Existing law establishes the Department of Veterans Affairs and designates the Secretary of Veterans Affairs as the chief administrative officer of the department. Existing law also establishes the California Veterans Board, and requires the board to advise the department and the secretary on policies for operations of the department. Existing law provides for veterans programs, including the veterans farm and home purchase programs, and provides for veterans homes.

This bill would create the office of Internal Audits for Veterans Affairs, the chief auditor of which would be subject to the direction of the secretary within the department. The bill would require the chief auditor to be appointed by the Governor, subject to Senate confirmation. The chief auditor would be responsible for reviewing and investigating, at the request of the secretary or other members of senior management of the department, the operations and financial condition of each California veterans home, each veterans farm and home purchase program, and other department programs and functions. Beginning January 1, 2020, and each year thereafter, the bill would require the chief auditor to submit a summary report to the board and the appropriate committees of the Legislature providing information about the offices activities and recommendations that lead to departmental efficiencies and improvements.

The bill would authorize the chief auditor to receive communications from any individual who believes he or she may have information that warrants a review or investigation of a veterans program. The bill would require the chief auditor to establish a toll-free telephone number to report alleged wrongdoing regarding veterans programs. The bill would prohibit the chief auditor from disclosing the identity of a person reporting information pursuant to these provisions without that persons written permission, except as specified.

The bill would repeal the provisions described above on January 1, 2025.

Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.

This bill would make legislative findings to that effect.

Existing law establishes the Department of Veterans Affairs and designates the Secretary of Veterans Affairs as the chief administrative officer of the department. Existing law also establishes the California Veterans Board, and requires the board to advise the department and the secretary on policies for operations of the department. Existing law provides for veterans programs, including the veterans farm and home purchase programs, and provides for veterans homes.

This bill would create the office of Internal Audits for Veterans Affairs, the chief auditor of which would be subject to the direction of the secretary within the department. The bill would require the chief auditor to be appointed by the Governor, subject to Senate confirmation. The chief auditor would be responsible for reviewing and investigating, at the request of the secretary or other members of senior management of the department, the operations and financial condition of each California veterans home, each veterans farm and home purchase program, and other department programs and functions. Beginning January 1, 2020, and each year thereafter, the bill would require the chief auditor to submit a summary report to the board and the appropriate committees of the Legislature providing information about the offices activities and recommendations that lead to departmental efficiencies and improvements.

The bill would authorize the chief auditor to receive communications from any individual who believes he or she may have information that warrants a review or investigation of a veterans program. The bill would require the chief auditor to establish a toll-free telephone number to report alleged wrongdoing regarding veterans programs. The bill would require the chief auditor to treat specified information relating to investigations and the individuals who provide information that leads to an investigation as confidential and not subject to public disclosure, as specified. prohibit the chief auditor from disclosing the identity of a person reporting information pursuant to these provisions without that persons written permission, except as specified.

The bill would repeal the provisions described above on January 1, 2025.

Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.

This bill would make legislative findings to that effect.

Existing law establishes the Department of Veterans Affairs and designates the Secretary of Veterans Affairs as the chief administrative officer of the department. Existing law also establishes the California Veterans Board, and requires the board to advise the department and the secretary on policies for operations of the department. Existing law provides for veterans programs, including the veterans farm and home purchase programs, and provides for veterans homes.

This bill would create the office of Internal Audits for Veterans Affairs, the chief auditor of which would be subject to the direction of the secretary within the department. The bill would require the chief auditor to be appointed by the Governor, subject to Senate confirmation. The chief auditor would be responsible for reviewing and investigating, at the request of the secretary or other members of senior management of the department, the operations and financial condition of each California veterans home, each veterans farm and home purchase program, and other department programs and functions. Beginning January 1, 2020, and each year thereafter, the bill would require the chief auditor to submit a summary report to the board and the appropriate committees of the Legislature providing information about the offices activities and recommendations that lead to departmental efficiencies and improvements.

The bill would authorize the chief auditor to receive communications from any individual who believes he or she may have information that warrants a review or investigation of a veterans program. The bill would require the chief auditor to establish a toll-free telephone number to report alleged wrongdoing regarding veterans programs. The bill would require the chief auditor to treat specified information relating to investigations and the individuals who provide information that leads to an investigation as confidential and not subject to public disclosure, as specified.

The bill would repeal the provisions described above on January 1, 2025.

Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.

This bill would make legislative findings to that effect.

GOVERNOR'S VETO

GV Bill Id:AB 2790

Author:(Irwin)

As Enrolled Ver:August 27, 2018

2/3 vote

Original Committee Reference: V.A.

SUMMARY: Creates the office of Internal Audits for Veterans Affairs within the California Department of Veterans Affairs (CalVet). Specifically, this bill:

1. Establishes the office, led by the chief auditor (auditor), who would be subject to appointment by the Governor and confirmation by the Senate.
2. Requires the auditor to report to the CalVet secretary (secretary) and conduct reviews and investigations at the request of the secretary or other members of senior management.
3. Sets the intent and scope of the auditor's reviews and investigations.
4. Requires the auditor to report findings of employee misconduct to the secretary.
5. Subjects the auditor to specified sections of Government Code related to internal auditors' independence and responsibilities.
6. Requires the auditor to establish a toll-free public telephone number for receiving complaints of possible wrongdoing.
7. Allows the auditor to initiate a review or investigation of an alleged wrongdoing.
8. Requires that the chief auditor not disclose the identity of a person reporting information without that person's written permission, with some exceptions.
9. Requires the auditor to submit annual summary reports to the California Veterans Board and relevant policy committees of the Legislature.
10. Includes a January 1, 2025 sunset.

EXISTING LAW: Military and Veterans code section 78.5 refers to the Inspector General (IG), "The secretary shall conduct audits as required by Section 13402 of the Government Code, on internal controls of the department, that shall be provided to the inspector general." The department had an IG but the position, which was created in 1999, was eliminated by budget action in 2004.

1. Creates the California Veterans Board (Board). Members of the Board are appointed by the Governor. The Board advises the department and secretary on policies for operations of the department. The Board has access to all documents and employees of the department.
2. Creates the California State Auditor's office with broad authority. The State Auditor promotes the efficient and effective management of public funds and programs by providing to citizens and the State independent, objective, accurate, and timely evaluations of state and local governments' activities.

FISCAL EFFECT: According to the Assembly Appropriations Committee, ongoing annual costs, estimated in the range of $600,000 to $850,000 (General Fund), to CalVet to staff an audit unit and submit the required reports.

COMMENTS: The California Department of Veterans Affairs lacks any division, office or even staff position responsible for overall internal accountability, monitoring for compliance, independent oversight, or service in the role of an ombudsman. This hasn't always been the case.

In 1999, AB 92 (Floyd), Chapter 894, created within the department an Inspector General's office, tasked with reviewing the operations and financial condition of all veterans programs supported by the state, investigating alleged misconduct and conducting investigations and reviews at the request of the governor, any member of the California Veterans Board, the CalVet secretary, and/or, at their discretion, any member of the state legislature or the general public.

CalVet's IG was eliminated in 2004 in a Senate budget bill, SB 1111 (Budget and Fiscal Review Committee) Chapter 218. Since the elimination of its IG, CalVet has been the subject of several scathing audits by the State Auditor. A 2013 report, titled "Wastefulness, failure to comply with state contracting requirements and inexcusable neglect of duty," revealed that the administrator of the Yountville veterans home had entered into an illegal contract to "build and operate a nearly 200-acre adventure park on the grounds, including zip lines and a mountain biking course," wasting more than $650,000 of state funds before the project was halted when CalVet executives learned of it two months after construction had already started.

