiveness evaluation using performance measures

6-Month Agency Response

The Judicial Council has reevaluated the previously submitted timeline for this and related expansive recommendations and reduced it by six months. We now anticipate completing all tasks associated with the recommendations in Chapters 3 and 4 of the audit report by the second quarter of 2017.

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

60-Day Agency Response

We view Ch. 3 and Ch. 4 as interrelated and are, therefore, providing a combined response on recommendations. CalHR's workforce planning model is an important succession planning tool to build a sustainable workforce. However, we believe a broader organizational assessment will better address the intent of the recommendations, and ensure that council business is conducted efficiently and effectively while providing needed services to all stakeholders. The assessment will incorporate CSA recommendations with additional grounding in industry standard models (Amer. Soc. for Public Admin. and the Baldridge Nat. Quality Program from the Nat. Inst. of Standards and Tech). It will be conducted to: 1. Identify stakeholders needs; 2. Develop a strategic plan to meet those needs; and 3. Develop performance measures that allow management to determine success toward completing strategic objectives. This approach generally will follow the sequence set out below as certain elements depend on the completion of others: 1. (QTR 2, 2016): a) Conduct a comprehensive survey of courts on a regular basis—at least every 5 years—to ensure services provided align with their responses. Re-evaluate any services courts identify as being of limited value or need. (Ch. 3, rec. 1); b) Establish customer needs. (Ch. 4, rec. 2); 2. (QTR 1, 2017): a) Identify necessary work functions based on customer needs (Ch. 4, rec. 2); b) Establish mission, create a strategic plan based on court needs, and determine services to provide to achieve plan goals (Ch. 3, rec. 2); 3. (QTR 2, 2017) Conduct workload analysis (Ch. 4, rec. 2.); 4. (QTR 2, 2017): a) Create, track, and monitor performance measures; b) Evaluate performance-based budgeting for adoption (Ch. 4, rec. 2); 5. (QTR 4, 2017) Implement a protocol to calculate future staffing needs and changes based on workload analysis (Ch. 3, rec. 2); 6. (Ongoing) Periodically evaluate organizational effectiveness using performance measures (Ch.3, rec. 2)

California State Auditor's Assessment of 60-Day Status: Pending

We acknowledge that some of our recommendations require significant and time-intensive steps. However, we are concerned with the amount of time the AOC estimates it needs to complete the various steps. In particular, the AOC notes that it will not complete its development of a strategic plan until the first quarter of 2017, after it identifies the needs of its stakeholders--the courts. Our report suggests that developing a strategic plan and identifying the needs of stakeholders can take place concurrently. Thus we believe that, at minimum, the AOC should begin its strategic planning process as soon as possible, rather than waiting for the results of the identification of customer needs. We look forward to reviewing the AOC's updated timelines for completion of these various steps.

Recommendation #20 To: Administrative Office of the Courts

To justify its budget and staffing levels, the AOC should conduct the steps in CalHR's workforce planning model in the appropriate order. It should begin by establishing its mission and creating a strategic plan based on the needs of the courts. It should then determine the services it should provide to achieve the goals of that plan. The AOC should base its future staffing changes on the foundation CalHR's workforce planning model provides. Finally, the AOC should develop and use performance measures to evaluate the effectiveness of this effort.

Annual Follow-Up Agency Response From October 2018

After continuous consideration, multiple starts, and upon further reflection, the Judicial Council of California (Judicial Council) is changing the status of this recommendation to "Will Not Implement." In our previous responses, we had referenced our Operational Planning and Alignment (OPA) activities and periodic surveys of the courts. While these efforts are valuable and will continue, the Judicial Council respectfully disagrees that these court surveys should be the primary determinant of how our administrative staff prioritize their work. The Judicial Council and its staff have continued to support the tenets of its Strategic Plan developed in 2006 and updated in 2016. It is important to recognize that the judicial branch's strategic plan was approved by the voting members of the Judicial Council, who each serve on different appellate and superior courts across the State and thus bring diverse views to branch-wide policy making. Under California Rules of Court, Judicial Council members commit themselves to acting in the best interest of the judicial system as a whole and do not represent any particular constituency, despite their primary roles as judicial officers or court executives at specific courts. The State Auditor's recommendation—while thoughtful and well-intentioned—seeks to alter how our administrative staff prioritize their work by replacing the guidance provided by the Judicial Council's voting members with court-specific needs assessments. As the constitutional policy-making body of the judicial branch, the Judicial Council at times does and may need to create policies that will be unpopular with certain courts or individual stakeholders. Our administrative staff are needed most to effectuate the Judicial Council's policy decisions, and their work should not otherwise be prioritized based on the court-specific preferences of either the Courts of Appeal or the State's 58 superior courts.

