SACRAMENTO – Upon learning that millions of dollars in employee salary and travel advances are going uncollected, Governor Edmund G. Brown, Jr. today issued an Executive Order to ensure state agencies and departments recover taxpayer dollars and improve internal accounting.
“It’s shocking that the state has apparently failed to collect millions of dollars in salary and travel advances owed by state employees,” Brown said. “This situation reinforces the worst stereotype of ineffective and inefficient government, and I have ordered state agencies to immediately investigate the backlog of uncollected debts and find every penny owed to taxpayers. State agencies must regain control of this program.”
Audits from the California State Controller’s Office have uncovered serious collection and internal accounting lapses at state agencies tied to salary and travel advances.
An audit conducted by the Controller’s Office in 2009, for example, found that $13.3 million in advances had not been collected at eleven state agencies. This total included more than $500,000 in advances outstanding more than three years after they were issued. In most cases, employees were granted advances and agencies were either slow to collect funds or failed to collect at all.
“The state’s poor debt collection and accounting practices are fleecing public coffers at a time when vital public programs are being decimated by unprecedented budget cuts,” California State Controller John Chiang said. “I applaud Governor Brown’s commitment to making every dollar count.”
The Controller is continuing to examine these programs at state agencies, including the California Department of Corrections and Rehabilitation (CDCR), and the audits may uncover millions more in uncollected salary and travel advances.
State law allows for advances under certain circumstances including when there are delays in issuing checks, when an employee separates and needs a final check, when an employee travels, when a hardship request is made or when a vendor requires immediate payment.
The longer a debt goes uncollected, the more likely it will not be recovered. If the employee’s agency or department does not initiate collection proceedings within three years, the agency or department cannot collect the debt without the employee’s consent.
The Governor’s Executive Order seeks to recover taxpayer dollars by directing state agencies and departments to clear salary and travel advances within 30 days through an expense claim. If advances are not cleared, agencies and departments will be expected to deduct what’s owed from the employee’s next paycheck. The Executive Order also calls for improvements in record keeping, oversight, training and collection practices.
Since taking office, the Governor has issued Executive Orders to freeze hiring across state government and cut state cell phones and the passenger vehicle fleet in half and has directed state agencies and departments to stop spending taxpayer dollars on free giveaway and gift items.
These actions are part of Brown’s efforts to save money this fiscal year and to cut millions in operational costs next fiscal year.
The text of the Executive Order is below:
EXECUTIVE ORDER B-5-11 BY THE GOVERNOR OF THE STATE OF CALIFORNIA
WHEREAS Executive Order B-1-11, issued on January 11, 2011, ordered state agencies and departments to review operational expenditures and to reduce waste, redundancies, and costs to create a more efficient and effective government; and
WHEREAS, state agencies and departments have established revolving funds to pay certain expenses, such as earned compensation when a regular paycheck cannot be issued, advances on earned compensation under authorized circumstances, travel expenses, advances on travel expenses, and when an immediate payment of an expense is necessary; and
WHEREAS, agencies and departments are authorized under Government Code Section 16400 to draw from a duly authorized appropriation to fund and reimburse their revolving funds; and
WHEREAS internal state audits have revealed that some agencies and departments are failing to apply sufficient internal controls to properly administer their revolving funds, and that this failure has cost the State millions of dollars; and
WHEREAS applicable regulations, policies, and guidelines must be vigilantly followed to ensure that the amounts distributed from revolving funds are recorded and collected in a timely manner.
NOW, THEREFORE, I, EDMUND G. BROWN JR., Governor of the State of California, by virtue of the power vested in me by the Constitution and the statutes of the State of California, do hereby issue the following orders to become effective immediately:
IT IS ORDERED that all State agencies and departments take immediate action to ensure that:
• Revolving funds are used only for payments authorized under Government Code section 16401 and the State Administrative Manual.
• Revolving fund reports are reviewed on a monthly basis.
• Periodic statements are sent to employees who have received a travel advance but have not submitted a travel expense claim.
• Collection letters and overpayment notification letters are sent in accordance with State Administrative Manual sections 8776.6 and 8776.7.
• Diligent collection efforts are undertaken when a receivable remains uncollected after three collection letters have been sent.
• Salary and travel advances are cleared within 30 days by an expense claim, and that advances not cleared within 30 days are deducted from the employee’s next payroll warrant in accordance with applicable bargaining unit agreements.
• Personnel offices clear any outstanding employee advances during the exit clearance process or deduct amounts due from the final payroll warrant.
• Proper recordkeeping is maintained and source documents are retained for at least four years.
• Appropriate training is provided to staff on an ongoing basis.
IT IS REQUESTED that other entities of State government not under my direct executive authority, including the California Public Utilities Commission, the University of California, the California State University, California Community Colleges, the legislative branch (including, for purposes of this Executive Order, the Legislative Counsel Bureau), and the judicial branch, implement similar measures.
This Order is not intended to create, and does not create, any rights or benefits, whether substantive or procedural, or enforceable at law or in equity, against the State of California or its agencies, departments, entities, officers, employees, or any other person.
I FURTHER DIRECT that, as soon as hereafter possible, this Order shall be filed in the Office of the Secretary of State and that widespread publicity and notice be given to this Order.
IN WITNESS WHEREOF I have hereunto set my hand and caused the Great Seal of the State of California to be affixed this 20th day of April 2011.
EDMUND G. BROWN JR.
Governor of California
Secretary of State