Another, published in 2016, found CalVet had spent nearly $28 million on an information technology system upgrade that "launched years later than planned, wastes staff time, and has not been fully implemented."

The department has also been scrutinized for its administration of Morale, Welfare, and Recreation funds, for falling short of full capacity at homes, questions concerning Veterans Homes' not being at full capacity, the lack of a kitchen at the West Los Angeles Home (subject of several pieces in the Los Angeles Times), the overall cost of the homes, a dearth of implementing regulations, and other matters.

These are just a selection of problems at CalVet that could have been detected early or prevented entirely if the department had a robust internal auditor.

Moreover, the world has changed since 1999: The United States has been in protracted armed conflict in Iraq and Afghanistan as well as in shorter conflicts throughout the world. These conflicts have and continue to produce many veterans who reside in California, currently approximately 1.8 million.

The department has also grown. There were two veterans homes in 1999, and now there are eight. The homes range from 20-acre campuses with 60 residents to 500-acre campuses with more 1,000 residents. Each home is distinctive within its region and offers their own unique environment and combinations of levels of care. Furthermore, CalVet now operates two veterans' cemeteries and a third is in an early phase of development.

The department's activities and responsibilities are too many to list. However, some of the more significant include: the Veterans Housing and Homelessness Prevention Program, approving schools' eligibility for GI Bill funds, the Homeless Veteran Outreach Support Program, the California Veterans Registry, the DVBE Advisory Council, programs for incarcerated veterans, administering funding for County Veteran Service Officers, programs to reach women, lesbian, gay, bi-sexual, and transgender (LGBT) Veterans, and minority veterans.

This bill is largely modeled after 1999's AB 92, but would substitute an internal auditor for an Inspector General.

There is recent precedent in the California Military Department. In response to a series of negative incidents, in 2012 SB 921 (Lieu) Chapter 731, the California Military Whistleblower Protection Act, signed by the Governor September 28, 2012, created an inspector general in the California Military Department at a time when a new Adjutant General was being appointed with the mission of organizational change.

The bill's author has provided the following statement:

"With the largest population of veterans in the United States and a Department of Veterans Affairs that is growing to accommodate it, California needs and deserves a department with a robust internal auditing function to ensure that it is providing the highest quality service possible, as efficiently as possible, with transparency, accountability and rigorous fidelity to standards and practices appropriate to an agency serving a population of recent veterans returning from the longest period of conflict in American history."

GOVERNOR'S VETO MESSAGE:

This bill would create an Office of Internal Audits at the California Department of Veterans Affairs, led by a chief auditor, to conduct programmatic and financial reviews, as well as investigate allegations of employee misconduct.

The bill will result in significant ongoing costs to the General Fund. Additional spending to support new programs, including the creation of an internal audits unit within the Department, must be considered through the annual budget process.

Analysis Prepared by: Jenny Callison / V.A. / (916) 319-3550 FN: 0005240

 THIRD READING  

Bill No: AB 2790

Author:

:

Vote:

SENATE VETERANS AFFAIRS COMMITTEE: 5-0, 6/12/18

AYES: Nielsen, Dodd, Nguyen, Roth, Wilk

NO VOTE RECORDED: Newman, Hueso

SENATE JUDICIARY COMMITTEE: 7-0, 6/26/18

AYES: Jackson, Moorlach, Anderson, Hertzberg, Monning, Stern, Wieckowski

SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/16/18

AYES: Portantino, Bates, Beall, Bradford, Hill, Nielsen, Wiener

ASSEMBLY FLOOR: 77-0, 5/30/18 - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST:

This bill creates an office of Internal Audits for Veterans Affairs within the California Department of Veterans Affairs (CalVet).

ANALYSIS:

Existing law:

1. Creates the California State Auditor's office with broad authority to promote the efficient and effective management of public funds and programs by providing to citizens and the State independent, objective, accurate, and timely evaluations of state and local governments' activities.
2. Establishes, within the Department of Finance, the Office of State Audits and Evaluations, which, among other things, issues Audit Memos that provide instruction to state departments and internal audit organizations.
3. Establishes the State Leadership Accountability Act, which, among other things:
   1. Provides that agency heads are responsible for the establishment and maintenance of systems of internal control, and effective and objective ongoing monitoring of the internal controls within their state agencies.
   2. Establishes reporting and independence requirements for internal auditors of state agencies.
4. Requires the Secretary of CalVet (Secretary) to conduct internal audits of CalVet’s internal controls, as required by the Government Code, and that the results shall be provided to the inspector general. (See Committee Analytical Comments below.)
5. Creates the California Veterans Board (Board). Members of the Board are appointed by the Governor and confirmed by the Senate. The Board advises CalVet and the Secretary on policies for CalVet operations. The Board has access to all documents and departmental employees.

This bill:

1. Establishes, within CalVet, an office of Internal Audits for Veterans Affairs, to be led by a chief auditor (Auditor), who would be appointed by the Governor and confirmed by the Senate.
2. Requires the Auditor to report to the Secretary and conduct reviews and investigations at the request of the Secretary or other members of senior management.
3. Sets the intent and scope of the Auditor's reviews and investigations.
4. Requires the Auditor to report findings of employee misconduct to the Secretary.
5. Subjects the Auditor to specified sections of Government Code related to internal auditors' independence and responsibilities.
6. Requires the Auditor to establish a toll-free public telephone number for receiving complaints of possible wrongdoing.
7. Allows the Auditor to initiate a review or investigation of an alleged wrongdoing.
8. Provides that the Auditor shall not disclose the identity of a person reporting information pursuant to this section without that person’s written permission, except in response to a court order or to a law enforcement agency in the furtherance of its duties.
9. Requires the Auditor to submit annual summary reports to the Board and relevant policy committees of the Legislature.
10. Establishes a sunset date of January 1, 2025.

Background

Internal controls within CalVet. Since 2004, CalVet has lacked any intradepartmental division, office or even staff position responsible for overall internal accountability, monitoring for compliance, independent oversight, or service in the role of an ombudsman.

In 1999, AB 92 created within CalVet an Inspector General’s (IG) office, tasked with reviewing the operations and financial condition of all veterans programs supported by the state, investigating alleged misconduct and conducting investigations and reviews at the request of the Governor, any member of the Board, the Secretary, and or, at their discretion, any member of the California State Legislature or the general public.

CalVet’s IG was eliminated in 2004 by SB 1111 (Senate Budget and Fiscal Review Committee, Chapter 218), a budget trailer bill, for an expected ongoing General Fund savings of $324,000. Since the elimination of the departmental IG, CalVet has been the subject of several scathing audits by the State Auditor. A 2013 report, titled “Wastefulness, failure to comply with state contracting requirements and inexcusable neglect of duty,” revealed that the administrator of the Yountville veterans home had entered into an illegal contract to “build and operate a nearly 200-acre adventure park on the grounds, including zip lines and a mountain biking course,” wasting more than $650,000 of state funds before the project was halted when CalVet executives learned of it two months after construction had already started.

Another, published in 2016, found CalVet had spent nearly $28 million on an information technology system upgrade that “launched years later than planned, wastes staff time, and has not been fully implemented.”

CalVet has been scrutinized also for its administration of Morale, Welfare, and Recreation funds, for falling short of full capacity at homes, questions concerning Veterans Homes' not being at full capacity, the lack of a kitchen at the West Los Angeles Home (subject of several pieces in the Los Angeles Times), the overall cost of the homes, a dearth of implementing regulations, and other matters.