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

Annual Follow-Up Agency Response From December 2017

The Judicial Council of California (Judicial Council) expects to periodically survey judicial branch entities as a component of its Operational Planning and Alignment (OPA) activities, which will be used to further inform policy decisions regarding staffing levels and services. A pilot survey was sent to trial and appellate courts in May 2016. However, progress on OPA has been temporarily delayed due to the Judicial Council's focus on awarding, disbursing, and monitoring roughly $25 million in grants provided under the Court Innovations Grant Program. Significant resources have been committed to developing grant requirements, evaluating proposals, and monitoring court spending in order to ensure the Court Innovations Grant program is a success and meets the Legislature's expectations.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From November 2016

After review and consideration of the CalHR workforce planning model, the Judicial Council of California (Judicial Council) has, to best meet its needs, adopted a structured model/methodology for operational planning and alignment that includes the following elements: a structure for regular surveying of council customers; a means of evaluating services for process improvements; a tool for identifying workload and workforce capacity planning; and a structure for annual operational planning; and the development of performance metrics. The model/methodology has been piloted within the organization. A strategy for implementation across Judicial Council offices is under development with plans to begin a phased roll out beginning in late 2016/early 2017, continuing as an ongoing process.

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented

1-Year Agency Response

The approach and timeframe outlined in the six-month response are on track.

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

In response to our inquiry of when it would complete it actions, the AOC provided us with the following timeline:

2015: 3rd—4th Quarter

- Operational planning and alignment—planning and initiation

- Customer Input: 4 in-person listening sessions convened with trial and appellate leadership of small, medium, and large courts on current services and future needs

- Analysis initiated to inform planned survey

2016: 1st—2nd Quarter

- Customer input

o Listening sessions with Supreme Court and Judicial Council members

o Follow-up with statewide survey to customers/clients

- Survey analysis on customer and staff operations needs

- Operational plan and performance measures development building on Judicial Council strategic plan foundation

2016: 3rd Quarter—2017: 2nd Quarter

- Develop structure for obtaining ongoing customer input

- Develop methodology to implement organization-wide workload analysis and evaluate future staffing needs

2017: 2nd Quarter/Ongoing

- Organizational effectiveness evaluation using performance measures

6-Month Agency Response

The Judicial Council has reevaluated the previously submitted timeline for this and related expansive recommendations and reduced it by six months. We now anticipate completing all tasks associated with the recommendations in Chapters 3 and 4 of the audit report by the second quarter of 2017.

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

60-Day Agency Response

We view Ch. 3 and Ch. 4 as interrelated and are, therefore, providing a combined response on recommendations. CalHR's workforce planning model is an important succession planning tool to build a sustainable workforce. However, we believe a broader organizational assessment will better address the intent of the recommendations, and ensure that council business is conducted efficiently and effectively while providing needed services to all stakeholders. The assessment will incorporate CSA recommendations with additional grounding in industry standard models (Amer. Soc. for Public Admin. and the Baldridge Nat. Quality Program from the Nat. Inst. of Standards and Tech). It will be conducted to: 1. Identify stakeholders needs; 2. Develop a strategic plan to meet those needs; and 3. Develop performance measures that allow management to determine success toward completing strategic objectives. This approach generally will follow the sequence set out below as certain elements depend on the completion of others: 1. (QTR 2, 2016): a) Conduct a comprehensive survey of courts on a regular basis—at least every 5 years—to ensure services provided align with their responses. Re-evaluate any services courts identify as being of limited value or need. (Ch. 3, rec. 1); b) Establish customer needs. (Ch. 4, rec. 2); 2. (QTR 1, 2017): a) Identify necessary work functions based on customer needs (Ch. 4, rec. 2); b) Establish mission, create a strategic plan based on court needs, and determine services to provide to achieve plan goals (Ch. 3, rec. 2); 3. (QTR 2, 2017) Conduct workload analysis (Ch. 4, rec. 2.); 4. (QTR 2, 2017): a) Create, track, and monitor performance measures; b) Evaluate performance-based budgeting for adoption (Ch. 4, rec. 2); 5. (QTR 4, 2017) Implement a protocol to calculate future staffing needs and changes based on workload analysis (Ch. 3, rec. 2); 6. (Ongoing) Periodically evaluate organizational effectiveness using performance measures (Ch.3, rec. 2)

