Report 2012-105 Summary - November 2012
Departments of Public Health and Social Services:
Weaknesses in the Administration of the Child Health and Safety Fund and the State Children's Trust Fund Limit Their Effectiveness
Our audit of the administration of the Child Health and Safety Fund (health and safety fund) and the State Children's Trust Fund (trust fund) highlighted the following:
- The Department of Health Services (Health Services) and the Department of Public Health (Public Health) violated state law by hiring a private contractor to manage the Kids' Plates Program, rather than having state employees perform the work.
- The contractor performed services without an approved contract, and was unable to award any funds that could have been used to help prevent unintentional childhood injuries.
- Health Services and Public Health spent roughly 40 percent of their total appropriations received during four fiscal years, or nearly $2.1 million on the contractor's administrative costs for the Kids' Plates Program.
- Public Health did not comply with its own contracting procedures when it awarded 115 grants to community agencies.
- The Department of Social Services (Social Services) did not fulfill certain monitoring requirements for trust fund expenditures. As a result, one grantee overcharged Social Services by $10,189, and Social Services' Office of Child Abuse Prevention may have used trust fund money to pay for expenditures that did not meet the trust fund's requirements.
- Social Services failed to fully publish certain information about the trust fund on its Web site as state law requires.
RESULTS IN BRIEF
Thousands of California's children are injured or killed every year as the result of unintentional injuries and child abuse. To address the need for the prevention of childhood injuries and abuse, the Legislature created two state funds: the Child Health and Safety Fund (health and safety fund) and the State Children's Trust Fund (trust fund). The Legislature designed the health and safety fund to support the State's childcare regulatory functions, child abuse prevention programs, and child injury prevention programs. Similarly, it created the trust fund to carry out child abuse and neglect prevention and intervention programs statewide.
The Department of Social Services (Social Services) and the Department of Public Health (Public Health) are each responsible for managing different aspects of the health and safety fund. While Social Services is the fund's designated administrator, Public Health is responsible for managing the part of the fund known as the Kids' Plates Program, a prevention program for unintentional childhood injuries. The Kids' Plates Program receives its revenue in part from the sale of Have a Heart, Be a Star, Help Our Kids specialized license plates. Public Health is responsible for using the program's revenue to award grants to community-based organizations throughout the State for projects and programs that prevent childhood injuries.
However, Public Health and its predecessor agency, the Department of Health Services (Health Services), violated state law when they contracted with the San Diego State University Research Foundation (research foundation) to manage the Kids' Plates Program from 2004 to 2010. Specifically, when contracting with the research foundation, Health Services and Public Health did not comply with provisions of state law that prohibit state agencies from contracting with private entities to perform work that state employees could perform. After repeatedly approving Health Services' and Public Health's contracts with the research foundation, the Department of General Services (General Services) finally identified this violation in October 2010, when Public Health submitted its 2010 contract to have the research foundation operate the Kids' Plates Program for the following two fiscal years. Public Health was unable to provide a justification for contracting with a private entity rather than having state employees perform the work, and ultimately Public Health determined it could not contract with the research foundation.
During the time that Public Health was attempting to resolve the problems with the 2010 contract, it continued to have the research foundation perform services without an approved contract, in violation of state law. When Public Health told the research foundation 10 months later that it could not pay for the work the foundation had performed, the foundation filed a claim for more than $300,000 with the State, which the State approved in June 2012. However, because the research foundation had been operating without a contract during those 10 months, it was not able to award any grants during that period of time. In other words, the State ended up paying more than $300,000 in administrative costs without awarding any funds that might have helped to prevent unintentional childhood injuries.
Also, although the Legislature appropriated health and safety funds for the Kids' Plates Program, it did not appropriate funds for Health Services and Public Health to pay for the program's administration. Consequently, Health Services and Public Health paid the research foundation to administer the program from the funds that the Legislature had intended they use directly for childhood injury prevention programs. Health Services and Public Health spent roughly 40 percent of their total appropriations received between fiscal years 2006-07 and 2009-10, or nearly $2.1 million, on the research foundation's administrative costs for the Kids' Plates Program.
Moreover, Public Health has not fully complied with state contract monitoring requirements. In particular, Public Health did not substantiate the amounts the research foundation claimed on its invoices. Public Health's other efforts to administer the Kids' Plates Program have also been flawed. Nearly two years after it stopped contracting with the research foundation, Public Health awarded 115 grants to community agencies. However, Public Health did not comply with its own contracting procedures when it awarded these grants.
As previously discussed, the trust fund is similar to the health and safety fund but focuses on the prevention of child abuse. Specifically, the law establishing the trust fund states that its purpose includes providing for the development of public-private funding partnerships, promoting public awareness regarding child abuse and available intervention services, and carrying out research and demonstration projects exploring the nature of and the long-term solutions to child abuse. Social Services does this by awarding grants to private nonprofit organizations and public institutions of higher education.
Social Services is responsible for administering and managing the trust fund. However, Social Services' Office of Child Abuse Prevention (office) did not fulfill certain monitoring requirements for 10 payments it made to grantees that operate local child abuse and neglect prevention and intervention programs. Because the office did not properly monitor its grantees it inappropriately paid one of them $10,189. We also found three instances in which the office may have used money from the trust fund to pay for expenditures that did not meet the trust fund's requirements. In addition, although our review found that the five grantees we reviewed appear to have met the performance measures established in their grant agreements, the office can improve its monitoring of grantees' progress. Specifically, the office's guidelines do not include a process for ensuring that its consultants review the grantees' reports and document their assessments of whether the grantees met the measurable outcomes contained in their grant agreements. Further, the office was unable to provide us with documentary evidence demonstrating that it had done so. Finally, the office has not fully complied with the state law that requires it to publish information about the trust fund. For example, the law requires the office to identify the programs it pays for using the trust fund and the target populations these programs serve. However, the office's Web site does not include conferences, education services, and outreach it paid for with the trust fund. Moreover, although state law requires the office to publish the trust fund amount as of June 30 of each year, it has not published on its Web site the trust fund's balance as of June 30, 2012.
To ensure that it does not violate provisions of state law that prohibit contracts for services that state employees can perform, Public Health should establish that it has adequate justification for hiring a private contractor before submitting contracts to General Services for approval.
To comply with state contracting laws and policies that protect the State's interest, Public Health should do the following:
- Ensure that its staff do not allow contractors to work before General Services has approved the contracts.
- Ensure that its staff comply with its internal contracting policies.
To comply with the State Contracting Manual, Public Health should direct its staff to substantiate the expenditures contractors claim. For example, Public Health could ask the contractors to submit for review detailed records substantiating all or a sample of their invoices.
To ensure compliance with the State Contracting Manual, Social Services should direct the office to substantiate the expenditures that grantees claim. For example, the office could ask the grantees to submit detailed records for all or a sample of their invoices for review.
To ensure that the office complies with the State Contracting Manual, Social Services should do the following:
- Direct the office to update its guidelines for grant administration to establish a formal process for reviewing the grantees' progress reports and interim products, which includes documenting its review and assessment of whether the grantees met the measurable outcomes in their grant requirements.
- Direct the office to retain the documentary evidence of its review and assessment in the grantee files.
To ensure compliance with the state law that requires the office to publish certain trust fund information, Social Services should do the following:
- Require the office to establish procedures to ensure the inclusion on its Web site of all programs and services it funded using the trust fund.
- Require the office to publish on its Web site the amount in the trust fund as of June 30 each year.
Public Health stated that it agrees with our recommendations and provided its plans for implementing them. In addition, although Social Services did not specifically state that it agrees with each of our recommendations, it provided its plans for implementing them.