CalVet’s responsibilities have grown during the past decade, particularly within its Veterans Homes Division. In 1999, there were two homes, and now there are eight. The homes range from 20-acre campuses with 60 residents to 500-acre campuses with more 2,000 residents. Each home is distinctive and offers its own unique environment and combinations of levels of care. CalVet also operates three veterans’ cemeteries with a fourth is in an early phase of development.

The department’s responsibilities are too many to list; however, they include: the CalVet Home Loan Program; Veterans Housing and Homelessness Prevention Program; approving schools' eligibility for GI Bill funds; Homeless Veteran Outreach Support Program; California Veterans Registry; DVBE Advisory Council; support for incarcerated veterans; overseeing county veteran service officers; and outreach programs to women, LGBT veterans, and minority veterans.

Comments

1. Military and Veterans Code Section 78.5 refers to a previously (but not currently) authorized IG, "The secretary shall conduct audits as required by Section 13402 of the Government Code, on internal controls of the department, that shall be provided to the inspector general." The department had an IG, but the position, which was created in 1999, was eliminated by budget action in 2004.
2. This bill is substantially similar to the unsuccessful AB 255 (Irwin, 2015), which is cited below under Related/Prior Legislation.
3. There is a recent comparable precedent in the California Military Department (CMD). In response to a series of negative incidents, the Legislature enacted SB 921 (Lieu, Chapter 731, Statutes of 2012), the California Military Whistleblower Protection Act, which created an IG within the CMD at a time when a new Adjutant General was being appointed with the mission of organizational change.

Related/Prior Legislation

AB 255 (Irwin, 2015) would have created an office of Internal Audits for Veterans Affairs within CalVet. (Held on suspense, Assembly Appropriations Committee)

SB 921 (Lieu, Chapter 731, Statutes of 2012) established an Office of the IG within the CMD.

SB 1111 (Senate Budget and Fiscal Review, Chapter 218, Statutes of 2004) eliminated the Office of the IG within CalVet.

AB 92 (Floyd, Chapter 894, Statutes of 1999) created an IG within CalVet with specified duties.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Senate Appropriations Committee, this bill will generate ongoing annual costs of up to approximately $1 million per year to CalVet for establishing and staffing the office, for operating expenses and equipment, and for producing the annual report.

SUPPORT: (Verified 8/16/18)

None received

OPPOSITION: (Verified 8/16/18)

None received

ASSEMBLY FLOOR: 77-0, 5/30/18

AYES: Acosta, Aguiar-Curry, Travis Allen, Arambula, Baker, Berman, Bigelow, Bloom, Bonta, Brough, Burke, Caballero, Calderon, Carrillo, Cervantes, Chau, Chávez, Chen, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Dahle, Daly, Eggman, Flora, Fong, Frazier, Friedman, Gallagher, Cristina Garcia, Eduardo Garcia, Gipson, Gloria, Gonzalez Fletcher, Gray, Grayson, Harper, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Muratsuchi, Nazarian, Obernolte, O'Donnell, Patterson, Quirk, Quirk-Silva, Reyes, Rodriguez, Rubio, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Voepel, Waldron, Weber, Wood

NO VOTE RECORDED: Rendon

Prepared by:

8/18/18 13:55:30

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2017 - 2018 Regular Session

AB 2790 (Irwin) - Veterans: Internal Audits for Veterans Affairs

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

AB 2790 would create the office of Internal Audits for Veterans Affairs within the California Department of Veterans Affairs (CalVet). The chief auditor of the office would be responsible for reviewing and investigating the operations and financial condition of each California veterans home, each veterans farm and home purchase program, and other CalVet programs and functions, as specified.

Fiscal Impact:

Ongoing annual costs of up to approximately $1 million per year to CalVet for establishing and staffing the office, for operating expenses and equipment, and for producing the annual report.

Background:

In 1999, an Inspector General’s office was established within CalVet, tasked with reviewing the operations and financial condition of all veterans programs supported by the state, investigating alleged misconduct, and conducting requested investigations and reviews. The Inspector General’s office was eliminated in 2004 and CalVet has since lacked any interdepartmental division, office or staff position responsible for overall internal accountability, monitoring for compliance, independent oversight, or service in the role of an ombudsman. Since then, the State Auditor has conducted several audits admonishing administration of and spending within CalVet.

Proposed Law:

This bill would establish the office of Internal Audits for Veterans Affairs and a chief auditor shall be appointed by the Governor, subject to Senate confirmation. The chief auditor would be required to conduct reviews and investigations at the request of the secretary or other members of senior management of CalVet with the intent of increasing efficiencies, improving operations, and reducing fraud, waste, and abuse, as specified. This bill would also require the chief auditor, beginning January 1, 2020, an annually thereafter, to submit a summary report to the California Veterans Board and the appropriate committees of the Legislature providing information about the office’s activities and identifying recommendations that lead to CalVet efficiencies and improvements. The chief auditor would be authorized to receive communications from any individual who believes he or she may have information that warrants a review or investigation of a CalVet veterans program, and the chief auditor may initiate a review or investigation of any alleged wrongdoing. Lastly, this bill would sunset on January 1, 2025.

Related Legislation:

AB 255 (Irwin, 2015), similar to this bill, would have created an office of Internal Audits for Veterans Affairs within CalVet. It was held on suspense in the Assembly Appropriations Committee.

SB 921 (Lieu, Chapter 731, Statutes 2012) established an Office of the Inspector General within the California Military Department.

-- END --

SENATE JUDICIARY COMMITTEE

Senator Hannah-Beth Jackson, Chair

2017-2018 Regular Session

Bill No: AB 2790 (Author:Irwin)

Version: April 19, 2018

Hearing Date: June 26, 2018

Fiscal: Yes

Urgency: No

Consultant: MEC

SUBJECT

Veterans: Internal Audits for Veterans Affairs

DESCRIPTION

This bill would create the office of Internal Audits for the Department of Veterans Affairs (Department) with a chief auditor appointed by the Governor and subject to Senate confirmation. The chief auditor would be required to conduct reviews and investigations at the request of the secretary or members of senior management, and provide that the requests are confidential and not subject to disclosure under the California Public Records Act. The bill would create a mechanism whereby suspected wrongdoing could be reported to and investigated by the chief auditor. The chief auditor would be prohibited from disclosing the identity of a person reporting this information without that person’s written permission, except in response to a court order or to a law enforcement agency in the furtherance of its duties.

BACKGROUND

In 1999, Assembly Bill 92 (Floyd) created within the Department an Inspector General’s office, tasked with reviewing the operations and financial condition of all veterans programs supported by the state, investigating alleged misconduct and conducting investigations and reviews at the request of the Governor, any member of the California Veterans Board, the Department Secretary, and/or, at their discretion, any member of the state Legislature or the general public. The office was eliminated in 2004 through the budget process. (SB 1111 (Committee on Budget) Ch. 218, Stats. 2004.)

A 2013 report by the State Auditor entitled “Wastefulness, failure to comply with state contracting requirements and inexcusable neglect of duty,” described how the administrator of the Yountville veterans home had entered into an illegal contract to “build and operate a nearly 200-acre adventure park on the grounds, including zip lines and a mountain biking” course.^[1] The project was halted two months after construction had already started and more than $650,000 was expended. Later, a 2016 audit was critical of the Department for spending nearly $28 million on an information technology system upgrade that “launched years later than planned, wastes staff time and has not been fully implemented.”^[2] These incidents, the author argues, are just a selection of problems at the Department that could have been detected early or prevented entirely if the Department had a robust internal auditor.