California State Auditor's Assessment of 60-Day Status: Pending

We acknowledge that some of our recommendations require significant and time-intensive steps. However, we are concerned with the amount of time the AOC estimates it needs to complete the various steps. In particular, the AOC notes that it will not complete its development of a strategic plan until the first quarter of 2017, after it identifies the needs of its stakeholders--the courts. Our report suggests that developing a strategic plan and identifying the needs of stakeholders can take place concurrently. Thus we believe that, at minimum, the AOC should begin its strategic planning process as soon as possible, rather than waiting for the results of the identification of customer needs. We look forward to reviewing the AOC's updated timelines for completion of these various steps.

Recommendation #21 To: Judicial Council of California

To ensure that it provides services to the trial courts as efficiently as possible, the Judicial Council should explore implementing a fee-for-service model for selected services. These services could include those that are little used or of lesser value to the trial courts, as identified in our survey that we discuss in Chapter 3.

Annual Follow-Up Agency Response From October 2018

The fee-for-service model conflicts with the statutory intent of the Trial Court Funding Act. In 1997, California enacted Assembly Bill 233, the Lockyer-Isenberg Trial Court Funding Act (Stats. 1997, ch. 850), consolidating costs of operating California's trial courts at the state level. The Act was intended to allow the judicial branch to plan and use resources on a statewide basis to ensure equal access to and the fair application of justice. Implementation of a fee-for-service structure will conflict with the administrative efficiencies the Lockyer-Isenberg Trial Court Act sought to achieve. Additionally, a workgroup created in September 2012, by Governor Edmund G. Brown, Jr. and Chief Justice Tani G. Cantil-Sakauye evaluated the State's progress towards achieving the goals of AB 233. The workgroup found "numerous ways in which the judicial branch has adopted administrative efficiencies and has coordinated efforts between trial courts, including the provision of administrative, legal, financial, human resources, and technology services for courts to take advantage of economies of scale. It also includes the development of best practices to improve the quality of justice and uniformity of practices and procedures statewide." All of the progress in creating uniformity and utilizing economies of scale would be in jeopardy in the event a fee-for-service system is implemented in which only a few select courts that are able to pay for the services receive the professional service, technical assistance, and/or education and training. Although large courts with existing infrastructures may not be negatively impacted by a fee-for-service structure, depending upon the fees charged, small to medium courts may be unable to afford the services they currently receive. Without multiyear commitments from courts to fund requested services, it will be nearly impossible to budget for this type of operation or hire staff necessary to accomplish the requested services.

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

Annual Follow-Up Agency Response From December 2017

The Judicial Council of California (Judicial Council) will evaluate potential process improvements in the context of its Operational Planning and Alignment (OPA) activities. The Judicial Council is committed to the OPA process, which will include recurring activities (such as surveys of the trial courts) to better inform business decisions regarding programs and service delivery. Although the OPA process has been temporarily delayed due to the Judicial Council's focus on awarding, disbursing, and monitoring roughly $25 million in Court Innovations Grant funding, OPA will be an important and ongoing process with no formal end date.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From November 2016

As part of its review of workforce capacity planning, the Judicial Council of California (Judicial Council) will be looking at business process improvements using the recently adopted methodology for operational planning and alignment (see current status for recommendation 20) to determine if there are more cost effective means for providing services. Application of the methodology throughout the organization will support streamlining of services and activities. This, in turn, will assist with determining whether a fee-for-service model is applicable to the various services provided by the Judicial Council. A fee-for-service model will be a consideration when evaluating alternative, more cost-effective service delivery models. We anticipate reporting back on the evaluation of a fee-for-service model in the fourth quarter of 2017.

