Report I2011-0837 Recommendation 4 Responses

Report I2011-0837: California Department of Veterans Affairs: Wastefulness, Failure to Comply With State Contracting Requirements, and Inexcusable Neglect of Duty (Release Date: October 2013)

Case Number I2011-0837

Recommendation #4 To: Veterans Affairs, Department of

Institute a policy that requires all payments of recreation fund moneys to a person or business in the amount of $5,000 or more during a fiscal year and any contract involving recreation fund enterprises be presented to the recreation fund advisory board (now known as the Morale, Welfare, and Recreation Committee) at a public meeting for an advisory vote prior to the payment being made.

Agency Response From October 2016

Veterans Affairs stated that with the passing of Senate Bill 543 in 2016, all Morale, Welfare, and Recreation fund monies are now merged into a single State Treasury account that will be distributed each year according to an allocation formula and with enhanced structure and oversight. In accordance with the bill, any homes that do not have Morale, Welfare, and Recreation committees will form them beginning in January 2017. In addition, Veterans Affairs is working to promulgate regulations that will clarify the role of these committees. This process will include input from residents and stakeholders and the collection of public comments.

California State Auditor's Assessment of Status: Fully Implemented


Agency Response From October 2015

Veterans Affairs reported that it recently requested the Department of Finance (Finance) to review its recreation fund program. Veterans Affairs stated that it anticipated recommendations from Finance that pertain to the composition and high level of involvement of a recreation fund committee at each veterans home. Veterans Affairs stated that even though each home has a process that includes residents' input about recreation fund expenditures, it believes the processes should be as uniform as possible system-wide. Thus, it will ensure that any new procedures resulting from Finance's recommendations reasonably incorporate resident input into expenditure decisions of its recreation funds. Veterans Affairs did not provide us with an expected completion date for these actions.

California State Auditor's Assessment of Status: Pending


Agency Response From April 2015

Veterans Affairs reported that it believes additional steps may be needed before implementing the draft procedures it provided to us in December 2014. Thus, Veterans Affairs stated that it convened a team to further explore potential issues and identify options to resolve them. However, Veterans Affairs did not provide us with an expected completion date for these actions.

California State Auditor's Assessment of Status: Pending


Agency Response From December 2014

Veterans Affairs stated in December 2014 that the new policy it has drafted to address our recommendation would be in place by January 2015. A draft version of the policy was provided to our office for our review.

The draft policy states that although the administrator of each home is ultimately responsible for approving the recreation fund's budget proposal, the administrator is required to seek the valuable input of the allied council (made up of elected representatives of the veterans home residents) and key employees of the home. Other than this statement, the draft policy does not specify any minimum requirements for when or how the administrator will solicit input from the home's residents. In July 2014, Veterans Affairs stated that its new policy would include enabling the homes' allied councils to work with home administrators on recreation fund spending plans and require Veterans Affairs to present regular reports on recreation fund expenditures to the residents. However, the draft policy did not reflect these intentions.

California State Auditor's Assessment of Status: Pending


Agency Response From September 2014

Veterans Affairs reported in July 2014 that it was working on new policies and procedures that would address our concern. For example, Veterans Affairs stated that the new procedures would include enabling the homes' allied councils to work with home administrators on recreation fund spending plans and requiring Veterans Affairs to present regular reports on expenditures to the residents. However, Veterans Affairs has not yet provided us with its new policies and procedures but it stated that it expected to complete them in October 2014.

As the California State Auditor's Office has not yet been provided with copies of the new policies and procedures, we are unable to determine whether Veterans Affairs' alternative solution will adequately address our recommendation.

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


Agency Response From May 2014

Veterans Affairs reported that it determined our recommendation was too restrictive. Specifically, it asserted that requiring advisory votes for recreation fund expenses would affect dozens of payments every year by the home in question, and it would impose restrictions on the use of the recreation fund that are beyond those imposed by the State Contracting Manual and the State Administrative Manual. Instead, Veterans Affairs stated it would "continue to discuss the [recreation] fund as well as specific projects with residents, and statutory notification requirements for [recreation] fund budgeting will continue to be followed."

We disagree with Veterans Affairs' position that veterans home residents should not have a formal role in the process for deciding how the funds set aside for their welfare should be spent or how recreation fund enterprises should be operated. As mentioned in our report, residents of the home were not informed that a recreation fund enterprise was going to build an adventure park on the grounds of their retirement home until they saw a helicopter flying overhead carrying large wooden beams for the construction of a zip line outside their windows. We remain firm in our contention that Veterans Affairs should specify in policy a formal advisory role for veterans home residents regarding recreation fund projects and significant expenditures.

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


Agency Response From March 2014

In December 2013, Veterans Affairs told us that before making any policy changes it wanted to receive a report from the Department of Finance regarding an audit it was conducting of the accounting and contracting procedures of the veterans home. Veterans Affairs received that report in January 2014, but the report did not mention our recommendation or anything similar to it. Subsequently, Veterans Affairs has not provided any further update regarding its implementation of this recommendation.

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


Agency Response From November 2013

Veterans Affairs has not provided any additional information.

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


Agency Response From September 2013

Veterans Affairs did not address specifically our recommendation to institute a policy that requires all payments from a home's recreation fund in the amount of $5,000 or more during a fiscal year and any contract involving recreation fund enterprises be presented to the home's Morale, Welfare, and Recreation Committee at a public meeting for an advisory vote prior to the payment being made. Instead, Veterans Affairs stated that it would increase recreation fund transparency through resident meetings and make quarterly recreation fund statements available to the residents of the veterans homes. It also added that it had distributed a memorandum in August 2013 to all home administrators providing additional guidance regarding recreation fund expenditures. However, this memorandum only provided guidance about what types of expenditures may be made from a recreation fund. As Veterans Affairs did not address our recommendation specifically in its response, we are unable to determine whether it intends to implement our recommendation.

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


All Recommendations in I2011-0837


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