January 30, 2020
The Governor of California
President pro Tempore of the Senate
Speaker of the Assembly
Sacramento, California 95814
Dear Governor and Legislative Leaders:
As required by Chapter 251, Statutes of 2004, my office presents this report about issues and selected state agencies that represent a high risk to the State or its residents. Our work to systematically identify and address such high-risk issues aims to enhance efficiency and effectiveness by focusing the State’s resources on improving the delivery of services related to important programs or functions.
In this report, we explain why we have added the State’s financial reporting and accountability to the high risk list: the State’s project to modernize its financial infrastructure through implementation of the Financial Information System for California (FI$Cal) has nearly doubled its expected costs since 2012 to more than $1 billion, and it will not deliver key features before the project officially concludes its development stage at the end of June 2020. Further, since numerous state entities began implementing FI$Cal, they have struggled to submit timely data for the State’s annual financial statements, an issue that could ultimately negatively affect the State’s credit rating.
The State continues to face seven high-risk issues that include aspects of water infrastructure, information technology oversight, and information security. We also concluded that four state agencies continue to meet our criteria for high risk: the California Department of Corrections and Rehabilitation, the California Department of Health Care Services, the California Department of Public Health, and the California State Teachers’ Retirement System. Finally, we removed Covered California and the State’s workforce and succession planning from our high risk list because the responsible agencies have demonstrated significant progress toward controlling risk factors.
We will continue to monitor the risks we have identified in this report and the actions the State takes to address them. When the State’s actions result in significant progress toward resolving or mitigating such risks, we will remove the high risk designation based on our professional judgment.
ELAINE M. HOWLE, CPA
California State Auditor