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented

1-Year Agency Response

The approach and timeframe outlined in the six-month response are on track.

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

In response to our inquiry of when it would complete its actions, the AOC provided us with the following timeline:

2015: 3rd—4th Quarter

- Operational planning and alignment—planning and initiation

- Customer Input: 4 in-person listening sessions convened with trial and appellate leadership of small, medium, and large courts on current services and future needs

- Analysis initiated to inform planned survey

2016: 1st—2nd Quarter

- Customer input

o Listening sessions with Supreme Court and Judicial Council members

o Follow-up with statewide survey to customers/clients

- Survey analysis on customer and staff operations needs

- Operational plan and performance measures development building on Judicial Council strategic plan foundation

2016: 3rd Quarter—2017: 2nd Quarter

- Develop structure for obtaining ongoing customer input

- Develop methodology to implement organization-wide workload analysis and evaluate future staffing needs

2017: 2nd Quarter/Ongoing

- Organizational effectiveness evaluation using performance measures

6-Month Agency Response

The Judicial Council has reevaluated the previously submitted timeline for this and related expansive recommendations and reduced it by six months. We now anticipate completing all tasks associated with the recommendations in Chapters 3 and 4 of the audit report by the second quarter of 2017.

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

60-Day Agency Response

Once the customer service survey of the courts has been completed and a strategic plan finalized, we will then evaluate the potential of implementing a fee-for-service model. We anticipate that this will be completed in the second quarter of 2017.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #22 To: Judicial Council of California

To justify the budget and staff level of the AOC, the Judicial Council should implement some or all of the best practices we identified to improve the transparency of AOC spending activities.

Annual Follow-Up Agency Response From October 2018

Upon further reflection, the Judicial Council of California (Judicial Council) believes it has implemented all of the recommended best practices that are the most beneficial to its operations. However, certain recommendations made by the State Auditor—such as implementing a fee-for-service model and prioritizing staff work based on court-specific needs instead of the Judicial Council's priorities—are respectfully declined and will not be implemented. The Judicial Council has adopted a strategic plan that guides the activities of its administrative staff. In addition, budget activities for the branch are open and transparent, particularly since any interested member of the public may listen to or attend meetings of the Judicial Branch Budget Committee and the Trial Court Budget Advisory Committee. Further public meeting materials are made available at the courts.ca.gov website and branch budget information can be found at: http://www.courts.ca.gov/finance.htm for those interested in learning about the judicial branch's budget. Finally, the State Controller's recurring and public audits of the Judicial Council's spending activities provide even further assurance that its spending decisions are appropriate and consistent with law.

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

Annual Follow-Up Agency Response From December 2017

This recommendation is partially implemented. In 2017, the Judicial Council developed a training program/resource guide titled Measuring Success (see attached handbook). This program builds upon the prior Operational Planning and Alignment methodology mentioned in Recommendation 21, and provides a structured and consistent approach to developing performance measures for council offices across the organization. It will be launched in early 2018 with plans to deploy across the organization during calendar year 2018.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From November 2016

The Judicial Council of California (Judicial Council) has initiated an operational planning and alignment effort to ensure it provides the most needed services to the courts and to the public. The Judicial Council has piloted this initiative with three internal offices, utilizing data from clients to promote better customer service and continual improvement. Specifically, the pilot effort entailed using client surveys to evaluate whether the services offered by these three offices are being utilized, and if so, to rank the criticality of these services on the judicial branch's operations. The results from this pilot effort will be used by both executive management and office managers to determine how best to use or reallocate each office's resources. The Judicial Council is planning to deploy this initiative to additional offices in calendar year 2017. Since this evaluation process will be a continuing effort that does not end, there is no target completion date for this initiative. Finally, the Judicial Council provides all required information for the annual budget process and has increased the transparency of its own budget by providing an additional display in the Governor's Budget for fiscal year 2016-17. This display provides information on the number of positions in the Judicial Council's various offices as well as information on prior spending by fund.