There is currently a California Military Whistleblower Protection Act (Act) that was created in 2012 through SB 921 (Lieu, Ch. 731, Stats. 2012) in response to a series of negative incidents at the California Military Department. The Act created an inspector general in the California Military Department at a time when a new Adjutant General was being appointed with the mission of organizational change.

This bill would create the office of Internal Audits for Veterans Affairs within the Department of Veterans Affairs to prevent waste and abuse in the Department.

CHANGES TO EXISTING LAW

Existing law, the California Whistleblower Protection Act, provides that state employees should be free to report waste, fraud, abuse of authority, violation of law, or threat to public health without fear of retribution. (Gov. Code Sec. 8547.1.)

Existing law authorizes the State Auditor to investigate information received that any employee or state agency has engaged in an improper governmental activity, and the identity of the person providing the information that initiated the investigation, or of any person providing information in confidence to further an investigation, shall not be disclosed without the written permission of the person providing the information except that the State Auditor may make the disclosure to a law enforcement agency that is conducting a criminal investigation. (Gov. Code Sec. 8547.5(b).)

Existing law creates the California Military Whistleblower Protection Act, requires the Governor to appoint a State Military Department Inspector General (IG), as specified, to oversee the California State Military Department, and provides that the IG may receive and investigate complaints or allegations, from any person, including but not limited to, any member of the California National Guard, the State Military Reserve, and the Naval Militia, of misconduct, discrimination, or retaliation against the Adjutant General or Assistant Adjutant General of the Military Department and allegations of misconduct by any member of the California National Guard. (Mil. & Vet. Code Sec. 55, 56, 57.)

Existing law provides that specified complaints and allegations would be exempt from public disclosure under the California Public Records Act (CPRA), as specified. (Mil. & Vet. Code Sec. 55(h)(3)9A).)

Existing law prohibits the IG from disclosing to any other person or entity the identity of the person making the complaint or allegation, unless the person provides written consent. (Mil. & Vet. Code Sec. 55(h)(3)(B).)

This bill would create the office of Internal Audits for Veterans Affairs within the Department of Veterans Affairs.

This bill would provide that the chief auditor shall be appointed by the Governor, subject to Senate confirmation, and subject to the direction of the Secretary of Veterans Affairs.

This bill would provide that the chief auditor shall conduct reviews and investigations at the request of the secretary or other members of senior management of the Department with the intent of increasing efficiencies, improving operations, and reducing fraud, waste, and abuse.

This bill would provide that the chief auditor’s work shall include, but not be limited to, the following:

• reviewing the operations and financial condition of each California veterans home and each veterans farm and home purchase program, and other department programs and functions; and
• investigating allegations of department employee misconduct and reporting any findings of misconduct directly to the secretary, for further action that the secretary may deem necessary.

This bill would provide that, to ensure the independence of the audit function, the Department and the chief auditor are subject to the requirements set forth in Government Code Section 13887(a), and Government Code Sections 13887.5 and 13888.

This bill would provide that beginning January 1, 2020, and each year thereafter, the chief auditor shall submit a summary report to the board and the appropriate committees of the Legislature providing information about the office’s activities and identifying recommendations that lead to departmental efficiencies and improvements.

This bill would provide that the chief auditor may receive communications from any individual, including, but not limited to, a participant in a veterans farm and home purchase program or a resident of a California veterans home, who believes he or she may have information that warrants a review or investigation of a department veterans program.

This bill would provide that to enhance accountability, the chief auditor shall establish a toll-free public telephone number for the purpose of identifying any alleged wrongdoing regarding the department or its programs.

This bill would provide that this telephone number shall be posted at every California veterans home and throughout all department and county veterans service offices, in clear view of all veterans home residents, employees, and the public.

This bill would require that the telephone number be issued to every participant of a home purchase program.

This bill would provide that when deemed appropriate by the chief auditor, he or she shall initiate a review or investigation of any alleged wrongdoing.

This bill would provide that the request shall be confidential and is not subject to disclosure under the California Public Records Act.

This bill would provide that the chief auditor shall not disclose the identity of a person reporting information pursuant to this section without that person’s written permission, except in response to a court order or to a law enforcement agency in the furtherance of its duties.

This bill would provide that its provisions would impose a limitation on the public’s right of access to the meetings of public bodies or the writings of public officials and agencies within the meaning of Section 3 of Article I of the California Constitution and that Legislature makes the following findings to demonstrate the interest protected by this limitation and the need for protecting that interest: In order to protect the privacy of persons who provide information of alleged wrongdoing by or complaints against veterans programs to the Chief Auditor for Veterans Affairs, the limitations on the public’s right of access imposed by Section 2 of this act are necessary.

This bill would provide its provisions sunset on January 1, 2025.

COMMENT

1. Stated need for the bill

According to the author:

With the largest population of veterans in the United States and a Department of Veterans Affairs that is growing to accommodate it, California needs and deserves a department with a robust internal auditing function to ensure that it is providing the highest quality service possible, as efficiently as possible, with transparency, accountability and rigorous fidelity to standards and practices appropriate to an agency serving a population of recent veterans returning from the longest period of conflict in American history.

2. Department of Veterans Affairs

According to the Department’s website, their mission is to “serve and honor all California veterans by connecting them and their families with their earned benefits through education, advocacy and direct services.” The website explains:

The California Department of Veterans Affairs (CalVet) works to serve California veterans and their families. With nearly 1.8 million veterans living in the State, CalVet strives to ensure that its veterans of every era and their families get the state and federal benefits and services they have earned and deserve as a result of selfless and honorable military service. CalVet strives to serve veterans and their families with dignity and compassion and to help them achieve their highest quality of life.

The Department’s activities and responsibilities include: the Veterans Housing and Homelessness Prevention Program, approving schools’ eligibility for GI Bill funds, the Homeless Veteran Outreach Support Program, the California Veterans Registry, the Disabled Veterans Business Enterprise Advisory Council, programs for incarcerated veterans, administering funding for County Veteran Service Officers, programs to reach women, lesbian, gay, bi-sexual, and transgender (LGBT) Veterans, and minority veterans.

3. Would establish the Office of Internal Audits

This bill would create the office of Internal Audits for Veterans Affairs within the Department of Veterans Affairs and would provide that the chief auditor shall be appointed by the Governor, subject to Senate confirmation, and subject to the direction of the Secretary of Veterans Affairs.

The chief auditor would be required to conduct reviews and investigations at the request of the secretary or other members of senior management of the department with the intent of increasing efficiencies, improving operations, and reducing fraud, waste, and abuse. The chief auditor’s work would include, among other things, reviewing the operations and financial condition of each California veterans home and each veterans farm and home purchase program, and other department programs and functions; and investigating allegations of department employee misconduct and reporting any findings of misconduct directly to the secretary, for further action that the secretary may deem necessary. The bill requires reporting to the Legislature, as specified.

This bill would provide that the chief auditor may receive communications from any individual, including, but not limited to, a participant in a veterans farm and home purchase program or a resident of a California veterans home, who believes he or she may have information that warrants a review or investigation of a department veterans program. The chief auditor would be required to establish a toll-free public telephone number for the purpose of identifying any alleged wrongdoing regarding the department or its programs. The telephone number must be posted at every California veterans home and throughout all department and county veterans service offices, in clear view of all veterans home residents, employees, and the public. And, the telephone number would need to be issued to every participant of a home purchase program. The chief auditor would be required to initiate a review or investigation of any alleged wrongdoing when deemed appropriate by the chief auditor.

