Report 2001-117 Summary - February 2002

Superior Courts:

The Courts Are Moving Toward a More Unified Administration; However, Diverse Service, Collection, and Accounting Systems Impede the Accurate Estimation and Equitable Distribution of Undesignated Fee Revenue

HIGHLIGHTS

Our review of certain court-related fees and the fiscal and administrative oversight of superior court operations found that:

  • The funding act addressed the disposition of some fees, but did not specify who would receive others, referred to as undesignated fees.

  • Due to the decentralized nature of the superior courts' accounting and collection processes, it is prohibitively complex to determine the precise amount of revenue generated by undesignated fees.

  • We estimated that the largest division in each of the three largest superior courts together generated $17.4 million in undesignated fee revenue during fiscal year 2000-01, most of which was distributed to the counties in accordance with locally negotiated agreements.

  • Several issues must be resolved before the State can implement a consistent and equitable distribution of undesignated fee revenue.

  • The Administrative Office of the Courts has initiated a wide-reaching management system for superior court resources; however, such actions will not ease efforts to determine how much revenue undesignated fees generate.

RESULTS IN BRIEF

The Lockyer-Isenberg Trial Court Funding Act of 1997 (funding act) made sweeping changes to the funding of the superior court system, effectively transferring responsibility for financing court operations from the counties to the State. As a result, the disposition of certain court-related fees came into question. Although the funding act addressed the disposition of some fees, it did not specify who should receive others, referred to as undesignated fees. This has created an ongoing debate between the superior courts and the counties over who should retain the revenue from such undesignated fees. A working group composed of selected court and county representatives, formed to determine the appropriate disposition of these fees, disbanded in late 1999 before reaching a consensus on the appropriate disposition of 47 of the undesignated fees it identified. As a result, the courts currently distribute this revenue on the basis of the local agreements they negotiated with the counties.

Because of the decentralized nature of the superior courts' accounting and collection processes, a precise and comprehensive calculation of revenue that the undesignated fees generate would be prohibitively complex. Although the superior courts we reviewed agreed to unify their former municipal and superior courts at least two years ago, the Administrative Office of the Courts (AOC) stated that efforts are ongoing statewide to consolidate those services that support court operations. In the meantime, these courts use highly decentralized collection and accounting processes, in which they sometimes aggregate certain designated and undesignated fees. Consequently, they do not always report how much revenue the undesignated fees generate individually. We examined the largest division in each of the three largest superior courts and determined that undesignated fees generated about $17.4 million in fiscal year 2000-01, or 9 percent of the divisions' total combined revenue, and that the superior courts distributed the vast majority of this revenue to the counties. The civil assessment penalty, imposed for an individual's failure to appear in court or pay a previously imposed fine, represented 58 percent of the $17.4 million, making it the largest revenue generator.

Before the State can implement a consistent and equitable distribution of undesignated fees, it must resolve several important issues. The California Constitution requires that fee revenue be used to offset the cost of providing services. Thus, it will be necessary to determine who incurs the cost related to each fee in each superior court before determining who should receive that revenue. Currently, the entities providing certain services vary from county to county; therefore, a uniform statewide designation of fees would be vulnerable to constitutional challenge. Additionally, the list of undesignated fees that the working group prepared contains errors, and though the courts we reviewed properly administered these fees, the list requires correction.

In an attempt to address some of the administrative confusion that resulted from the funding act, the AOC has initiated efforts to develop a wide-reaching management system for superior court resources. Such actions will not ease efforts to determine how much revenue undesignated fees generate because the majority of this revenue is distributed to the counties and therefore is outside the courts' control. However, the AOC hopes that its efforts will help to ensure that the superior courts handle and report their resources in a sufficient and consistent manner. To this end, it has recently published the Trial Court Financial Policies and Procedures Manual, which outlines some of the requirements the superior courts must meet, now that they are state funded. The AOC has also begun to develop a statewide accounting software system so that the superior courts will no longer need to rely on the counties for their accounting needs. Finally, it has sponsored legislative changes that increase its authority and thus should aid in its ability to meet its responsibilities to monitor the superior courts.

RECOMMENDATIONS

To make sure that undesignated fees are properly identified and distributed, the AOC should review and correct the working group's list of these fees. Once this list is complete and accurate, the AOC should direct each superior court to identify the entity in its jurisdiction that incurs the cost of providing the service related to each fee on the list. It should also direct the superior courts to ensure that, in their agreements with their respective counties, the courts distribute each of these fees to the entity incurring the cost. Finally, the AOC should seek legislation designating the distribution of charges other than fees, such as penalties and fines.

AGENCY COMMENTS

The AOC concurs with our findings and is taking steps to implement our recommendations.


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