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented

1-Year Agency Response

The approach and timeframe outlined in the six-month response are on track.

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

In response to our inquiries of when it would complete its actions, the AOC provided us with the following timeline:

2015: 3rd—4th Quarter

- Operational planning and alignment—planning and initiation

- Customer Input: 4 in-person listening sessions convened with trial and appellate leadership of small, medium, and large courts on current services and future needs

- Analysis initiated to inform planned survey

2016: 1st—2nd Quarter

- Customer input

o Listening sessions with Supreme Court and Judicial Council members

o Follow-up with statewide survey to customers/clients

- Survey analysis on customer and staff operations needs

- Operational plan and performance measures development building on Judicial Council strategic plan foundation

2016: 3rd Quarter—2017: 2nd Quarter

- Develop structure for obtaining ongoing customer input

- Develop methodology to implement organization-wide workload analysis and evaluate future staffing needs

2017: 2nd Quarter/Ongoing

- Organizational effectiveness evaluation using performance measures

6-Month Agency Response

The Judicial Council has reevaluated the previously submitted timeline for this and related expansive recommendations and reduced it by six months. We now anticipate completing all tasks associated with the recommendations in Chapters 3 and 4 of the audit report by the second quarter of 2017.

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

60-Day Agency Response

We view Ch. 3 and Ch. 4 as interrelated and are, therefore, providing a combined response on recommendations. CalHR's workforce planning model is an important succession planning tool to build a sustainable workforce. However, we believe a broader organizational assessment will better address the intent of the recommendations, and ensure that council business is conducted efficiently and effectively while providing needed services to all stakeholders. The assessment will incorporate CSA recommendations with additional grounding in industry standard models (Amer. Soc. for Public Admin. and the Baldridge Nat. Quality Program from the Nat. Inst. of Standards and Tech). It will be conducted to: 1. Identify stakeholders needs; 2. Develop a strategic plan to meet those needs; and 3. Develop performance measures that allow management to determine success toward completing strategic objectives. This approach generally will follow the sequence set out below as certain elements depend on the completion of others: 1. (QTR 2, 2016): a) Conduct a comprehensive survey of courts on a regular basis—at least every 5 years—to ensure services provided align with their responses. Re-evaluate any services courts identify as being of limited value or need. (Ch. 3, rec. 1); b) Establish customer needs. (Ch. 4, rec. 2); 2. (QTR 1, 2017): a) Identify necessary work functions based on customer needs (Ch. 4, rec. 2); b) Establish mission, create a strategic plan based on court needs, and determine services to provide to achieve plan goals (Ch. 3, rec. 2); 3. (QTR 2, 2017) Conduct workload analysis (Ch. 4, rec. 2.); 4. (QTR 2, 2017): a) Create, track, and monitor performance measures; b) Evaluate performance-based budgeting for adoption (Ch. 4, rec. 2); 5. (QTR 4, 2017) Implement a protocol to calculate future staffing needs and changes based on workload analysis (Ch. 3, rec. 2); 6. (Ongoing) Periodically evaluate organizational effectiveness using performance measures (Ch.3, rec. 2)

California State Auditor's Assessment of 60-Day Status: Pending

We acknowledge that some of our recommendations require significant and time-intensive steps. However, we are concerned with the amount of time the AOC estimates it needs to complete the various steps. In particular, the AOC notes that it will not complete its development of a strategic plan until the first quarter of 2017, after it identifies the needs of its stakeholders--the courts. Our report suggests that developing a strategic plan and identifying the needs of stakeholders can take place concurrently. Thus we believe that, at minimum, the AOC should begin its strategic planning process as soon as possible, rather than waiting for the results of the identification of customer needs. We look forward to reviewing the AOC's updated timelines for completion of these various steps.

All Recommendations in 2014-107

Agency responses received are posted verbatim.