4. Protecting those who report suspected wrongdoing

Existing law, the California Whistleblower Protection Act (CWPA), provides that the identity of the person reporting waste, fraud, abuse of authority, violation of law, or of any person providing information in confidence to further an investigation, shall not be disclosed without the written permission of the person providing the information. (Gov. Code Sec. 8547.5(b).)

In 1943, the Legislature enacted the California Public Records Act (CPRA), which declared that the people of the state had a fundamental and necessary right of access to the conduct of the people’s business. (Gov. Code Sec. 6250.) Within this declaration is the provision that individuals have a right of privacy. (Id.) Further, the CPRA exempts from disclosure information related to records of complaints to any state or local agency for correctional or law enforcement purposes, and a reporting individual’s identity may not be disclosed when disclosure would endanger the safety of a witness or other person involved in the investigation, or unless disclosure would endanger the successful completion of the investigation or a related investigation. (Gov. Code Sec. 6254(f).) Whistleblowers arguably fall under this exemption since disclosure of their identities could endanger the successful completion of the investigation and runs contrary to the intent of the CWPA, which encourages individuals to freely report violations of the law. A whistleblower’s identity also is exempt from disclosure when the individual makes the complaint to any governmental agency which agrees to treat the disclosed material as confidential. (Gov. Code Sec. 6254.5(e).) The CWPA specifically provides that the identity of the individual reporting a violation in confidence shall not be disclosed. (Gov. Code Sec. 8547.5(b).)

SB 37 (Maddy, Ch. 12, Stats. 1993) made confidential the identity of persons involved in an investigation by the State Auditor that any employee or state agency has engaged in an improper governmental activity. AB 567 (Villines, Ch. 452, Stats. 2009) provided additional protections for a whistleblower and confidential informant when the State Auditor releases evidence supporting its findings resulting from the investigation. The reasoning behind this was that the release of the supporting evidence itself could be premature at this stage because of any ensuing administrative or court action that may result from the investigation. Legal representatives of the state may not want the evidence itself released until they have had the chance to review it and determine for themselves what exposure to liability the state may have, or whether or what action will be taken against responsible parties. This bill, establishing the Office of Internal Audits in the Department of Veterans Affairs, would follow this legislative history of maintaining confidentiality for whistleblowers. The provisions of this bill that protect information shared by those blowing the whistle on the Department of Veterans Affairs mirror those protections that exist in the California Military Whistleblower Protection Act.

Specifically, the chief auditor would be required to conduct reviews and investigations at the request of the secretary or other members of senior management of the department and provide that the requests shall be confidential and are not subject to disclosure under the California Public Records Act.

This bill would also provide that the chief auditor may receive communications from any individual, including, but not limited to, a participant in a veterans farm and home purchase program or a resident of a California veterans home, who believes he or she may have information that warrants a review or investigation of a department veterans program. The chief auditor would also be required to establish a toll-free public telephone number for the purpose of identifying any alleged wrongdoing regarding the department or its programs. Additionally, in order to protect the people who will be reporting potential wrongdoing, the bill would prohibit the chief auditor from disclosing the identity of a person reporting the alleged wrongdoing without that person’s written permission, except in response to a court order or to a law enforcement agency in the furtherance of its duties.

Support: None Known

Opposition: None Known

HISTORY

Source: Author

Related Pending Legislation: None Known

Prior Legislation:

AB 255 (Irwin, 2015) was similar to the bill currently before this Committee. This bill was held under submission in the Assembly Committee on Appropriations.

SB 921 (Lieu, Ch. 731, Stats. 2012) established specified requirements for the position of California’s Military Department Inspector General (IG). It also specified the duties of the IG and required the IG to maintain a toll-free public telephone number and Internet Web site to receive complaints and allegations. The bill authorized the IG to investigate specified complaints and allegations of misconduct upon written request of specified persons and provided that those requests are not public records under the California Public Records Act.

AB 92 (Floyd, Ch. 894, Stats. 1999) created the State Office of Inspector General for Veterans Affairs, subject to the direction of the Governor to replace the administratively created position of Internal Auditor in the State Department of Veterans Affairs. Required the inspector general to submit a report and make recommendations they deemed necessary for improving the operations of the veterans program to the board and to the Legislature annually.

Prior Vote:

Assembly Floor (Ayes 77, Noes 0)

Assembly Appropriations Committee (Ayes 16, Noes 0)

Assembly Accountability and Administrative Review Committee (Ayes 7, Noes 0)

Assembly Veterans Affairs Committee (Ayes 10, Noes 0)

**************

1. “Audit blasts California veterans home for spending money on adventure park, tavern,” David Siders, Sacramento Bee, October, 17, 2013. ↑

2. “Audit: Vets agency wastes $28 million on failed computer system,” Rachel Cohrs, Sacramento Bee, June 16, 2016 ↑

SENATE COMMITTEE ON

Senator Josh Newman, Chair

2017 - 2018 Regular

Bill No: Hearing Date: 6/12/18

Subject:

DESCRIPTION

Summary:

Creates an office of Internal Audits for Veterans Affairs within the California Department of Veterans Affairs (CalVet).

Existing law:

1. Creates the California State Auditor's office with broad authority. The State Auditor promotes the efficient and effective management of public funds and programs by providing to citizens and the State independent, objective, accurate, and timely evaluations of state and local governments' activities.
2. Establishes, within the Department of Finance, the Office of State Audits and Evaluations, which, among other things, issues Audit Memos to provide instruction to state departments and internal audit organizations.
3. Establishes the State Leadership Accountability Act, which, among other things:
   1. Provides that agency heads are responsible for the establishment and maintenance of a system or systems of internal control, and effective and objective ongoing monitoring of the internal controls within their state agencies.
   2. Establishes reporting and independence requirements for internal auditors of state agencies.
4. Requires the Secretary of CalVet to conduct internal audits of CalVet’s internal controls, as required by the Government Code, and that the results shall be provided to the inspector general. (See Committee Analytical Comment below.)
5. Creates the California Veterans Board (Board). Members of the Board are appointed by the Governor and confirmed by the Senate. The Board advises CalVet and the Secretary on policies for CalVet operations. The Board has access to all documents and departmental employees.

This bill:

1. Establishes the office, led by a chief auditor, who would be subject to appointment by the Governor and confirmation by the Senate.
2. Requires the auditor to report to the CalVet secretary (secretary) and conduct reviews and investigations at the request of the Secretary or other members of senior management.
3. Sets the intent and scope of the auditor's reviews and investigations.
4. Requires the auditor to report findings of employee misconduct to the secretary.
5. Subjects the auditor to specified sections of Government Code related to internal auditors' independence and responsibilities.
6. Requires the auditor to establish a toll-free public telephone number for receiving complaints of possible wrongdoing.
7. Allows the auditor to initiate a review or investigation of an alleged wrongdoing.
8. Protects the identity of a person providing information that results in a review or investigation, with some exceptions.
9. Requires the auditor to submit annual summary reports to the California Veterans Board and relevant policy committees of the Legislature.
10. Includes a January 1, 2025 sunset.

BACKGROUND

Since 2004, CalVet has lacked any intradepartmental division, office or even staff position responsible for overall internal accountability, monitoring for compliance, independent oversight, or service in the role of an ombudsman.

In 1999, Assembly Bill 92 (Floyd) created within CalVet an Inspector General’s (IG) office, tasked with reviewing the operations and financial condition of all veterans programs supported by the state, investigating alleged misconduct and conducting investigations and reviews at the request of the governor, any member of the CalVet Board, the CalVet Secretary, and or, at their discretion, any member of the California State Legislature or the general public.

CalVet’s IG was eliminated in 2004 by SB 1111, a budget trailer bill, for an expected ongoing General Fund savings of $324,000. Since the elimination of the departmental IG, CalVet has been the subject of several scathing audits by the State Auditor. A 2013 report, titled “Wastefulness, failure to comply with state contracting requirements and inexcusable neglect of duty,” revealed that the administrator of the Yountville veterans home had entered into an illegal contract to “build and operate a nearly 200-acre adventure park on the grounds, including zip lines and a mountain biking course,” wasting more than $650,000 of state funds before the project was halted when CalVet executives learned of it two months after construction had already started.

Another, published in 2016, found CalVet had spent nearly $28 million on an information technology system upgrade that “launched years later than planned, wastes staff time, and has not been fully implemented.”

CalVet has been scrutinized also for its administration of Morale, Welfare, and Recreation funds, for falling short of full capacity at homes, questions concerning Veterans Homes' not being at full capacity, the lack of a kitchen at the West Los Angeles Home (subject of several pieces in the Los Angeles Times), the overall cost of the homes, a dearth of implementing regulations, and other matters.

CalVet’s responsibilities have grown during the past decade, particularly within its Veterans Homes Division. In 1999, there were two veterans homes, and now there are eight. The homes range from 20-acre campuses with 60 residents to 500-acre campuses with more 2,000 residents. Each home is distinctive within its region and offers their own unique environment and combinations of levels of care. Furthermore, CalVet now operates two veterans’ cemeteries and a third is in an early phase of development.

The department’s activities and responsibilities are too many to list. However, some of the more significant include: the Veterans Housing and Homelessness Prevention Program, approving schools' eligibility for GI Bill funds, the Homeless Veteran Outreach Support Program, the California Veterans Registry, the DVBE Advisory Council, programs for incarcerated veterans, administering funding for County Veteran Service Officers, programs to reach women, LGBT veterans, and minority veterans.

COMMENT

Author Statement:

“With the largest population of veterans in the United States and a Department of Veterans Affairs that is growing to accommodate it, California needs and deserves a department with a robust internal auditing function to ensure that it is providing the highest quality service possible, as efficiently as possible, with transparency, accountability and rigorous fidelity to standards and practices appropriate to an agency serving a population of recent veterans returning from the longest period of conflict in American history.”

Committee Analytical Comment:

1. Military and Veterans code section 78.5 refers to the Inspector General (IG), "The secretary shall conduct audits as required by Section 13402 of the Government Code, on internal controls of the department, that shall be provided to the inspector general." The department had an IG but the position, which was created in 1999, was eliminated by budget action in 2004.
2. This bill is substantially similar to the unsuccessful AB 255 (Irwin, 2015), which is cited below under Related/Prior Legislation.
3. There is recent precedent in the California Military Department. In response to a series of negative incidents, in 2012 SB 921 (Lieu) the California Military Whistleblower Protection Act, signed by the Governor September 28, 2012, created an IG within the California Military Department at a time when a new Adjutant General was being appointed with the mission of organizational change.

Related/Prior Legislation:

AB 255 (Irwin, 2015) would have created an office of Internal Audits for Veterans Affairs within CalVet. (Held on suspense, Assembly Appropriations Committee)

SB 921 (Lieu, Chapter 731, Statutes of 2012) established an Office of the Inspector General within the California Military Department

SB 1111 (Budget and Fiscal Review, Chapter 218, Statutes of 2004) eliminates the Office of the Inspector General within CalVet.

AB 92 (Floyd, Chapter 894, Statutes of 1999) creates an IG within CalVet with specified duties.

POSITIONS

Sponsor: Author.

Support: None received

Oppose: None received

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:

Author:(Irwin)

As Amended Ver:April 19, 2018

Majority vote

SUMMARY: Creates the office of Internal Audits for Veterans Affairs within the California Department of Veterans Affairs (CalVet). Specifically, this bill:

1. Establishes the office, led by the chief auditor (auditor), who would be subject to appointment by the Governor and confirmation by the Senate.
2. Requires the auditor to report to the CalVet secretary (secretary) and conduct reviews and investigations at the request of the secretary or other members of senior management.
3. Sets the intent and scope of the auditor's reviews and investigations.
4. Requires the auditor to report findings of employee misconduct to the secretary.
5. Subjects the auditor to specified sections of Government Code related to internal auditors' independence and responsibilities.
6. Requires the auditor to establish a toll-free public telephone number for receiving complaints of possible wrongdoing.
7. Allows the auditor to initiate a review or investigation of an alleged wrongdoing.
8. Requires that the chief auditor not disclose the identity of a person reporting information without that person's written permission, with some exceptions.
9. Requires the auditor to submit annual summary reports to the California Veterans Board and relevant policy committees of the Legislature.
10. Includes a January 1, 2025 sunset.

EXISTING LAW: Military and Veterans code section 78.5 refers to the Inspector General (IG), "The secretary shall conduct audits as required by Section 13402 of the Government Code, on internal controls of the department, that shall be provided to the inspector general." The department had an IG but the position, which was created in 1999, was eliminated by budget action in 2004.

Creates the California Veterans Board (Board). Members of the Board are appointed by the Governor. The Board advises the department and secretary on policies for operations of the department. The Board has access to all documents and employees of the department.

Creates the California State Auditor's office with broad authority. The State Auditor promotes the efficient and effective management of public funds and programs by providing to citizens and the State independent, objective, accurate, and timely evaluations of state and local governments' activities.

FISCAL EFFECT: According to the Assembly Appropriations Committee, ongoing annual costs, estimated in the range of $600,000 to $850,000 (General Fund), to CalVet to staff an audit unit and submit the required reports.

COMMENTS: The California Department of Veterans Affairs lacks any division, office or even staff position responsible for overall internal accountability, monitoring for compliance, independent oversight, or service in the role of an ombudsman. This hasn't always been the case.

In 1999, Assembly Bill 92 (Floyd), Chapter 894, created within the department an Inspector General's office, tasked with reviewing the operations and financial condition of all veterans programs supported by the state, investigating alleged misconduct and conducting investigations and reviews at the request of the governor, any member of the California Veterans Board, the CalVet secretary, and/or, at their discretion, any member of the state legislature or the general public.

CalVet's IG was eliminated in 2004 in a Senate budget bill, SB 1111. Since the elimination of its IG, CalVet has been the subject of several scathing audits by the State Auditor. A 2013 report, titled "Wastefulness, failure to comply with state contracting requirements and inexcusable neglect of duty," revealed that the administrator of the Yountville veterans home had entered into an illegal contract to "build and operate a nearly 200-acre adventure park on the grounds, including zip lines and a mountain biking course," wasting more than $650,000 of state funds before the project was halted when CalVet executives learned of it two months after construction had already started.

Another, published in 2016, found CalVet had spent nearly $28 million on an information technology system upgrade that "launched years later than planned, wastes staff time, and has not been fully implemented."

The department has also been scrutinized for its administration of Morale, Welfare, and Recreation funds, for falling short of full capacity at homes, questions concerning Veterans Homes' not being at full capacity, the lack of a kitchen at the West Los Angeles Home (subject of several pieces in the Los Angeles Times), the overall cost of the homes, a dearth of implementing regulations, and other matters.

These are just a selection of problems at CalVet that could have been detected early or prevented entirely if the department had a robust internal auditor.

Moreover, the world has changed since 1999: The United States has been in protracted armed conflict in Iraq and Afghanistan as well as in shorter conflicts throughout the world. These conflicts have and continue to produce many veterans who reside in California, currently approximately 1.8 million.

The department has also grown. There were two veterans homes in 1999, and now there are eight. The homes range from 20-acre campuses with 60 residents to 500-acre campuses with more 1,000 residents. Each home is distinctive within its region and offers their own unique environment and combinations of levels of care. Furthermore, CalVet now operates two veterans' cemeteries and a third is in an early phase of development.

The department's activities and responsibilities are too many to list. However, some of the more significant include: the Veterans Housing and Homelessness Prevention Program, approving schools' eligibility for GI Bill funds, the Homeless Veteran Outreach Support Program, the California Veterans Registry, the DVBE Advisory Council, programs for incarcerated veterans, administering funding for County Veteran Service Officers, programs to reach women, lesbian, gay, bi-sexual, and transgender (LGBT) Veterans, and minority veterans.

This bill is largely modeled after 1999's AB 92, but would substitute an internal auditor for an Inspector General.

There is recent precedent in the California Military Department. In response to a series of negative incidents, in 2012 SB 921 (Lieu) the California Military Whistleblower Protection Act, signed by the Governor September 28, 2012, created an inspector general in the California Military Department at a time when a new Adjutant General was being appointed with the mission of organizational change.

The bill's author has provided the following statement:

"With the largest population of veterans in the United States and a Department of Veterans Affairs that is growing to accommodate it, California needs and deserves a department with a robust internal auditing function to ensure that it is providing the highest quality service possible, as efficiently as possible, with transparency, accountability and rigorous fidelity to standards and practices appropriate to an agency serving a population of recent veterans returning from the longest period of conflict in American history."

Analysis Prepared by: Christian Burkin / V.A. / (916) 319-3550 FN: 0003304

Date of Hearing: May 9, 2018

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

ABPCA Bill Id:AB 2790

Author:(Irwin) – As Amended Ver:April 19, 2018

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill creates the office of Internal Audits for Veterans Affairs within the California Department of Veterans Affairs (CalVet). Specifically, this bill:

1. Establishes the office, led by the chief auditor (auditor), who would be subject to appointment by the governor and confirmation by the Senate.
2. Requires the auditor to report to the CalVet secretary (secretary) and conduct reviews and investigations at the request of the secretary or other members of senior management.
3. Requires the auditor to report findings of employee misconduct to the secretary.
4. Subjects the auditor to specified sections of Government Code related to internal auditors' independence and responsibilities.
5. Requires the auditor to establish a toll-free public telephone number for receiving complaints of possible wrongdoing.
6. Allows the auditor to initiate a review or investigation of an alleged wrongdoing.
7. Protects the identity of a person providing information resulting in a review or investigation, with some exceptions.
8. Requires the auditor, beginning January 1, 2020, and each year thereafter, to submit an annual summary report to the California Veterans Board and relevant policy committees of the Legislature.
9. Includes a January 1, 2025 sunset date.

FISCAL EFFECT:

Ongoing annual costs, estimated in the range of $600,000 to $850,000 (GF), to CalVet to staff an audit unit and submit the required reports.

COMMENTS:

1. Purpose. According to the author, this bill is needed in light of recent problems documented in State Auditor reports, which the author contends could have been detected or prevented earlier if CalVet had a robust internal audit function.
2. Background. In 1999, Assembly Bill 92 (Floyd) created an Inspector General’s (IG) office within CalVet, tasked with reviewing the operations and financial condition of all veterans programs supported by the state, investigating alleged misconduct and conducting investigations and reviews at the request of the governor, any member of the California Veterans Board, the CalVet secretary, and, at its discretion, any member of the state Legislature or the general public.

CalVet’s IG was eliminated in 2004 in a Senate budget bill. Since the IG’s elimination, CalVet has been the subject of several unfavorable audits by the State Auditor, including audits in 2013 and 2016. The department has also been scrutinized for its administration of Morale, Welfare, and Recreation funds, for falling short of full capacity at veterans’ homes, the lack of a kitchen at the West Los Angeles Home (subject of several pieces in the Los Angeles Times), the overall cost of the homes, a dearth of implementing regulations, and other matters.

CalVet is responsible for eight veterans’ homes ranging in size from 20-acre campuses with 60 residents to 500-acre campuses with more 1,000 residents. Each home offers its own unique environment and combinations of levels of care. CalVet also operates two veterans’ cemeteries and a third is in an early phase of development.

In addition, CalVet is responsible for the Veterans Housing and Homelessness Prevention Program, approving schools' eligibility for GI Bill funds, the Homeless Veteran Outreach Support Program, the California Veterans Registry, the DVBE Advisory Council, programs for incarcerated veterans, administering funding for County Veteran Service Officers, and programs to reach women, lesbian, gay, bi-sexual, and transgender (LGBT) veterans, and minority veterans.

1. Prior Legislation.

AB 255 (Irwin), of the 2015-16 Legislative Session, was substantially similar to this bill. AB 255 was held on this committee’s Suspense File.

SB 921 (Lieu), Chapter 731, Statutes of 2012, created an inspector general in the California Military Department.

Analysis Prepared by: Jennifer Swenson / APPR. / (916) 319-2081

Date of Hearing: April 25, 2018

ASSEMBLY COMMITTEE ON ACCOUNTABILITY AND ADMINISTRATIVE REVIEW

Susan Talamantes Eggman, Chair

ABPCA Bill Id:AB 2790 (

Author:Irwin) – As Amended Ver:April 19, 2018

SUBJECT: Veterans: Internal Audits for Veterans Affairs

SUMMARY: Creates the office of Internal Audits for Veterans Affairs within the California Department of Veterans Affairs (CalVet). Specifically, this bill:

1. Establishes the office, led by the chief auditor (auditor), who would be subject to appointment by the Governor and confirmation by the Senate.
2. Requires the auditor to report to the CalVet secretary (secretary) and conduct reviews and investigations at the request of the secretary or other members of senior management.
3. Sets the intent and scope of the auditor's reviews and investigations.
4. Requires the auditor to report findings of employee misconduct to the secretary.
5. Subjects the auditor to specified sections of Government Code related to internal auditors' independence and responsibilities.
6. Requires the auditor to establish a toll-free public telephone number for receiving complaints of possible wrongdoing.
7. Allows the auditor to initiate a review or investigation of an alleged wrongdoing.
8. Protects the identity of a person providing information that results in a review or investigation, with some exceptions.
9. Requires the auditor to submit annual summary reports to the California Veterans Board and relevant policy committees of the Legislature.
10. Includes a January 1, 2025 sunset.

EXISTING LAW establishes reporting and independence requirements for internal auditors of state agencies.

FISCAL EFFECT: Unknown

COMMENTS: This bill would establish an internal auditor's office within CalVet. The auditor would be appointed by the Governor subject to Senate confirmation, report to the secretary, and conduct reviews and investigations at the discretion of the secretary and senior management.

While the department does not have an internal audit office, it has had an inspector general (IG) in the past. The IG was established in 1999 and eliminated by a budget bill in 2004. According to analyses of that budget bill, some of the oversight function of the IG was expected to be performed by other state entities, including the California State Auditor (State Auditor) and Department of Finance. While both entities have conducted several audits of CalVet programs and issues, there is not an internal audit function at CalVet that reviews the department's programs and operations on an ongoing basis.

According to the author, this bill is needed in light of recent problems documented in State Auditor reports, which the author contends could have been detected or prevented earlier if CalVet had a robust internal audit function.

The author states:

“With the largest population of veterans in the United States and a Department of Veterans Affairs that is growing to accommodate it, California needs and deserves a department with a robust internal auditing function to ensure that it is providing the highest quality service possible, as efficiently as possible, with transparency, accountability and rigorous fidelity to standards and practices appropriate to an agency serving a population of recent veterans returning from the longest period of conflict in American history.”

The auditor would be charged with reviewing the operations and financial conditions of California veteran homes, the veteran farm and home purchase program, as well as other CalVet programs and operations.

Additionally, the auditor would be allowed to receive communications from any individual, including CalVet program participants and veteran home residents. The auditor would be required to establish a toll-free public telephone number for the purpose of receiving complaints about potential wrongdoing and he or she would be authorized to investigate allegations.

This bill specifies that CalVet and the auditor would be subject to Government Code sections related to internal audits at state departments. These sections set reporting structures for the auditor to enhance independence and specify methods to report concerns to authorities outside of the department if necessary.

Under this bill, the auditor would be required to submit an annual summary report to the California Veterans Board and the relevant committees of the Legislature. The report must include information about the auditor's activities as well as recommendations that led to efficiencies, and improvements.

This bill sunsets the auditor's office on January 1, 2025.

DOUBLE REFERRAL: This bill was previously heard in the Assembly Veterans Affairs Committee on April 10, 2018, with a vote of 10-0.

REGISTERED SUPPORT / OPPOSITION:

Support

None on file

Opposition

None on file

Analysis Prepared by: Scott Herbstman / A. & A.R. / (916) 319-3600

Date of Hearing: April 10, 2018

ASSEMBLY COMMITTEE ON VETERANS AFFAIRS

Jacqui Irwin, Chair

ABPCA Bill Id:AB 2790 (

Author:Irwin) – As Introduced Ver:February 16, 2018

SUBJECT: Veterans: Internal Audits for Veterans Affairs

SUMMARY: Creates the office of Internal Audits for Veterans Affairs within the California Department of Veterans Affairs (CalVet). Specifically, this bill:

1. Establishes the office, led by the chief auditor (auditor), who would be subject to appointment by the Governor and confirmation by the Senate.
2. Requires the auditor to report to the CalVet secretary (secretary) and conduct reviews and investigations at the request of the secretary or other members of senior management.
3. Sets the intent and scope of the auditor's reviews and investigations.
4. Requires the auditor to report findings of employee misconduct to the secretary.
5. Subjects the auditor to specified sections of Government Code related to internal auditors' independence and responsibilities.
6. Requires the auditor to establish a toll-free public telephone number for receiving complaints of possible wrongdoing.
7. Allows the auditor to initiate a review or investigation of an alleged wrongdoing.
8. Protects the identity of a person providing information that results in a review or investigation, with some exceptions.
9. Requires the auditor to submit annual summary reports to the California Veterans Board and relevant policy committees of the Legislature.
10. Includes a January 1, 2025 sunset.

EXISTING LAW: Military and Veterans code section 78.5 refers to the Inspector General (IG), "The secretary shall conduct audits as required by Section 13402 of the Government Code, on internal controls of the department, that shall be provided to the inspector general." The department had an IG but the position, which was created in 1999, was eliminated by budget action in 2004.

Creates the California Veterans Board (Board). Members of the Board are appointed by the Governor. The Board advises the department and secretary on policies for operations of the department. The Board has access to all documents and employees of the department.

Creates the California State Auditor's office with broad authority. The State Auditor promotes the efficient and effective management of public funds and programs by providing to citizens and the State independent, objective, accurate, and timely evaluations of state and local governments' activities.

FISCAL EFFECT: Unknown.

COMMENTS: The California Department of Veterans Affairs lacks any division, office or even staff position responsible for overall internal accountability, monitoring for compliance, independent oversight, or service in the role of an ombudsman. This hasn’t always been the case.

In 1999, Assembly Bill 92 (Floyd) created within the department an Inspector General’s office, tasked with reviewing the operations and financial condition of all veterans programs supported by the state, investigating alleged misconduct and conducting investigations and reviews at the request of the governor, any member of the California Veterans Board, the CalVet secretary, and/or, at their discretion, any member of the state legislature or the general public.

CalVet’s IG was eliminated in 2004 in a Senate budget bill, SB 1111. Since the elimination of its IG, CalVet has been the subject of several scathing audits by the State Auditor. A 2013 report, titled “Wastefulness, failure to comply with state contracting requirements and inexcusable neglect of duty,” revealed that the administrator of the Yountville veterans home had entered into an illegal contract to “build and operate a nearly 200-acre adventure park on the grounds, including zip lines and a mountain biking course,” wasting more than $650,000 of state funds before the project was halted when CalVet executives learned of it two months after construction had already started.

Another, published in 2016, found CalVet had spent nearly $28 million on an information technology system upgrade that “launched years later than planned, wastes staff time, and has not been fully implemented.”

The department has also been scrutinized for its administration of Morale, Welfare, and Recreation funds, for falling short of full capacity at homes, questions concerning Veterans Homes' not being at full capacity, the lack of a kitchen at the West Los Angeles Home (subject of several pieces in the Los Angeles Times), the overall cost of the homes, a dearth of implementing regulations, and other matters.

These are just a selection of problems at CalVet that could have been detected early or prevented entirely if the department had a robust internal auditor.

Moreover, the world has changed since 1999: The United States has been in protracted armed conflict in Iraq and Afghanistan as well as in shorter conflicts throughout the world. These conflicts have and continue to produce many veterans who reside in California, currently approximately 1.8 million.

The department has also grown. There were two veterans homes in 1999, and now there are eight. The homes range from 20-acre campuses with 60 residents to 500-acre campuses with more 1,000 residents. Each home is distinctive within its region and offers their own unique environment and combinations of levels of care. Furthermore, CalVet now operates two veterans’ cemeteries and a third is in an early phase of development.

The department’s activities and responsibilities are too many to list. However, some of the more significant include: the Veterans Housing and Homelessness Prevention Program, approving schools' eligibility for GI Bill funds, the Homeless Veteran Outreach Support Program, the California Veterans Registry, the DVBE Advisory Council, programs for incarcerated veterans, administering funding for County Veteran Service Officers, programs to reach women, lesbian, gay, bi-sexual, and transgender (LGBT) Veterans, and minority veterans.

This bill is largely modeled after 1999’s AB 92, but would substitute an internal auditor for an Inspector General.

There is recent precedent in the California Military Department. In response to a series of negative incidents, in 2012 SB 921 (Lieu) the California Military Whistleblower Protection Act, signed by the Governor September 28, 2012, created an inspector general in the California Military Department at a time when a new Adjutant General was being appointed with the mission of organizational change.

The bill’s author has provided the following statement:

“With the largest population of veterans in the United States and a Department of Veterans Affairs that is growing to accommodate it, California needs and deserves a department with a robust internal auditing function to ensure that it is providing the highest quality service possible, as efficiently as possible, with transparency, accountability and rigorous fidelity to standards and practices appropriate to an agency serving a population of recent veterans returning from the longest period of conflict in American history.”

REGISTERED SUPPORT / OPPOSITION:

Support

None on File

Opposition

None on File

Analysis Prepared by: Christian Burkin / V.A. / (916) 319-3550